Steel giant Tata has confirmed plans to shed 3,000 jobs across its European operations against the backdrop of a tough trading environment, which it said was being exacerbated by excess global steel production being dumped into the EU as the result of global trade disputes.
The Indian-owned firm, which employs 21,500, in the 海角视频 and Holland, said that two-thirds of the proposed job losses would be office-based roles in a major restructuring of the business which it said was needed to improve its financial perrformance.
In the 海角视频 Tata Steel Europe employs around 8,000 of which 5,000 are in Wales, where the majority - around 4,000 - work at its primary steelmaking plant in Port Talbot.
Tata said it couldn't say at this stage how many jobs in Wales and the rest of the 海角视频 could be lost.
It added that proposals will be discussed with employees and trade unions first.
Earlier this year, Tata abandoned a proposed merger with German firm ThyssenKrupp, to create a new European steel powerhouse.
In statement Tata Europe said the restructuring was needed to "mitigate against the current structural and cyclical headwinds" and "create the foundations for the company future success."
It said that stagnant EU steel demand and global overcapacity have been compounded by trade conflicts, including escalating tariffs between the US and China, which it said had turned "the European market into a dumping ground for the world’s excess steel capacity."
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Together with a significant increase in the cost of emission allowances, Tata said this had created an urgent need for improvements to the company’s financial performance.
Henrik Adam, chief executive of Tata Steel Europe, said: "We plan to change how we work together to enable better cooperation and faster decision-making. This will help us become self-sustaining and cash positive in the face of unprecedented severe market conditions, enabling us to lead the way towards a carbon-neutral future.”
Welsh Government Economy Minister Ken Skates said he wanted to meet with officials from the company to establish what it meant for workers in Wales.
He said: "This news is very disappointing and reflects the extremely challenging environment faced by steel producers across Europe, but particularly in the 海角视频, where energy prices are much higher. At this very worrying time for Tata Steel employees and their families, we will do everything in our power to support them."
Roy Rickhuss, general secretary of the steelworkers’ trade union, Community, said: “This is a shocking announcement, which will worry many steelworkers and their families in the 海角视频 and across Europe.
"This news has been badly handled and the company should hang its head in shame with the way this development has been communicated. The workforce should not pay the price for the failure of the joint venture with Thyssenkrupp nor the lack of a plan B when the JV talks collapsed.
" We secured a jobs guarantee until 2021 and we will be robustly defending that agreement. We want a long-term vision for the future of steelmaking in Tata Steel Europe, not the management of decline by 3,000 job cuts.
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“While company management are responsible for the direction they are taking, yet again we must call for more action to create a level playing field for 海角视频 steel businesses.
"Our steel producers continue to face higher energy costs, high business rates and competition from cheap imports. Government attempts to address these longstanding issues have not created the environment our steel companies need to compete effectively in a global market.”
Tata said its programme is focused on four areas to improve financial performance:
- Increasing sales of higher-value steels by improving product mix and customer focus.
- Efficiency gains by optimising production processes, supported by the application of big data and advanced analytics.
Lowering employment costs, leading to an estimated reduction in employee numbers of up to 3,000 across Tata Steel Europe’s operations, about two-thirds of which are expected to be office-based.
Reduction of procurement costs through smarter sourcing and strengthening cooperation with companies within the Tata Steel group.
In September, Tata announced plans to close its Orb Electrical Steels plant in Newport with the loss of nearly 400 jobs. It announced the decision after a sales process for the plant failed to find a buyer.
In the first six months of its current financial year, starting April 2019 - Tata Steel Europe reported a 90% decrease in its earnings before interest and tax to £31m.
Through its proposed" transformation programme", Tata Steel Europe is initially targeting a positive cash flow by the end of its financial year ending March 2021.
It is also aiming for an Ebitda margin of around 10% throughout the market cycle.
Based on full year 2019 revenue figures, it said this would equate to £750m in Ebitda With improved earnings and cash flows, it added it would be a financially self-sustaining business able to invest in asset reliability and improvements while also servicing its financial obligations to its lenders and shareholders.