Corus, part of the Tata Steel Group, will cut 400 jobs in its distribution business, in the wake of the global economic downturn.
Since the acquisition by Tata Steel in January 2007, which catapulted the domestic steel major to the world’s sixth, this is the first layoff announced by the Corus.
A company release said that Corus Distribution had introduced a series of measures to reduce expenditure on transport, consumables, energy and other discretionary spending. “However, these actions alone will not be sufficient to offset the decline in the market and the business unit is therefore today announcing proposals to reduce approximately 400 positions,” said the statement.
The restructuring will be done in the UK and Ireland, where the company employs around 2,400 people across 36 sites. Following the production-cut announcement, Moody's Investors Service revised the outlook on Tata Steel's Ba1 corporate family rating to negative, reflecting the change in slowing demand in Europe and the UK.
Since the start of 2008, Corus Distribution UK & Ireland has been operating in a volatile and fluctuating market. “The impact and continuation of the global economic downturn is having a major effect on steel customers in the automotive, construction, plant and machinery segments. Since September, the business has seen a significant decline in demand,” said the release.
The consultation process with employees would start as soon as possible with focus on voluntary redundancy. Corus Distribution would put in a range of support services to help the affected employees.
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Corus today announced that it would cut 30 per cent production in the fourth quarter. Last month, it had decided to reduce its crude steel production in the third quarter by up to 20 per cent, which translates to around one million tonnes. The decision is aimed at aligning steel production with demand.
Steel prices have crashed in the last 2-3 months. Hot rolled coil prices, which were hovering at $1,200-1,250 a tonne, are now ruling around $600-700.