Corus, Britain’s largest and world’s ninth biggest steelmaker, which was bought by Tata for £6.7 billion two years ago, is reportedly going to cut up to 3,500 jobs this week. The cut is one of the biggest setbacks to the faltering sector, but has not come as a surprise.
According to figures released last week by the World Steel Association, production worldwide dropped by a quarter in December, and this forced Corus to take the decision sooner than was planned.
Union leaders had been in last-ditch talks with the government in an attempt to fend off some of the job cuts in the steel industry.
In case of Corus, they pressed ministers to adopt a system offered by the Dutch government, for its operations in the Netherlands. There the state makes up the pay of workers put on short working weeks. But so far it was not clear, said the Sunday Times, whether the Government had accepted it and insisted that Corus will go ahead with the job cuts. The cuts were reportedly part of a long-term restructuring plan drawn up by the outgoing chief executive Phillipe Varin.
The only respite in the gloom seems to be that trimming of the workforce is not going to lead to the closure of any large Corus sites.
“This is not about site closure. This is about making Corus in the UK competitive,” said an industry insider.
The job cuts in Corus is a major incident and will overshadow a likely announcement by Business Secretary Lord Mandelson of aid for the car industry.
Loan guarantees to car-finance firms will be one of the much-anticipated measures aimed at kick-starting demand. What will however be of much discussion in the business circles are further large-scale job losses in Jaguar Land Rover.
About 1,500 lay offs are expected within weeks at JLR. Even Toyota, which had so far refrained from cuts despite the downturn in the automobile industry, was now reported to be looking at trimming staff at its UK operations.