Tata Steel, the biggest steelmaker in Britain, is expected to axe more than 1,000 jobs, on top of the 1,170 cuts it announced last year, due to low steel prices.
PORT TALBOT, WALES, UK (JANUARY 18, 2016) (ITN) – Britain’s largest steelmaker Tata Steel Ltd said on Monday (January 18) that it would cut 1,050 UK jobs, in another blow for an industry reeling from cheap imports and tumbling world prices.
The plan involves shedding 750 jobs at Tata’s Port Talbot-based strip products business in Wales, 200 jobs in support functions and 100 jobs at steel mills around the country, the company said in a statement.
The announcement comes as European Union steel prices hit their lowest since 2004. Some 4,000 British steel jobs were lost in October 2015 alone, equivalent to about a fifth of the sector’s workforce.
“We’ve been losing significant amounts of money and I think it’s a prudent and vital action that we actually take to preserve the jobs of 3,500 employee employees who will remain here working,” said Stuart Wilkie, a director at Tata Steel.
In November, the European Commission failed to agree on measures to protect the steel industry, such as cutting the time it takes to impose anti-dumping duties.
The Commission is also considering granting China “market economy status”, which will make it harder for Europe to impose the duties.
China makes nearly half the world’s 1.6 billion tonnes of steel, and exported over 100 million tonnes of the alloy last year, more than four times the 2014 shipments from the European Union’s largest producer, Germany.
But China has also fallen victim to global over-supply and slumping demand, with its major steel firms losing 53.1 billion yuan ($8.07 billion) from January to November last year.
“I think if we don’t stem the flow of tsunami of Chinese imports into the UK we will certainly see further job losses. The price of steel is coming down and down and China are the main culprits here, they’re selling steel at an under market price,” added Gareth Stace, Tata’s Director of Steel.
British union GMB called for a protest in Brussels on Feb 15 to get the Commission to deal with the Chinese steel ‘dumping’, while the Unite union said the Britain’s failure to act had left the industry “on the verge of ‘wipe out'”.
The UK government has tried to tackle high energy costs, green taxes and government procurement policy. It has also supported anti-dumping action in steel at the EU level, and pledged action on business rates.
But a government report published last month said the future of Britain’s steel sector is still not secure.
Britain is at the centre of Europe’s steel crisis as its mills pay some of the world’s highest energy costs and green taxes, while business rates are up to 10 times higher than EU counterparts.
James Bevan, chief investment officer said he would be surprised if Tata leaves the UK altogether.
“It may certainly want to further reduce production in the near term depending on the upturn in overall global supply and demand conditions. But the UK does have significant opportunity for Tata for the long term and as a strategic thinker I would expect Tata to observe that reality and therefore to remain in place.”
The Port Talbot site employs some 4,000 people and is expected to report annual losses above £60 million ($86 million) by the end of March 2016, an industry source told Reuters. A separate source said Tata Steel had not yet approached restructuring advisors.
It is estimated that for every direct steel sector job lost, three or four jobs are cut in sectors that depend on steelmaking.
“It’ll generate poverty and deprivation if the steel industry closed as the mines did,” said Graham Rowlands, former steel worker.
Tata Steel took a non-cash charge in the quarter to end-September totalling 87 billion Indian rupees ($1.3 billion), mostly due to losses at its British business.
The company, a unit of India’s Tata conglomerate, has slashed costs and cut thousands of jobs since buying Anglo-Dutch producer Corus in 2007.