Tata Cuts 1,200 Jobs at U.K. Steel Operations

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. steel industry has been rocked for the second time in a month with the announcement by Tata Steel Europe (London, England) that it is planning to shed 1,200 jobs from its U.K. operations.

Tata Steel's Long Products Europe business today announced proposals to stop production of steel plate, blaming a shift in market conditions caused by a flood of cheap imports, particularly from China; a strong pound; and high electricity costs. About 900 jobs in Scunthorpe and 270 in Scotland, as well as a small number at other Long Products Europe sites, will have to go. The company said that plate mills in Scunthorpe, Dalzell and Clydebridge would be mothballed, while one of the two coke ovens at the Scunthorpe steelworks would be closed.

The news comes less than a month after Sahaviriya Steel Industries (SSI) U.K. Limited, part of SSI PCL (BAK:SSI) (Bangkok), announced the sudden closure of the Redcar steel-making plant, with the loss of 1,700 jobs. For additional information, see October 5, 2015, article - U.K. Steel Plant to Close with 1,700 Job Losses.

A couple of weeks later, hopes that that the blast furnace and coke ovens could be kept running were ended when the company confirmed they too would have to close, with the expected loss of another 500 jobs. For additional information, see October 14, 2015, article - Redcar Rescue Hopes Snuffed Out as Blast Furnace Closes.

"I realise how distressing this news will be for all those affected," said Karl Koehler, chief executive of Tata Steel's European operations. "We have looked at all other options before proposing these changes. We will work closely with affected employees and their trade union representatives. We will look to redeploy employees, wherever possible, and minimize employee hardship."

He added: "The U.K. steel industry is struggling for survival in the face of extremely challenging market conditions. This industry has a crucial role to play in rebalancing the U.K. economy, but we need a fairer system to encourage growth. The European Commission needs to do much more to deal with unfairly traded imports--inaction threatens the future of the entire European steel industry."

Tata highlighted that during the past two years, imports of steel plate into Europe have doubled and imports from China have quadrupled, causing steel prices to fall steeply. The stronger pound also has undermined the competitiveness of the business's Europe-bound exports, and encouraged more imports.

Tata's announcement and subsequent blaming of China's overproduction of steel came in the same week that the U.K. was hosting the official state visit by China's President Xi Jinping. U.K. Prime Minister David Cameron was expected to raise the cheap steel issue with President Jinping.

According to a statement from Cameron's official spokesperson: "We recognise the enormous challenges facing the steel sector, and we have been working with industry on this to see what more can be done. That's why we convened the summit last Friday to really focus minds and provide an opportunity for ministers to have discussion with the industry. There are steps we have taken. We have paid out more than £50 million [$77 million] in compensation to industries in the steel sector for the costs related to energy-intensive industries. We are looking at what lessons can be learnt from other countries in the EU and beyond. We are working to boost productivity and cut production costs."

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