News / Tata Steel cuts 500 jobs, blaming industry slump and green levies
Date: 2013-10-31
Tata Steel cuts 500 jobs, blaming industry slump and green levies
Tata Steel is cutting almost 500 jobs in Scunthorpe, Cumbria and Teeside, blaming a slump in demand across the European construction industry and the cost of green levies.
Announcing the cuts, the company and its biggest union called on the government to do more to support the steel sector by helping with exports and encouraging use of UK steel in building projects.
About 340 jobs will go in Scunthorpe, Lincolnshire, where Tata employs 4,000 workers. Almost a third of the 300 workers at Workington in Cumbria will lose their jobs and 40 jobs will go at Teesside, where Indian-owned Tata, which owns what was once British Steel, employs 1,500 people. The cuts come less than a year after 900 steel job losses, mainly in Port Talbot, Wales. Tata said then that the cuts were part of a plan to cope with terrible market conditions.
Karl-Ulrich Köhler, Tata Steel's European chief executive, said: "European steel demand this year is expected to be only two-thirds of pre-crisis levels after falls in the last two years. On top of the challenging economic conditions, rules covering energy and the environment in Europe and the UK threaten to impose huge additional costs."
The financial crisis exacerbated overproduction in the European steel industry. China's rapidly expanding capacity has also pushed up the price of iron ore, the sector's main raw material, while putting downward pressure on the price of steel.
Eurofer, which represents the steel industry, forecasts that steel consumption will fall 4.5% this year in Europe with only 0.5% growth expected in 2014.
Europe has emerged from its long recession but growth is still sluggish and manufacturing is picking up in the UK, albeit from a low base. Tata said steel is one of the last industries to benefit from economic recovery because customers can use stockpiles left over from the boom years before buying more.
Tata and the Community trade union, which represents most iron and steel workers, called on the government to do more to support the industry.
Michael Leahy, Community's general secretary, said: "The business has been dealing with a downturn in some of its markets for the past five years. Nevertheless, today's news once again reflects the fragile state of our economy and the lack of any real impetus by government to support our manufacturing base."
The union called on the government to come up with a proper strategy to support UK industry, including giving companies incentives to use UK steel instead of cheap imports for big infrastructure and building projects.
However, the Unite union accused Tata of trying to "sack its way out of a downturn". Its national officer Paul Reuter said: "We are urging the leadership of Tata Steel in the UK to look at what steps are needed to grow the company rather than slashing jobs."
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