Tata Steel plans to cut up to 3,000 jobs across its European operations.
Sector hit with excess supply, weak demand
AMSTERDAM/LONDON: Tata Steel Limited plans to cut up to 3,000 jobs across its European operations as the sector wrestles with excess supply, weak demand and high costs.
Earlier, a source close to the discussions told Reuters that around 3,000 people would be affected after the group’s European chief executive officer Henrik Adam said Tata Steel was planning to announce job cuts across the European business without giving figures.
In a statement on Monday, Tata said that it was urgently seeking to improve performance by increasing sales of higher value products, efficiency gains and reducing employment costs by cutting employee numbers by up to 3,000 across its European operations.
“Around two-thirds of the job losses are expected to be office-based roles,’’ it said.
Indian-owned Tata Steel, which launched a transformation programme in June to strengthen its European business, has operations including steelmaking in the Netherlands and Wales and downstream operations across Europe.
“There will be no plant closures,’’ Tata said, adding the aim was to shield Tata Steel Europe from challenges, such as weak demand, excess capacity and trade issues, and to become cash positive by the end of its financial year ending March 2021.
European steelmakers largely blame China for the extent of a surplus in the market, but the world’s biggest steelmaker says it has made its own deep cuts to capacity.
Tata’s quest to boost profitability follows a European anti-trust decision to block a joint venture with Germany’s Thyssenkrupp AG.
Tata said in a statement that challenging market conditions had been made “worse by the use of Europe as a dumping ground for the world’s excess capacity”.
In the first six months of its financial year starting April 2019, Tata Steel Europe reported a drop of 90% in EBITDA (earnings before interest, tax, depreciation and amortisation).
Britain last week said Chinese steelmaker Hebei Jingye Group Co Ltd has signed a provisional deal to buy British Steel Limited, which went into compulsory liquidation in May.
The agreement is politically resonant ahead of British elections as job opportunities have become a major issue. If confirmed, the rescue could save thousands of jobs.
The value of the Jingye rescue deal was not disclosed.
Earlier a BBC report saying a deal was imminent gave a figure of £70 million ($90 million), while sources close to the talks said the price was likely closer to £50 million.
ArcelorMittal SA, the world’s biggest steelmaker, has idled a series of plants across Europe.
Eurofer, which represents the European steel industry, said in an e-mail that job losses were “a worrying and upsetting trend” caused by global overcapacity and hesitant demand.
It urged EU policymakers to help stabilise the EU market by warding off import surges and supporting vital steel sector workers during this challenging period.