Tata Steel to cut 500 jobs in UK

Tata Steel, Europe's second-largest steel producer, has announced it could cut around 500 jobs under plans to restructure the part of its British business that supplies the construction and engineering industries.

Changes to its long products business - which makes tubes, rails and rods, used in many industrial sectors - will affect management and administrative jobs at sites in northern England, primarily Scunthorpe, where 340 positions could be lost, Tata said.

It blamed a prolonged downturn in demand, particularly for construction steel in Britain, a market that is at about half of 2007 levels.

Fall in steel demand
"European steel demand this year is expected to be only two-thirds of pre-crisis levels after falls in the past two years," Karl Koehler, CEO of Tata Steel's European operations, said.

"On top of the challenging economic conditions, rules covering energy and the environment in Europe and the UK threaten to impose huge additional costs on the steel industry."

The US$ 500 billion/yr steel industry, a gauge of the health of the global economy, has suffered from a drop in demand from austerity-hit Europe and worries about the outlook for the Chinese economy.

Tata has battled tough conditions in Europe almost since taking over steelmaker Corus in 2007, just before the global financial crisis, and this week’s cuts follow a major restructuring of its long products unit in 2011, with the loss at the time of about 1500 jobs in Britain.

Details of the job losses
About 340 jobs will go in Scunthorpe, Lincolnshire, where Tata employs 4000 workers. Almost a third of the 300 workers at Workington in Cumbria will lose their jobs and 40 jobs will go at Teesside, where Indian-owned Tata, which owns what was once British Steel, employs 1500 people.

The cuts come less than a year after 900 steel job losses, mainly in Port Talbot, Wales. Tata said then that the cuts were part of a plan to cope with terrible market conditions.

Financial crisis hit steel manufacturers
The financial crisis exacerbated overproduction in the European steel industry. China's rapidly expanding capacity has also pushed up the price of iron ore, the sector's main raw material, while putting downward pressure on the price of steel.

Eurofer, which represents the steel industry, forecasts that steel consumption will fall 4.5% this year in Europe with only 0.5% growth expected in 2014.

Europe has emerged from its long recession but growth is still sluggish and manufacturing is picking up in the UK, albeit from a low base. Tata said steel is one of the last industries to benefit from economic recovery because customers can use stockpiles left over from the boom years before buying more.

Announcing the cuts, the company and its biggest union called on the government to do more to support the steel sector by helping with exports and encouraging use of UK steel in building projects.

Tata and the Community trade union, which represents most iron and steel workers, called on the government to do more to support the industry.

Michael Leahy, Community's general secretary, said: "The business has been dealing with a downturn in some of its markets for the past five years. Nevertheless, today's news once again reflects the fragile state of our economy and the lack of any real impetus by government to support our manufacturing base."

The union called on the government to come up with a proper strategy to support UK industry, including giving companies incentives to use UK steel instead of cheap imports for big infrastructure and building projects.

However, the Unite union accused Tata of trying to "sack its way out of a downturn". Its national officer Paul Reuter said: "We are urging the leadership of Tata Steel in the UK to look at what steps are needed to grow the company rather than slashing jobs."

Edited from various sources by Elizabeth Corner

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