- Wednesday, April 24, 2024
By: Radhakrishna N S
THE EUROPEAN arm of Indian conglomerate Tata Steel is on its way to cut 1,250 jobs in a bid to improve profitability in the region.
Tata Steel Europe chief executive officer Henrik Adam said in a memo seen by Reuters: “Our financial situation is serious, and there’s an urgent priority to improve the performance of the business and our cash position.”
The Indian steel giant said it will not replace employees who have retired or left the company.
The latest information on the proposed job cuts is that it would be less than 50 per cent of what the company had declared last year.
Last year, the Mumbai-based steel group had announced to axe 3,000 jobs across its European plants.
Tata Steel has reportedly outlined details of a transformation programme and continues to be in talks with its European works council to reduce the job losses, according to the memo.
Adam added: “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.”
Following the news over Tata Steel’s latest plans, the UK’s Unite union has called for “urgent talks” with the business to discuss the implication on the company’s British operations, including the Port Talbot site in South Wales.
Tony Brady, Unite officer for Tata Steel, said: “Unite is today (10) calling for urgent talks with Tata Steel management to ascertain the exact implications for jobs in the UK, especially in Wales where the company has a large presence.
“Although the figure for possible job losses across Europe now appears to be smaller than originally thought, we will campaign against any job losses. We don’t believe that the company’s plans, which are centred on cost cutting, are the answer.
“We will be seeking cast iron assurances on future investment and employment. What top executives need to focus on is reversing years of underinvestment.
“We appreciate that the UK industry continues to face unique challenges, such as the high energy costs compared with its European competitors, but we will not stand by and let one of the cornerstones of British industry be reduced even further.”
Last year, Unite, Britain and Ireland’s largest union, said it was not prepared to stand by and let possible job losses to go ahead at the Port Talbot plant in Wales and at other sites across the UK, which employ a total of about 8,500 workers.
During the third quarter of financial year 2020, the overall slowdown was more pronounced for Tata Steel’s European business due to seasonal weakness and elevated levels of unfairly priced imports.
In the quarter ended in December, Tata Steel Europe’s liquid steel production grew by around three per cent quarter on quarter (QoQ) to 2.51 million tonnes, whereas deliveries grew by approximately three per cent QoQ to 2.35 million tonnes.
The European business of the company reported a loss of Rs 9.56 billion (£100 million) in the third quarter of 2020 at earnings before interest, tax, depreciation and amortisation (EBITDA) level, primarily due to £75 per tonne decline in realisations, which weighed down its consolidated performance.
The Jamsetji Tata founded company recorded a consolidated net loss of Rs 12.2853bn (£128.59m) for the quarter ended December 31. It had reported a net profit of Rs 17.5307bn in the same period in 2019.
Tata Steel Europe has refinanced its €1.75bn external borrowings last year. The refinancing was at more flexible terms and better pricing and has also improved the debt maturity profile.
