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Forced to make changes to its Long Products Europe business due to a shift in market conditions, Tata Steel expects to layoff about 1,200 employees.
According to a press release, a flood of cheap imports, particularly from China, a strong pound and high electricity costs, have led the firm to announce proposals to stop its production of steel plate.
The proposed changes are expected to result in around 1,200 layoffs – about 900 in Scunthorpe and 270 in Scotland as well as a small number at other Long Products Europe sites.
The company plans to mothball its plate mills in Scunthorpe, Dalzell and Clydebridge and close one of the two coke ovens at the Scunthorpe steelworks.
Karl Koehler, chief executive of Tata Steel’s European operations, 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.”
Tata Steel is set to begin the consultation process with its employees and their trade union representatives immediately.
Simultaneously, the company’s subsidiary UK Steel Enterprise will look at ways to provide more support to those affected by the layoffs and help stimulate new job creation in those areas.
The press release noted that over the last four decades Tata Steel has helped to regenerate local economies with £88 million of support and has created more than 75,000 new jobs across the UK.
In the last two years, imports of steel plate from China have quadrupled and imports into Europe have doubled, causing a sharp drop in steel prices.
At the same time, a stronger pound has reduced the price competitiveness of the business’s Europe-bound exports, and encouraged more imports.
As such, Tata Steel will be concentrating on higher-value markets with a focus on developing stronger and lighter products for its customers.
“The UK steel industry is struggling for survival in the face of extremely challenging market conditions. This industry has a crucial role to play in rebalancing the UK economy, but we need a fairer system to encourage growth,” Koehler commented.
“The European Commission needs to do much more to deal with unfairly traded imports – inaction threatens the future of the entire European steel industry.”