Tata Steel plans to cut 900 jobs in the UK as part of a restructuring drive, as weak conditions in Europe show little sign of letting up.
The majority of the cuts — around 500 — will be of administrative and management personnel at its integrated production plant in Port Talbot, South Wales.
The company also plans to revamp its redistribution and processing hubs and reduce the total number from 16 to 6. It will reduce shifts at its long-products operations in Rotherham, and its tubing business in Hartlepool to adjust production levels to lower demand.
It will also re-start a blast furnace at Port Talbot early next year, following a Rs 2,212-crore investment programme, and restart a hot strip mill at its Llanwern site in South Wales.
The changes were part of a strategy to transform the company into an “all-weather steel company capable of succeeding in difficult economic conditions,” said Karl Koehler, CEO of Tata Steel’s European operations.
The job losses, which will follow a consultation period with employees and unions, are the latest in a string of steps taken by Tata Steel to combat declining demand and weak pricing in Europe. Last year, the company cut around 1,200 jobs at its plant in Scunthorpe.
Earlier this month, Tata Steel announced a quarterly loss of Rs 364 crore, pointing to a weakening in Europe since the spring.
Demand for steel in Western Europe in 2012 will fall 8.5 per cent year on year, with the construction sector being the worst hit, according to Chris Houlden, of consultancy CRU. “We might see some improvements as we go into next year.” However, demand remains well off pre-crisis levels: at around 115.5 million tonnes for 2012, against 162 million tonnes in 2007.
Continuing failure
Other European steel companies have also taken action to cope with the challenging circumstances.
ArcelorMittal has announced the permanent closure of four of its blast furnaces in Europe.
The head of Britain’s Community trade union said the latest losses were symptomatic of “continuing failure” of the government’s economic strategy, and urged it to provide support to the manufacturing sector in the way German and France had.