Tata Steel Europe will lay off considerably fewer employees than originally announced under its “transformation” program designed to combat “very challenging” market circumstances, CEO Henrik Adam told employees late Monday. However, consultations on layoffs at the steelmaker will start as soon as early April as it speeds up its reorganization after losses last year.
“Although it’s good news that we are able to minimise the impact on our current employees, we need to progress with speed to secure the future for the business,” Adam warned.
The number of proposed job cuts throughout the whole Tata Steel Europe business — including some operations and offices outside Europe — is now to be reduced to 1,250, compared with the total of 2,950 that had been announced last November — comprising 1,600 jobs in the Netherlands, 1,000 in the UK and 350 elsewhere in the world.
Tata Steel Europe currently employs around 21,500. Its assets include the 3.85 million mt/year integrated Port Talbot steelworks.
“We have identified a range of measures, including not replacing employees who have retired or left the business, which would minimise job losses within the current workforce to 1,250 across the European business,” Adam said in a memo to employees following conversations with the European Works Council.
Although details of the transformation program are still being thrashed out with the Works Council, the priority is now to speed along arrangements to “urgently improve the profitability of the business as well as enable annual investments to accelerate the development of new high-value products and help decarbonise steelmaking,” Adam said in his note. Consultations will therefore start in early April on the proposed organizational changes with the relevant national employee representatives, he said.
Tata Steel Europe plans to make a specific push on packaging, automotive and engineering steel products as it lifts its profile as a higher-value products producer in a drive to improve its financial performance.
The company also aims to optimize production processes, supported by the application of big data and advanced analytics, and improve customer focus.
The transformation program was introduced November “to address long-term industry challenges as well as severe short-term market headwinds which have led to the business losing GBP76 million on an EBITDA basis during the first nine months of the financial year,” ending December 2019, Adam said.
“The transformation programme targets GBP650 million EBITDA uplift, GBP500 million of which is as a result of productivity improvements and increased sales of higher-value steels,” he added.
— Diana Kinch