Tata Steel is thinking about mass layoffs in Europe due to the situation in the steel market
The European division of the Indian steel company Tata Steel plans to increase profits through restructuring, involving job cuts at the company's main plants in the UK and Holland, according to the Financial Times.
Henrik Adam, who took over as CEO of Europe's third-largest steel producer in July, said he aims to make the Indian company "promising in every way" as it faces "a huge number of challenges." Their main sources are declining demand for steel, trade wars and environmental pressure on the industry.
According to the Financial Times, Tata Steel Europe could gradually cut labor costs by £ 150 million, as well as save on raw material purchases and focus on bar sales. According to the company's announced plan in 2020, Tata Steel Europe should receive pre-tax profit (EBITDA) in the amount of 750 million pounds sterling. This is almost 200 million more than EBITDA of 576 million pounds in 2018-19.
According to Adam, the question of the scale of future reductions has not yet been finally decided. However, they will not bypass any of the enterprises in Europe, where a total of about 20 thousand people are employed, although there is no talk of closing the factories yet.
“It's not just about cutting costs. I think it's fair to say what we're aiming for: it's not just an increase in profits, it's a fundamental change in the business, ”Adam explained in an interview with the Financial Times.
Like other European steelmakers, Tata sees profits shrinking on the back of rising raw material prices and falling steel prices as orders in key areas such as the automotive industry slump amid an industrial slowdown.
The sector's difficulties are exacerbated by rising carbon prices, as well as the aftermath of the US-China trade war, which has led to an increase in Chinese steel supplies to the region.
“We have a fairly liberal import policy in Europe. As a consequence, imports from different regions of the world that go to Europe are due to the fact that in other regions the rules are stricter, ”explains Adam, noting that it is time for the EU to tighten regulation.
Recall that on Saturday, the largest steel producer in Ukraine, Metinvest Group announced plans to cut costs and layoffs of up to 30% of factory administration employees. Rinat Akhmetov's company notes that a global crisis has begun on the steel market.