Tata Steel to shut European longs unit after sale plan falls through


  • 20 Oct 2015
Tata Steel to shut European longs unit after sale plan falls through
Other | Credit: Reuters

Tata Steel will cut around 1,200 jobs in Europe, with the UK being the worst hit, under a planned restructuring to deal with "flood of cheap imports" from China and other places.

The company, which will stop making steel plate at its Long Products Europe business, also blamed high power costs a strong pound for the proposed moves.

"As a result, Tata Steel has been forced to make changes to its Long Products Europe business. The proposed changes would lead to around 1,200 job losses - about 900 in Scunthorpe and 270 in Scotland as well as a small number at other Long Products Europe sites," it said in a statement.


The business announced proposals to stop production of steel plate. This comes in response to a shift in market conditions caused by a flood of cheap imports, particularly from China, a strong pound and high electricity costs, it added.

Plate mills in Scunthorpe, Dalzell and Clydebridge would be mothballed, while one of the two coke ovens at Scunthorpe steelworks would be closed, Tata Steel said.

Tata Steel Europe Head Karl Koehler said: "I realise how distressing this news will be for all those affected. We have looked at all other options before proposing these changes. We will work closely with affected employees and their trade union representatives. We will look to redeploy employees, wherever possible, and minimise employee hardship." 


The UK steel industry is struggling for survival in the face of extremely challenging market conditions. The industry has a crucial role to play in rebalancing the UK economy, but it needs a fairer system to encourage growth, he added.

The European Commission needs to do much more to deal with unfairly traded imports inaction threatens the future of the entire European steel industry, Koehler said.

In last two years, imports of steel plate into Europe have doubled and imports from China have quadrupled, causing steel prices to fall steeply. At the same time, a strong pound has undermined competitiveness of the business's Europe-bound exports and encouraged more imports, Tata Steel said.


To counter the situation, the firm is concentrating on higher-value markets with a focus on developing stronger and lighter products for its customers.

Executive Chairman of the Long Products Europe business Bimlendra Jha said: "We are looking closely at the performance of all parts of Long Products Europe as part of a focus on returning to profitability." 

The consultation process with Tata Steel employees and their trade union representatives begins today. Its subsidiary UK Steel Enterprise will look at how it can provide more support to the local communities affected by the announcement and help stimulate new job creation in those areas.


The consultation process with Tata Steel employees and trade union representatives begins today.

Tata Steel's subsidiary, UK Steel Enterprise, will look at how it can provide more support to the local communities affected by the announcement and help stimulate new job creation in those areas.

Data from trade association UK Steel shows the company has about 14,000 people involved in steel making.


The losses come as imports of cheap Chinese steel and high energy costs put intense pressure on the UK industry.

It follows news of the closure of SSI's Redcar plant last week and a number of Caparo Industries steel units being put into administration yesterday.

The steel crisis also dominated UK Parliament yesterday as Opposition Labour leader, Jeremy Corbyn, challenged British Prime Minister David Cameron to take up the issue with China during President Xi Jinping's state visit to the UK this week.

"Will we raise it with the Chinese? Of course, we'll raise all these issues. That is what our relationship with China is all about. It is at such a high-level that there is no subject off the table and all of these issues, including the steel industry, of course will be discussed," Cameron told the House of Commons.

Roy Rickhuss, the general secretary of steelworkers' union Community said: "We have had a succession of ministers and now the Prime Minister saying that they will raise the issue of Chinese steel dumping, which we know is impacting on the UK steel industry and the global steel price.

"The Prime Minister needs to do more than raise the issue.

He needs to tell the Chinese premier what action he's going to take to stop Chinese steel damaging the future of a vital foundation industry in the UK. The jobs going at Tata Steel are in part of a division that the company failed to sell earlier this year." 

John Park Assistant General Secretary of trade union Community said: "The significance of this is that it could be the end of steel production in Scotland.

"Tata Steel have to be persuaded to mothball the site rather than close it and the Scottish government has to have a role in keeping the infrastructure secure and supporting short-time work until a future can be secured.

"In the 1970s, more than 200,000 people were employed in the UK steel sector, but the number now stands at just 30,000.

Workers' unions say that one in six of those jobs is now under threat.

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