Tata Steel will cut around 1,200 jobs in Europe, with the UK being the worst hit, under a planned restructuring to deal with flood of cheap imports from China and other places.
Tata Steel Long Products Europe business on Tuesday said it has decided to stop producing steel plates, because of increasing imports of cheap steel from China, a stronger pound and high electricity costs. The decision would lead to about 1200 job losses at the unit.
Instead, the company would be focusing on higher-value markets with a focus on developing stronger and lighter products for its customers, it said.
Bimlendra Jha, executive chairman of the standalone Long Products Europe business said in a statement that the Tuesday’s move is the next step in reshaping its business “to give it the best chance of survival in this fiercely-competitive global marketplace.”
“We are looking closely at the performance of all parts of Long Products Europe as part of a focus on returning to profitability,” Jha said in a statement filed to the stock exchanges.
The move comes at a time when imports of steel plate into Europe have doubled and imports from China have quadrupled – in the past two years – causing steel prices to fall sharply. “At the same time, a stronger pound has undermined the competitiveness of the business’ Europe-bound exports, and encouraged imports,” the company’s statement said.
A slower demand from domestic economy and higher production in factories has forced China to export steel which is hurting steelmakers across the world. Tata Steel is one among them, having taken a hit both in India and in Europe businesses.
On Tuesday, Tata Steel said it “the proposed changes would lead to around 1200 job losses – about 900 in Scunthorpe , and 270 in Scotland as well as a small number of other Long Products Europe sites.” As per the plan, plate mills in Scunthorpe, Dalzell, and Clydebridge would be mothballed while one of the two coke ovens at the Scunthorpe steelworks would be closed, it added.
Karl Koehler, chief executive for Tata Steel’s Europe business aid in a statement that the UK steel industry is struggling in the face of extremely challenging market conditions. He called upon the European Commission to take some action to deal with “unfairly traded imports” which threatens the entire steel industry.