Britain's largest steelmaker, Tata Steel on Thursday said it is planning to cut up to 720 jobs at its plant in northern England as it revamps its speciality and bar business to refocus more on high value segments like aerospace to come out of the red.
Most of the jobs will go from its steel bar-making plant in Rotherham, South Yorkshire, which has been underperforming owing to cheap imports and high electricity prices in Britain, and around 35 will be cut from its West Midlands plant by March 2016.
The announcement comes a day after Tata Steel, Europe's second-largest steelmaker, settled its UK arm's pensions dispute with trade unions that brought the firm to the brink of the biggest industrial dispute there in over three decades.
Karl Koehler, chief executive of Tata Steel's European operations, blamed the forced redundancies on rising energy costs.
"Energy is one of our largest costs at our speciality and bar business and we are disadvantaged by the UK's cripplingly high electricity costs. And, while the UK government announced helpful measures to reduce the impact of its high energy taxes a few years ago, these measures still haven't been introduced," Koehler said.
Electricity costs in the UK are more than double compared to its key European competitors.
"I realise how distressing this news will be for all those affected, but I am also extremely aware of our responsibility towards the ongoing survival of this business, which will continue to employ about 1,500 people," he added.
Tata Steel said it would be working closely with those at risk of losing their jobs to redeploy people and minimise compulsory redundancies.
Mark Broxholme, managing director of Tata Steel's speciality and bar business, said the company was forced to act under the economic circumstances.
"Today, we are the world's third largest supplier of aerospace steels and we want to build on this. Today's announcement about reshaping the bar business is the next stage in that journey and would give it the best chance to succeed in these fiercely-competitive markets," he said.
Meanwhile, in a Bombay Stock Exchange (BSE) filing in India, Tata Steel, parent firm of Tata Steel Europe, said: "Tata Steel today announced the next stage in its plans to refocus its speciality and bar business on high-value markets such as aerospace. The proposed changes would result in a reduction in employee numbers, mainly at its Rotherham based bar business."
The company further said: "Tata Steel has identified 720 positions which will potentially become redundant."
Koehler said: "Now is the time for the government to act. Foundation industries like ours urgently need a competitive business environment and a government willing to strengthen UK manufacturing supply chains. This would ensure the UK remains an attractive place to invest."
The Europe chief of Tata Steel said he is aware of the distress the development will create for those affected.
"...but I am also extremely aware of our responsibility towards the ongoing survival of this business which will continue to employ about 1,500 people in South Yorkshire," he added.
Tata Steel said its subsidiary UK Steel Enterprise will look at how it can provide more support to local communities affected by Thursday's announcement and help stimulate new job creation in those areas.
"Over the last four decades the organisation has helped to regenerate local economies with 85 million pounds of support and created 75,000 new jobs across the UK," it added.
Managing Director of Tata Steel's speciality and bar business Mark Broxholme said: "We have to recognise that economic circumstances continue to undermine the work Tata Steel has done to build a sustainable business here."
The firm started the journey of refocusing on speciality business in 2009 on making and supplying high quality safety critical steel to the world's most demanding applications, he added.
"That work has led to significant investments in our capability to make high-value steels for the aerospace and other demanding markets. Today, we are the world's third largest supplier of aerospace steels and we want to build on this," Broxholme said.
Recent investments by Tata Steel in its speciality steels business include 5 new remelting furnaces capable of producing the advanced materials demanded by customers.
"Today’s announcement about reshaping the bar business is the next stage in that journey and would give it the best chance to succeed in these fiercely-competitive markets. The consultation process begins today with our employees and their trade union representatives," he added.
Broxholme further said: "We want to continue the investment in this business to improve the range of high-value products and services for our target markets."
Source: PTI
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