Essar Steel Algoma is temporarily laying off 130 employees, effective Jan. 11.
The across-the-board cuts involving hourly workers at the Sault Ste. Marie steelmaker is the result of the world economic crisis, said spokeswoman Brenda Stenta.
"We've done everything possible to keep our people working as long as we have and unfortunately the situation is not improving. By taking decisive action now, we are hoping to ensure the long-term viability of this company."
If current market condition don't improve, more layoffs are possible.
Stenta said once the effects of 141 voluntary retirees, leaving by the late March, and the current layoffs are absorbed by the company, they'll be in a better position to determine the next steps on how to match the remaining employees with production levels.
Last November, the company proposed a work-sharing concept to cut hours from 40 to 32 with Service Canada providing an employment insurance top-up.
Members of Local 2251, the company's largest union, has rejected that, but Local 2724 has entered into a joint application with Essar to take advantage of the program. The union must still take it to their membership for final approval.
All plant employees were put on notice last fall as world and steel markets began to tank and the company's order book suddenly dried up.
Stenta said things are not much better this winter. Orders have fluctuated but it's "nowhere near normal levels" which is consistent with conditions at other domestic steel producers.
The 3,000-employee company makes hot and cold-rolled sheet and plate for the North American construction, light manufacturing, auto and, pipe and tube sectors.
Stenta said Essar's goal to double production at the Sault to 4 million tons remains the same, but the timing of the expansion will be adjusted given the market. Construction of a co-generation power plant is nearing completion, likely by this spring.
