In a devastating blow to Northern Ontario's industrial heartland, Algoma Steel Inc. has announced it will lay off approximately 1,000 employees. This decision comes a mere two weeks after the financially struggling company secured a combined $500 million in emergency financing from the federal and Ontario governments.
A Swift and Severe Workforce Reduction
The Sault Ste. Marie-based steelmaker issued the layoff notices on Monday, December 1, 2025. The cuts represent a staggering 40% of the company's total workforce of 2,500 people and are set to take effect on March 23, 2026. The announcement triggered an immediate 7.8% drop in the company's share price.
Company leadership pointed to a confluence of crippling factors. The primary culprit cited is the "unprecedented" series of tariffs on steel and aluminum imposed by the United States under President Donald Trump. These tariffs were increased from 25% to 50% in June, a move that Algoma says has "fundamentally altered the competitive landscape and sharply limited our ability to access the U.S. market."
Tariff Pressure and a Forced Transformation
The financial impact of the U.S. trade policy has been severe. According to financial reports, Algoma Steel suffered a 13% drop in third-quarter sales, with direct expenses related to the tariffs amounting to $89.7 million. The company stated the U.S. market is now "largely closed to us."
This economic pressure has forced an abrupt acceleration of the company's planned transition from traditional blast furnace steelmaking to electric arc furnace (EAF) production. Algoma announced it will close its blast furnace and coke-making operations in early 2026, a full year earlier than previously planned. This shift, while aimed at long-term survival and efficiency, renders a large portion of the current workforce redundant.
"We fully understand how unsettling this news is for our employees, their families and the broader Sault Ste. Marie community," the company said in a statement.
Community Reeling After Recent Government Lifeline
The timing of the layoffs has sent shockwaves through the community and raised questions about the recent government intervention. On November 17, a $500 million aid package was finalized, with $400 million from the federal Canada Enterprise Emergency Funding Corp. and $100 million from the Ontario government. In exchange, the governments received millions of options to purchase company shares.
At the time of the deal's closing, Algoma Steel CEO Michael Garcia said the financing would provide "long-term financial flexibility." The subsequent mass layoff announcement has cast a pall over that statement.
Union leaders are grappling with the scale of the job losses. United Steelworkers Local 2251 president Mike Da Prat told the Sault Star he does not believe the community of roughly 78,000 can absorb the loss of about 900 union jobs from his local alone. "If there is an opportunity to go elsewhere, what choice do they have?" he asked.
Bill Slater, president of USW Local 2724 representing salaried workers, confirmed about 150 of his members also received notices, putting the total job loss estimate at around 1,050 positions, including non-unionized staff.
The layoffs mark a pivotal and painful moment for Algoma Steel, a historic industrial pillar in Sault Ste. Marie, as it contends with the harsh realities of international trade disputes and a costly technological transition.
