Corus to cut 3,500 jobs in 'body blow' to British economy
Indian-owned steelmaker Corus today announced it was shedding 3,500 jobs in a cost-cutting move described by a union boss as dealing a “body blow” to recession-hit Britain.business Updated: Jan 26, 2009 18:45 IST
Indian-owned steelmaker Corus on Monday announced it was shedding 3,500 jobs in a cost-cutting move described by a union boss as dealing a “body blow” to recession-hit Britain.
Up to 2,500 of the redundancies were expected in Corus's British plants.
The job losses were announced as part of a series of strategic and structural measures aimed at improving the competitive position of the Anglo-Dutch company that is owned by Tata Steel.
Corus, Britain's largest and Europe's No. 2 steelmaker, said the measures are expected to yield about 600 million pounds in cash benefits in the six months to the end of March and “bring annual improvements in operating profit of more than 200 mn pounds.”
“It will also put around 3,500 jobs at risk around the company as a whole,” Corus said in a statement following media reports that 2,500 of the company's 24,000 British workforce would go in the cuts.
With unemployment in Britain touching 1.92 million last year, British union bosses were expected to meet Corus management this week to discuss the plans.
Britain was officially declared to be in a state of recession last week, with figures showing the economy shrank by 1.5 percent in the final three months of last year, following a 0.6 percent fall in the third quarter of 2008.
Corus, which was bought by Tata for 6.7 billion pounds two years ago, has suffered in the current economic downturn, particularly because of a slump in the construction and automotive industries.
“Elements of the initiative comprise long-term plans that were already under consideration, but which have been brought forward as a result of the slowdown,” said the company, which employs 42,000 people around the world.
The company said it will make every effort to achieve the job losses through voluntary redundancies, whilst retaining critical skills in the business.
Corus CEO Philippe Varin said the proposed changes “are essential for the future of the business.”
“The company will keep its focus on priority areas such as training, research and product development, which, together with today's initiative, will ensure Corus is in the best possible shape to compete strongly in the future,” Varin added.
Company spokesman David Litterick said talks with the British government about providing help to the newly unemployed are ongoing, adding, “We are still hopeful that something will be agreed."
John Wilson, a spokesman official Britain's general trade union GMB, said the Corus move was "a body blow" for manufacturing in Britain.
"It is essential that the UK Government offers this industry the same support being offered to the banking sector because, just like banks, steel is the bedrock of our economy," he added.