Tata Steel, the largest steelmaker in Britain, announced on Thursday plans to cut up to 720 jobs at its plant in northern England as it revamps it speciality and bar business to focus more on high-value segments like aerospace in a bid to come out of the red.
Most of the jobs will go from its steel bar-making plant in Rotherham, South Yorkshire, which has been underperforming owing to cheap imports and high electricity prices in Britain, and around 35 will be cut from its West Midlands plant by March 2016.
The announcement comes a day after Tata Steel, Europe's second-largest steelmaker, settled its UK arm's pensions dispute with trade unions that brought the firm to the brink of the biggest industrial dispute there in over three decades.
Karl Koehler, chief executive of Tata Steel's European operations, blamed the forced redundancies on rising energy costs."Energy is one of our largest costs at our speciality and bar business and we are disadvantaged by the UK's cripplingly high electricity costs. And, while the UK government announced helpful measures to reduce the impact of its high energy taxes a few years ago, these measures still haven't been introduced," Koehler said.
Electricity costs in the UK are more than double compared to its key European competitors."I realise how distressing this news will be for all those affected, but I am also extremely aware of our responsibility towards the ongoing survival of this business, which will continue to employ about 1,500 people," he added.
Tata Steel said it would be working closely with those at risk of losing their jobs to redeploy people and minimise compulsory redundancies.Mark Broxholme, managing director of Tata Steel's speciality and bar business, said the company was forced to act under the economic circumstances.
"Today, we are the world's third largest supplier of aerospace steels and we want to build on this. Today's announcement about reshaping the bar business is the next stage in that journey and would give it the best chance to succeed in these fiercely-competitive markets," he said.
Meanwhile, in a Bombay Stock Exchange (BSE) filing in India, Tata Steel, parent firm of Tata Steel Europe, said: "Tata Steel today announced the next stage in its plans to refocus its speciality and bar business on high-value markets such as aerospace.
The proposed changes would result in a reduction in employee numbers, mainly at its Rotherham-based bar business."The company further said: "Tata Steel has identified 720 positions which will potentially become redundant."