Tata Steel to axe 1,500 jobs in UK
20 May 2011
London – Tata Steel is to restructure its ’long products’ business unit to target high-value markets and introduce greater flexibility into its costs and operations. The plan involves an investment £400 million over a five-year period, but also 1,500 UK job losses.
The company said it intends either to close or mothball parts of its Scunthorpe plant, threatening 1,200 jobs at Scunthorpe and 300 jobs at its Teesside sites. Jobs at risk are in operational, functional and management positions.
The proposals for Scunthorpe are: To close the Bloom and Billet mill and associated steel caster (Bloom 750); To mothball the Queen Bess blast furnace; and to review the operations of the Billet caster.
According to Tata, significant cost savings were achieved in long products during the global economic downturn after a range of strategic actions were taken, including a restructuring of the speciality steels business, which is now in profit.
However, the long products business has continued to make losses over the last two years, due particularly to a decline in the construction sector. 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, Tata added.
Another factor is EU carbon legislation, which threatens to impose huge additional costs on the steel industry, said said Karl-Ulrich Köhler, managing director and CEO of Tata Steel’s European operations.
“Besides, there remains a great deal of uncertainty about the level of further 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.”
According to Köhler, Tata has used the experience gained in turning around its speciality steels business to developing this new strategy for the rest of Long Products.
“We are convinced it represents the best chance of making this business successful and sustainable in the long term,” he said.
Jon Bolton, director of Tata Steel Long Products, added: “As difficult as they are, these steps will help us to shape this business for the future. Over the longer term we will be able to re-invest in our people, our customers, our equipment and the local communities in which we operate.
“Some of our key markets are not forecast to fully recover from the global economic downturn for a number of years. Other market sectors have changed and our customers are demanding new and different products from us, as well as improved levels of service.
“This investment will improve Long Products’ manufacturing capabilities, particularly in the area of plant reliability. By closing the Bloom and Billet Mill we will be taking out of production some highly energy-intensive plant that is pretty well obsolete in today’s steelmaking world. By mothballing Queen Bess furnace we will match our operations to the new market realities, but retain the flexibility to respond to a market upturn.”
The investment follows a number of recent announcements in the business, including upgrading the rail rolling mill at Hayange in France, as well as improvements to the plate and wire rod rolling facilities in Scotland and England.
