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Home  » Business » Tata Steel to axe 1,050 UK jobs in global steel crisis fallout

Tata Steel to axe 1,050 UK jobs in global steel crisis fallout

By Sumeet Chatterjee and Maytaal Angel
January 18, 2016 21:29 IST
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European Union steel prices hit their lowest since 2004

Britain's largest steelmaker Tata Steel Ltd <KTISC.NS> said on Monday that it would cut 1,050 UK jobs, in another blow for an industry reeling from cheap imports and tumbling world prices.

The plan involves shedding 750 jobs at Tata's Port Talbot-based strip products business in Wales, 200 jobs in support functions and 100 jobs at steel mills around the country, the company said in a statement.

The announcement comes as European Union steel prices hit their lowest since 2004. Some 4,000 British steel jobs were lost in October 2015 alone, equivalent to about a fifth of the sector's workforce.

"We need the European Commission to accelerate its response to unfairly traded imports," said Karl Koehler, chief executive of Tata Steel's European operations.

"Not doing so threatens the future of the entire European steel industry," he said.

In November, the European Commission failed to agree on measures to protect the steel industry, such as cutting the time it takes to impose anti-dumping duties.

The Commission is also considering granting China "market economy status", which will make it harder for Europe to impose the duties.

China makes nearly half the world's 1.6 billion tonnes of steel, and exported over 100 million tonnes of the alloy last year, more than four times the 2014 shipments from the European Union's largest producer, Germany.

But China has also fallen victim to global over-supply and slumping demand, with its major steel firms losing 53.1 billion yuan ($8.07 billion) from January to November last year.

British union GMB called for a protest in Brussels on Feb 15 to get the Commission to deal with the Chinese steel 'dumping', while the Unite union said the Britain's failure to act had left the industry "on the verge of ‘wipe out’".

A spokeswoman for British prime minister David Cameron said: "We have taken action to help the steel industry ... The challenge is that this is a broader, global crisis facing the steel industry."

The UK government has tried to tackle high energy costs, green taxes and government procurement policy. It has also supported anti-dumping action in steel at the EU level, and pledged action on business rates.

But a government report published last month said the future of Britain's steel sector is still not secure.

Britain is at the centre of Europe's steel crisis as its mills pay some of the world's highest energy costs and green taxes, while business rates are up to 10 times higher than EU counterparts.

The opposition Labour party's Stephen Kinnock, a member of parliament for Aberavon, told the BBC: "The crisis has been brewing for many years and unfortunately we have a government that's been sitting on its hands."

The Port Talbot site employs some 4,000 people and is expected to report annual losses above £60 million ($86 million) by the end of March 2016, an industry source told Reuters. A separate source said Tata Steel had not yet approached restructuring advisors.

"Today’s announcement is a hammer blow for the whole community of Port Talbot, and will have severe repercussions for the local economy," said the UK's Federation of Small Businesses (FSB).

It is estimated that for every direct steel sector job lost, three or four jobs are cut in sectors that depend on steelmaking.

Tata Steel took a non-cash charge in the quarter to end-September totalling 87 billion Indian rupees ($1.3 billion), mostly due to losses at its British business.

The company, a unit of India's Tata conglomerate, has slashed costs and cut thousands of jobs since buying Anglo-Dutch producer Corus in 2007.

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Sumeet Chatterjee and Maytaal Angel in Mumbai/London
Source: REUTERS
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