Friday, February 5, 2016

News: Tata calls for more action on imports as losses rise

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Tata Steel has reported a loss of £68m for the quarter which saw the Indian-owned steelmaker confirm proposals to cut thousands of jobs from its UK workforce.

Tata Steel has for a long time been warning that continuing cheap imports risk undermining Europe's steel industry and that uncompetitive energy costs and the strength of sterling are hurting its UK operations. 720 jobs that are at risk - including 500 in Rotherham - as Tata Steel works through proposals to restructure its speciality and bar business. 1,000's of jobs are under threat in Scunthorpe and Scotland.

The company again used its latest financial update to reiterate the "headwinds" faced by the steel industry in Europe.

With a decline in liquid steel production and turnover, a pre-tax operational loss of £68m was reported for the three months to the end of December, a rise from £25m in the previous quarter and a big change to the profit of £132m reported in the same period last year.

The statement said: "Surging imports into Europe exerted further pressure on margins in the last quarter. The unprecedented market conditions, made worse by the UK's regulatory costs and strong pound, led to announcements to reduce jobs and mothball assets in the UK – part of an ongoing transformation programme. Regulatory action on a European and national level is needed to enable the business to compete fairly."

Dr Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: "Growing European steel demand continues to be undermined by a flood of imports into the region. Chinese steel shipments into Europe leapt more than 50% last year, while imports from Russia and South Korea jumped 25% and 30% respectively. The European steel association has identified that Chinese steel is being exported at prices below the cost of production. This unfair trade is undercutting domestic producers and harming the European steel industry which employs many thousands of people and is at the foundation of much of the region's cutting-edge innovation. That's why we are calling on the European Commission and national governments to speed up and strengthen action against unfair trade.

"This perfect storm caused the deterioration of our financial performance in the last quarter and led to us announcing restructuring in the UK where our operations also face higher regulatory costs. These changes will continue to be a core focus in a bid to improve our competitiveness and enable us to concentrate on supplying higher-value products to customers.

"Making our customers more successful is key to our long-term differentiation strategy. With another 30 new product launches this year, we are making progress."

In South Yorkshire, sites like Stocksbridge in Sheffield and Aldwarke in Rotherham, focus on exceptional high-value products and sectors such as aerospace. The European business is continuing on "its customer focus journey" by developing differentiated and innovative products and services which make its customers more competitive.

Announced in July 2015, the next stage in its plans to refocus its speciality and bar business on high-value markets such as aerospace included changes that would result in a reduction in employee numbers, mainly at its Rotherham-based bar business. Tata said that the bar business in Rotherham has been "underperforming in the face of commodity-grade steel being imported to the UK due to the strong pound and high electricity costs which are more than double those of key European competitors."

Tata Steel website

Images: Tata Steel

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