Pound blamed as British Steel cuts 400 jobs despite turnaround

BRITISH Steel is to cut almost 10pc of its workforce as part of an efficiency drive it says is necessary to keep up with changes in the industry as the weak pound weighs on the business.

The company – created when turnaround fund Greybull bought a chunk of Tata Steel’s UK assets for a symbolic £1 – is to shed 400 of its 5,000 global staff.

Redundancies will be made in managerial and administrative roles across British Steel’s UK, Irish, French and Netherlands operations, though no sites are slated for closure.

Currency changes have pushed up the cost of raw materials – which are traded in dollars – for British Steel, driving the redundancies.

Gerald Reichmann, British Steel chief financial officer, said: “We’ve made a strong start to life as British Steel but our external environment is constantly changing. For example, raw materials are all traded in US dollars, so the weakening of the pound and euro have implications for us.”

The cuts come just two months after the company said its turnaround plan was “firmly on track with unprecedented levels of investment” and that it had made a significant increase in annual profits. British Steel said in July that its annual sales had risen by £200m to £1.4bn and profits were up 50pc to £68m, although this excluded a £47m hit it took when a blast furnace malfunctioned.

The figures marked a turnaround for the company, which suffered heavy losses under its previous owner, particularly at its Scunthorpe plant.

Announcing the job losses, British Steel executive chairman Roland Junck said the company was pressing ahead with a £170m investment plan.

Unions described the job losses as a “body blow to the workforce who have already made huge sacrifices to make the group sustainable”. The Greybull acquisition saved thousands of jobs, but came at a price. It axed 1,200 roles and staff were asked to take pay cuts to help the business survive.

There was some positive news in the sector, though. Tata yesterday began an estimated £50m investment programme to extend the working life of one of its Port Talbot blast furnaces.