USW urges Algoma to diversify product line as $500M lifeline meets wider Q3 losses

State of Algoma Steel

President Donald Trump’s tariffs have hit Algoma particularly hard. They have effectively forced the Canadian flat-rolled steelmaker out of the US market. About half of Algoma’s order book had consisted of US customers, with the majority in the automotive and appliance sectors.

Recall Trump in June doubled Section 232 tariffs on imported steel, including steel from Canada, to 50%. That came after the reinstatement of 25% Section tariffs in March. Canada had previously been exempt from Section 232.

On Wednesday, the company provided guidance for its third-quarter results, and it’s not pretty. Shipments are expected to be 415,000-420,000 short tons, down 11-12% from the previous quarter. And its adjusted EBITDA loss is expected to widen considerably from CA$-32.4 million in Q2 to CA$-80 million to CA$-90 million in Q3.

In the earnings guidance, Algoma Steel CEO Michael Garcia also highlighted the company’s first arc and first steel production from its new electric-arc furnace. That occurred in July and was “a critical milestone in our transformation to low-carbon steelmaking.”

He also reiterated that the company is “prioritizing Canadian market demand with a focused plate and coil product mix.”

Union wants transparency and diversification into structurals and rail

The USW welcomed the government’s financial support for Algoma, noting that the money will protect jobs in the short term. However, the union is also calling for transparent and longer-term commitments regarding the use of public funds.

“Workers and the public deserve transparency about the terms of this deal. These are public dollars, and the terms and conditions must be made public, not left behind closed doors,” USW National Director Marty Warren said.

The union additionally stated that “investments in expanding the product capability of Algoma are of the utmost importance.”

Canada is pushing “Buy Canadian” policies that would mandate use of Canadian steel in infrastructure, housing, and defense projects. The USW thinks Algoma should diversify into products such as structural steel and rail to help meet the demand for Canadian steel.

“The federal government has already made funds available to Canadian steel producers through the Strategic Response Fund,” the union pointed out. “The next step is using those funds to expand Algoma’s product mix to ensure the long-term viability of steel production and steelworker jobs in Sault Ste. Marie.”

Algoma did not respond to a request for comment about the union’s statement.

Algoma union workforce

USW Local 2251 represents hourly workers employed by Algoma Steel. USW Local 2724 represents ~500 salaried Algoma workers, including engineers, accountants, and information technologists.

Algoma Steel had ~2,700 employees after starting layoffs in March. That makes it the largest employer in Sault Ste. Marie, a city with ~72,000 residents.

The company has previously revealed that its transition to EAF steelmaking will result in far fewer employees. Previous plans were for employment levels to drop to ~1,700 by 2029 when both EAFs became operational and when the blast furnace and coke ovens would no longer be in use.

But it is unclear now what employment levels will be given the tariff-induced turmoil. Algoma announced earlier this week that it will begin taking the blast furnace and coke ovens down much earlier than anticipated in response to the US trade measures.