Tata Steel set to cut 3,000 European jobs as part of a ‘transformation programme’

Tata Steel to cut employee numbers by up to 3,000 across it’s European operations.

The steelmaker outlined the proposals as part of a “transformation programme” in Europe.

It says the move is needed to “ensure the business can thrive despite severe market headwinds which have led to a sharp decline in profitability.”

Tata highlighted plans to urgently improve its financial performance to make sure the European business becomes “self-sustaining and cash positive.”

Of the 3000 job losses around two-thirds of are expected to be office-based roles.

According to Dutch media 1500 jobs will go in the Netherlands. 

It’s not known if any roles will be lost at Tata’s Steel plant in Shotton.

Henrik Adam, CEO of Tata Steel in Europe, said:

“Today we are highlighting important proposals towards building a financially strong and sustainable European business.

We plan to change how we work together to enable better cooperation and faster decision-making.

This will help us become self-sustaining and cash positive in the face of unprecedented severe market conditions, enabling us to lead the way towards a carbon-neutral future.”

The programme is focused on four areas to improve financial performance:

• Increasing sales of higher-value steels by improving product mix and customer focus;
• Efficiency gains by optimising production processes, supported by the application of big data and advanced analytics;
• Lowering employment costs, leading to an estimated reduction in employee numbers of up to 3,000 across Tata Steel Europe’s operations, about two-thirds of which are expected to be office-based (‘white collar’) roles;
• Reduction of procurement costs through smarter sourcing and strengthening cooperation with companies within the Tata Steel group

A company statement said: 

“Through its proposed transformation programme, Tata Steel Europe is initially targeting a positive cash flow by the end of its financial year ending March 2021. It is also aiming for an EBITDA margin of around 10% throughout the market cycle.

Based on full year 2019 revenue figures, this would equate to £750 million in EBITDA. With improved earnings and cash flows, Tata Steel Europe will be a financially self-sustaining business able to invest in asset reliability and improvements while also servicing its financial obligations to its lenders and shareholders.

A transformation is needed to mitigate the current structural and cyclical headwinds and create the foundation for the company’s future success.

Stagnant EU steel demand and global overcapacity have been compounded by trade conflicts which have turned the European market into a dumping ground for the world’s excess steel capacity. Together with a significant increase in the cost of emission allowances, this has created an urgent need for improvements to the company’s financial performance.

In the first six months of its current financial year (starting April 2019), Tata Steel Europe reported a drop of 90% in EBITDA to £31 million. Revenue was £3.25 billion.

Tata Steel Europe will engage with various stakeholders to ensure compliance with all European and national ”