Indian steel major Tata Steel has started the process to downsize its European operations through sale of its construction grade assets in Europe. The company on Wednesday announced that it has signed a Memorandum of Understanding with Switzerland-based Klesch Group to undertake detailed due diligence and negotiations for the potential sale of its long products Europe business and associated distribution activities and keep its focus only on strip products.
Once complete, the sale would directly impact about 6,500 people that are employed at Long Products Europe and its distribution facilities. Tata Steel employs 30,500 people across Europe, including 17,500 in the UK.
The MoU covers several UK-based assets including Tata Steel?s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.
Karl Koehler, Chief Executive of Tata Steel?s European operations, said: ?We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.?
Explaining the context and rationale for this decision, Koehler said that the company has decided to use its resources mainly on strip products activities, where it has greater cross-European production and technological synergies.
?Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise. We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies,? Koehler said.
The European steel industry is emerging from one of the most challenging economic periods in its history. Tata Steel has invested 1.2 billion pounds in its UK operations and trained 1,200 UK apprentices and graduates since acquiring Corus in 2007.
Tata Steel is Europe’s second largest steel producer, with steel making in the UK and Netherlands, and manufacturing plants across Europe. The company supplies products and services to the most demanding markets, including construction, automotive, packaging, rail, lifting & excavating, energy & power and aerospace. The combined Tata Steel group is one of the world?s largest steel producers, with a steel capacity of 29 million tonnes and 80,000 employees across four continents.
