Tata Steel Europe has announced job losses of 1,500 employees from two of its plants in north England — Scunthorpe and Teesside. The move is part of its restructuring plan in the long steel business, where it will invest £400 million over the next five years.
The company, in a statement, said, “The decline in some major markets, particularly the construction sector, has been a key factor. Demand for structural steel in the UK is only two-thirds of the 2007 level and is not expected to fully recover within the next five years. As a consequence, the business has proposed a plan to further reduce costs, focus on products that create value and improve its ability to respond quickly to demand fluctuations. This strategy includes a proposal to close or mothball parts of the Scunthorpe plant and puts at risk 1,200 jobs at Scunthorpe and 300 jobs at its Teesside sites.”
The long steel products business of Tata had undertaken a series of measures over the last three years to cut costs, which included restructuring of its speciality steels business. The company also sold off a major part of its Teesside Cast Products (TCP) plant to Sahviriya Steel of Thailand for $469 million earlier this year.
The jobs at risk are in operational, functional and management positions. A 90-day consultation process would begin soon with affected employees and union representatives.
Karl-Ulrich Köhler, managing director and CEO of Tata Steel’s European operations, said, “We are aware that our employees and their families will experience a very unsettling few months as a result of this announcement. We will do everything we can to provide them support and assistance.”
As part of the restructuring process, the company will target products and market that will give it better margins. Also, it is expected to ‘introduce a greater flexibility into costs and operations’.
Köhler said weakness in the construction market in Europe is one of the main reasons why the company has decided to axe 1,500 jobs. “Another, is the regulatory outlook. The European Union carbon legislation threatens to impose huge additional costs on the steel industry. Besides, there remains a great deal of uncertainty about the level of unilateral carbon cost rises that the UK government is planning. These measures risk undermining our competitiveness and we must make ourselves stronger in preparation for them,” he said.
This is not the first time that Tata Steel Europe has cut jobs in Europe. The company, in 2010, mothballed the TCP plant that rendered 1,600 people jobless. The plant was then sold off to SSI of Thailand. Apart from that, the company has also shut down its Living Solutions unit in Shotton, North Wales, cutting 180 jobs more.
In 2009, Tata Steel Europe had cut 4,500 jobs in Europe to battle the demand downturn in its key markets.
Tata is one of the biggest steel makers in the world, with operations in 26 countries.
