Tata Steel to infuse 400mn, slash 1,500 jobs in Europe

The steel unit, making long products, used mainly in the construction business, has been making losses over the past two years due to sluggish demand.

"Tata Steel has today proposed a restructuring of its long products business to target high-value markets and introduce greater flexibility into its costs and operations.

To support this strategy, Tata Steel plans to invest £400 million over a five-year period," the company said in a release.

The strategy includes a "proposal to close or mothball parts of the Scunthrope plant and put at risk 1,200 jobs at Scunthrope and 300 jobs at the Teesside sites," it added.

The jobs at risk are in operational, functional and management positions, it said, adding "a 90-day consultation process will begin soon with affected employees and union representatives".

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 year, the statement said.

"As a consequence, the business has proposed a plan to further reduce costs, focus on products that create value and improve its ability to respond quickly to demand fluctuations."

Tata Steel had earlier been successful in its stride to reduce costs significantly and bring specialty steel business in Europe into the black during the global economic downturn through a range of strategic actions.

"We are proposing to take these actions (infusing funds, reducing workforce) only after going through an inclusive consultative process that involved very careful scrutiny of the long products business performance.

"We are convinced it represents the best chance of making this business successful and sustainable in the long-term," Tata Steel Europe's Managing Director and CEO Karl-Ulrich Kohler said.

Sharing concerns of the employees, the company promised to do "everything" it can to provide them with support and assistance. Tata Steel said it would close the bloom and billet mill and associated steel caster at Scunthrope plant, mothball the Queens Bess blast furnace and "review the performance of the billet caster".

"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," Tata Steel Director, Long Products, Jon Bolton said.

The investment would improve long products manufacturing capabilities of the company, and by closing the bloom and billet mill Tata Steel would save a lot on energy and the mothballing of the Queen Bess blast furnace would help the company to retain the flexibility to respond to a market upturn, he said.

Commenting on the development, General Secretary of Community union Michael Leahy said, "We are, of course, extremely disappointed at the prospect of further job losses, coming as they do on the back of earlier cutbacks.

"However, difficult though the current position is for all concerned, we recognise that this is part of a wider strategic review of the business aimed at securing its long-term viability and access to new markets. To that end, we welcome the commitment to invest £400m over the next five years".