Steel producer Tata Steel disclosed on Tuesday that it proposes to restructure its UK Strip Products business in South Wales in order to improve competitiveness by reducing costs, which will result in the loss of about 400 jobs at its Port Talbot site.
The proposed changes will enable the UK Strip Products business to compete in Europe, where steel demand and prices are expected to be under pressure for some years. In addition, business rates in the UK are reportedly much higher than other EU countries’ and the company added that UK energy costs will continue to be uncompetitive until new mitigation measures become effective.
Tata Steel’s European chief executive, Karl Koehler, stated that the company has invested over GBP250m in state-of-the-art steelmaking technology in the Strip Products business over the last two years. Tata Steel is also currently investing in its Hot Strip Mill in Port Talbot and has upgraded its galvanising line in Llanwern, which has enabled the company to increase its production of high-value automotive steels.
Koehler added “These proposed changes then are vital if we are to build a competitive future for our Strip Products business in the UK. We will, of course, engage fully with employees, trade unions and our political stakeholders during this restructuring process. And we will do everything we can to support our employees through this unsettling time.”
Chair of the UK trade unions’ steel committee which is comprised of the Community, Unite and GMB unions,
Roy Rickhuss, commented: “We are obviously very concerned to hear this news and we will do all we can to support those affected by the announcement.
“We recognise the company has been dealing with a long-term downturn in European steel markets for more than five years. However we have also expressed our own concerns about possible under manning within Strip Products and in Port Talbot in particular. Therefore, it is vital that this is not just an exercise to just reduce costs by cutting jobs but takes a considered and objective view as to the numbers required to run and maintain the plant to make steel safely and productively.
The company will soon begin a consultation process with affected employees and their representatives, which is expected to be conducted over more than 45 days.
Tata Steel produces steel in the UK and Netherlands, as well as at manufacturing plants across Europe. The company supplies products and services to markets such as construction, automotive, packaging, rail, lifting & excavating, energy & power and aerospace. The combined Tata Steel group has a steel capacity of 29 million tonnes and 80,000 employees across four continents.