Tata Steel UK to implement job cuts after split

Market: Metals
26/11/20

Tata Steel UK will implement job cuts in an attempt to become sustainable after splitting from the Netherlands business, a senior source said.

Internal discussions within the company have started on headcount reduction. It has also accepted that it cannot be a "high-volume" producer as a standalone business and will need to focus on value-added products and services to be competitive.

Community Union confirmed that it is not in talks with the company over headcount reduction.

The separation of the European division has not completed yet, but the source confirmed this will go ahead irrespective of Tata's talks with SSAB over its Ijmuiden facility. Tata employs around 8,000 people in the UK, the bulk of them in Wales, with around half employed at Port Talbot.

"We are starting the process to separate Tata Steel Netherlands and Tata Steel UK. We will keep colleagues informed about this as it progresses," a Tata Steel spokesperson told Argus.

Tata's Indian parent company has for some time been suggesting that its European division needs to be cash-positive, or at least cash-neutral, to avoid needing financial infusions at a time when its profitable owner is seeking growth opportunities. At the Worldsteel general assembly in Monterrey, Mexico last year, Tata Steel managing director TV Narendran told Argus that there was an expectation that the European operations would be able to stand on their own feet in the coming year without financial support.

That expectation has clearly been quashed by the Covid-19 pandemic, leading to the company's ongoing talks with government. The government was requesting a transition to greener forms of steelmaking — sources suggest a one blast furnace one electric arc furnace operation is possible going forward — in return for any potential investment.

Port Talbot, like the vast majority of European mills, has been experiencing delivery delays of late, not helped by production issues. But the company has shortened the stoppages of its hot-rolled and cold-rolled mills to 12 days over the Christmas period in a bid to catch up and build stock at its finishing units.

By Colin Richardson

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