Algoma Steel lays off some salaried professionals as trade war with U.S. commences

Even before the United States announced the imposition of tariffs at midnight Tuesday, Algoma Steel had already begun some layoffs, at least for the short term.

The president of the union representing salaried professionals at Algoma Steel in Sault Ste. Marie says around 20 of his members were laid off, effective this past Friday, primarily due to uncertainty about the imposition of 25 per cent American tariffs on steel, with the possibility of more to come.

Bill Slater, president of United Steelworkers (USW) Local 2724, which includes engineers, accountants and information technologists, said the layoffs may be temporary or there could be more — he's not sure.

"At this time, right now, I have no idea," said Slater. "I mean, anything is possible for more layoffs. It's possible for the people that are laid off to get recalled. I don't have control. And with the uncertainty right now, it's very hard to look into the future."

Founded in 1901, Algoma Steel says it's now one of North American's leading manufacturers of  hot- and cold-rolled steel sheet and plate products, and is the largest employer in Sault Ste. Marie, which has a population of around 72,000.

Slater said Algoma Steel produces primarily plate and coil, and a lot of the coil is sold to the United States for automotive and appliance construction.

He said he's waiting to hear what the levels of government are doing to mitigate the impacts.

"I hope there's a lot more of a Buy Canadian call from the government that's going to ensure at least our projects that are going on, that are based off of tax dollars, are using Canadian products," said Slater.

"And I hope that they look outside of the USA for trade agreements so that all our eggs aren't in one basket."

He said while the union is holding the company to its collective agreement, it is trying to assist Algoma Steel in any way it can to allow it to be more successful.

Mike Da Prat, president of USW Local 2251, the union representing labourers, said none of his members have been laid off but a few probationary workers have been told they're no longer needed.

President-CEO says company considering different scenarios

Algoma Steel president and CEO Michael Garcia pointed out the 20 layoffs represent less than one per cent of the 2,700-member workforce.

To illustrate the magnitude of the tariffs, Garcia said that in at any given time, about half of its order book consists of U.S.-based customers, so a 25 per cent tariff on half of their orders must be dealt with in some manner.

Garcia also noted the general price of steel in the U.S. has risen in the last month, which is making it a little more feasible to continue to sell there, although tariffs signficantly reduce profits.

Regardless, Garcia said, the company is looking at and preparing for a range of scenarios and timelines for tariffs to keep the company viable.

He said belt-tightening is starting to take place with a keen eye to discretionary spending. Although he would not give details about what that would look like, he said the focus was on operating safely and meeting the needs of customers, and the company is restricting overtime work.

"We've game-planned scenarios all across the spectrum between long-term structural tariffs that stay in place for a long time to a temporary disruption, and we have to understand what each scenario means for Algoma Steel," he said. "I am concerned that it's distracting to our employees and that many of them are worried about the long term prospects for the company."

As for mitigating factors, Garcia said he's been very vocal with the Canadian government about moving to implement tariffs on all foreign steel into Canada, which would create an opportunity for the domestic steel industry to supply to Canadian customers.

Meanwhile, Sault Ste. Marie Mayor Mathew Shoemaker said worries about the impact on his border city are being confirmed.

"We are hunkering down for an extended period of challenging economic times here," he told CBC Radio. "It's going to be tough. There's no masking that."

Shoemaker, as a mayor, doesn't have a direct role in trade, but said the city can reach out to counterparts that either buy steel or supply raw materials to make steel to Algoma and keep lines of communication open, as it did when the United States imposed tariffs in 2018.

"We are trying to co-ordinate conversations, and I continue to be in close contact with the mayor of Sault, Michigan, and American legislators to try to advocate against these tariffs, whether individually or as part of the Border Mayors Alliance that we've joined."

Shoemaker does admit that he is worried the tariffs might be in effect for an extended period of time.

"I'm eager to see what the federal government plans with regard to its countermeasures and its support measures to buttress the communities and industries that are most impacted by this."

Canada, Ontario announce preliminary retaliation

In measures announced Tuesday morning by Prime Minister Justin Trudeau, Canada is imposing 25 per cent retaliatory tariffs on $30 billion worth of American products, with the levy set to expand to cover another $125 billion in U.S. goods in 21 days.

Trudeau added Canada will file claims with the World Trade Organization and through the Canada-U.S.-Mexico Free Trade Agreement.

Ontario Premier Doug Ford said he would prioritize Ontario products in the $30 billion worth of procurement the government does each year and would rip up a $100-million deal with Elon Musk's SpaceX for Starlink services.

Ford said he wants every retail store in the province to show which products are made in Canada and if it doesn't happen, he has threatened to legislate the practice.

He also said Tuesday afternoon that he is slapping an immediate  25 per cent surcharge on all electricity that Ontario sends to the states of New York, Michigan and Minnesota.