Algoma Steel chief executive officer Michael Garcia is stepping down from his role.Deborah Baic/The Globe and Mail
As Algoma Steel Group Inc. ASTL-T chief executive officer Michael Garcia prepares to step down from the Canadian steelmaker for personal reasons, he says the timing may not be ideal, but that the company is well positioned to weather the tariff storm.
Algoma, based in Sault Ste. Marie, Ont., announced Wednesday evening that Mr. Garcia is retiring at the end of the year and chief financial officer Rajat Marwah is taking his place. Mr. Garcia had been Algoma’s chief executive officer since June, 2022.
The impending leadership change looms as the company continues to battle one of the biggest challenges in its 125-year history.
Since March, Algoma has been dealing with tariffs on its exports of steel to the United States. In June, U.S. President Donald Trump doubled the levy to 50 per cent, which essentially shut the company out of that market. Before the trade war, the U.S. market accounted for 60 per cent of Algoma’s business.
Mr. Garcia’s departure, however, is part of a planned succession arrangement at Algoma.
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“I absolutely love the people at Algoma Steel. I love leading the company and I love everything about the job,” he said in an interview on Thursday. “But there’s very important things in my life that I wanted to pursue and prioritize that I just, unfortunately, couldn’t do that while living in Sault Ste. Marie.”
Mr. Garcia plans to move to Toronto in the new year and build a new life with his girlfriend, who currently lives in Oakville, Ont. He’s not planning on immediately returning to the work force but he is open to the possibility.
“It’s all about me prioritizing what’s most important in my life, and that’s being with my partner and the person I want to live together with for the rest of my life.”
The CEO broached the idea of retirement with the board late last year, well before the tariff crisis blew up. At that point he was considering leaving this past summer. But with the trade war raging, it was agreed that he would stay until the end of the year.
Mr. Garcia came out of retirement in 2022 to take the top job at Algoma. He had been living in his home state of Arizona after taking a package out of Domtar Inc., where he spent just under seven years as president of its pulp and paper division in North Carolina. Earlier in his career, Mr. Garcia worked for Evraz Highveld Steel & Vanadium in South Africa, and for aluminum giant Alcoa in China. Before that, he spent five years in the U.S. Army, and is a veteran of the Gulf War’s Operation Desert Storm.
Flattened steel at Algoma Steel's facility in Sault Ste. Marie, Ont., that will be made into sheets of steel. The company says it's focusing on steel plate instead of steel coil amid trade pressures.Deborah Baic/The Globe and Mail
While he concedes the timing of his exit at Algoma isn’t perfect, given how much uncertainty the company still faces, he said that Mr. Marwah taking over ensures a steady hand on the wheel.
“Rajat has been my right-hand man all along. He knows the company intimately. He knows our plan intimately,” Mr. Garcia said. “So I feel good about not leaving the company unprepared.”
Mr. Marwah joined Algoma in 2008 as general manager of finance and cost. He was promoted to vice-president of finance in 2012 and then moved up to CFO in 2014. In its statement, the company said he has significant experience in strategy, capital markets and corporate development, and played a pivotal role in the continuing transition from its legacy blast furnace to electric arc furnaces.
Because EAFs are run on batches, as opposed to continual operation from the blast furnace, Algoma will eventually be in a position to produce only as much steel as the market demands. The first of two EAFs went into production in July.
Over the past seven months, Algoma has been scrambling to try to win more business in Canada to stem its U.S. losses. This has been extremely difficult because other steelmakers with Canadian operations such as ArcelorMittal Dofasco, and Cleveland-Cliffs Inc., the owner of Stelco, are also vying for that business.
Algoma late last month secured $500-million in low-interest federal and provincial loans that give it substantial liquidity breathing room to survive the trade war.
To try to distance itself from its competition in Canada, Algoma is increasingly focusing on making steel plate. It is the only domestic producer of plate, which is used in military applications such as ships and submarines for the Royal Canadian Navy. As it produces more plate over time, Algoma intends to scale back its output of lower-margin coil in Canada.
Algoma reported a net loss of $485.1-million in the third quarter, incurring almost $90-million in tariff costs and taking a writedown of more than $500-million.