Dr John Sentamu has reacted to the decision of SSI on Monday to axe 1,700 jobs at the site amid falling global steel prices, causing a huge blow to the Teesside economy.
He said: "The news on Monday that SSI UK had reached the decision to mothball the iron and steelmaking at the Redcar site for up to five years as a result of poor trading conditions and low world steel prices has been a hammer blow not only to the workers, but also their families and the local community.
"When I was Bishop of Birmingham, we saw the collapse of Rover. I have seen the effect this can have on a community and the wider loss of a skilled labour resource.
"The Government needs to be supporting the manufacturing sector, it has a critical role in our UK economy and in our regional economies as well.
"It is my hope that the SSI plant executives with the Union officials can find a way forward to retain the skills in the area and to maintain the facilities if it is deemed possible to resume production.
"In any case this closure should be a spur to innovation and investments in Teesside, whose skilled and dedicated workforce have enormous potential.
"I will try to do all I can as an advocate for workers and their families - and for the future of their community - at this difficult time".
The government was "working to help those who will lose their jobs at the Redcar steel plant," a Downing Street spokesman said.