Tata Steel has unveiled restructuring and cost-cutting plans for its Europe business which include slashing up to 3,000 jobs amid weakening demand and soaring expenses.
"This will help us become self-sustaining and cash positive in the face of unprecedented severe market conditions, enabling us to lead the way towards a carbon-neutral future," said Henrik Adam, Chief Executive Officer of Tata Steel in Europe.
In September, the company had announced closure of a manufacturing plant in southern Welsh city of Newport. Britain's largest steelmaker employs more than 8,000 people to manufacture advanced products for automotive, construction and engineering industries.
Adam said a transformation programme is needed to ensure the business can thrive despite severe market headwinds which have led to a sharp decline in profitability.
The programme is focused on increasing sales of higher-value steels by improving product mix and customer focus; efficiency gains by optimising production processes supported by the application of big data and advanced analytics; lowering employment costs, leading to an estimated reduction in employee numbers of up to 3,000 across Tata Steel Europe's operations; and reduction of procurement costs through smarter sourcing and strengthening cooperation with companies within the Tata Steel group.
About two-thirds of job cuts are expected to be office-based (white collar) roles. "A transformation is needed to mitigate the current structural and cyclical headwinds and create the foundation for the company's future success," said the company in a statement.
"Stagnant EU steel demand and global overcapacity have been compounded by trade conflicts which have turned the European market into a dumping ground for the world's excess steel capacity. Together with a significant increase in the cost of emission allowances, this has created an urgent need for improvements to the company's financial performance."
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In the first six months of its current financial year starting April, Tata Steel Europe reported a drop of 90 per cent in earnings before interest, tax, depreciation and amortisation (EBITDA) to 31 million pounds on a revenue of 3.25 billion pounds.
"Tata Steel Europe will engage with various stakeholders to ensure compliance with all European and national obligations," it said.
Tata Steel has invested about two billion pounds in its British business since acquiring Corus in 2007, including more than 100 million pounds in the last year to support advanced steel manufacturing at a number of sites.