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Tata Steel said on Thursday it had identified 720 jobs that could become redundant with restructuring plans at its speciality and bar business in Britain.
As the company plans to refocus its speciality and bar business on high-value markets such as aerospace, the proposed changes would result in this reduction, mainly at its Rotherham-based unit, it said.
The Rotherham-based bar business has been under-performing, in the face of commodity-grade steel being imported to Britain due to a strong pound and electricity costs more than double those of key European competitors.
"Energy is one of the largest costs at our speciality and bar business and we are disadvantaged by the UK’s cripplingly high electricity costs. While the government announced helpful measures to reduce the impact of its high energy taxes a few years ago, these still haven’t been introduced," the company's press release quoted Karl-Ulrich Köhler, chief executive of the European operations.
Tata said it would be working closely with those at risk and their trade union representatives to redeploy employees and minimise the number of dismissals.
“I realise how distressing this news will be for all those affected but I am also extremely aware of our responsibility towards the ongoing survival of this business, which will continue to employ about 1,500 people in South Yorkshire,” said Köhler.
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Recent investments by Tata Steel in its speciality steels business include five new remelting furnaces capable of producing the advanced materials demanded by customers. “We want to continue the investment in this business to improve the range of high-value products and services for our target markets,” Mark Broxholme, managing director at the speciality and bar business was quoted.
Tata Steel, most heavily indebted in the segment across the globe, has lately been going through disputes with its employees in Europe. On Wednesday, a major one at the UK arm ended as all its four unions accepted Tata Steel's compromise proposal for changes to the British Steel Pension Scheme to keep it open.
“The problem is that Tata Steel Europe has high fixed cost, with employee cost being one of the biggest. The way steel prices are falling, the company has no option but to take such steps,” said an analyst with a local brokerage. “We are not seeing any recovery in the steel market. The only solution to this issue is that anti-dumping duty should be placed by Europe to curb imports.”
