Stelco posts strongest quarter since 2024 purchase as layoffs proceed

HAMILTON · Cleveland-Cliffs says Stelco had its strongest financial quarter since the U.S. company acquired it in 2024, even as it proceeds with hundreds of layoffs at its Ontario operations. The steelmaker's parent company credited a sharp improvement in Canada's hot-rolled steel market for the positive third-quarter results. At the same time, layoff notices are going out to up to 500 workers in Hamilton and Nanticoke. Cleveland-Cliffs CEO Lourenco Goncalves said the Canadian government must do more to correct an oversupplied market for galvanized steel.

Goncalves said Stelco became a positive contributor to Cleveland-Cliffs's results for the period ended Sept. 30. "Third quarter was Stelco’s strongest ... since we acquired the company two years ago. The Canadian hot-rolled market has improved substantially," he said in a statement Monday. He added that all of the company's major profit drivers increased. However, Goncalves said the domestic market cannot accommodate two Canadian producers of galvanized steel plus what he called an "avalanche of imports."

The company is idling its galvanizing lines in Hamilton, which account for roughly 20 per cent of Stelco's output. Ron Wells, president of United Steelworkers Local 1005, said about 333 layoffs are expected in Hamilton. John McElroy, president of USW Local 8782, said up to 50 layoffs are expected at the Lake Erie Works in Nanticoke. More than 100 Hamilton workers had received notices as of Monday. Goncalves has characterized the layoffs as a temporary measure.

READ MORE: Stelco defends layoffs as steel exports to U.S. plunge 58 percent

READ MORE: Stelco lays off 85 more workers as steel industry jobs shrink

The CEO tied any recall of workers to government action on imports. "If the Canadian government uses the power they already have ... to block or severely reduce imports of galvanized steel into the Canadian market, Stelco can immediately bring back all the temporarily laid-off workers," Goncalves said during an earnings call. He said the Canadian government offered financial support, but argued that "government money cannot buy a market for galvanized steel." He said Stelco will concentrate on hot-rolled products that have a market.

Union leaders criticized the company's messaging. Wells called the earnings call "a slap in the face" and Goncalves's statements "confusing." "It’s just galling to hear that they’re making money in Canada, they’ve had a great Q3 overall, and they’re laying our members off," Wells said. He questioned the business rationale, noting the idled departments were open during the profitable quarter. "There’s no real business reason," Wells said. "There is either complete greed, or it’s political theatre."

The layoffs have prompted the federal government to threaten legal action. Industry Minister Mélanie Joly has said Ottawa is considering options under the Investment Canada Act, which could include financial penalties or a court order. The government has said Cleveland-Cliffs's purchase included promises to maintain employment levels through 2029. "A business decision or even a change in market conditions cannot be used to not follow their commitment," Joly said. She indicated a federal response is just "days" away.

Goncalves reiterated he is prepared to fight the Canadian government in court to preserve the layoff plan. He also said he is willing to sell Stelco. The CEO praised U.S. President Donald Trump's trade policies, including tariffs of up to 50 per cent on certain steel and aluminum imports from Canada, for helping create conditions for domestic investment. Colin Mang, an assistant professor of economics at McMaster University, said Goncalves's demands for trade barriers are consistent with seeking more market share. However, Mang explained it might be hard for Canada to meet these expectations, suggesting that expecting a complete ban or U.S.-level restrictions is not really possible.

Wells said workers feel "underappreciated" by the company. "They're dedicated, loyal employees," he said. "They work weekends, they work holidays, they missed their kids' hockey games, graduations, and that loyalty isn't being repaid." He also expressed hope that Joly would follow through on enforcing the Investment Canada Act. Goncalves said Stelco will maintain its total production tonnage and preserve about 2,000 Canadian jobs by focusing on hot-rolled products.

With files from The Canadian Press, CBC News and BNN Bloomberg