Tata Steel to cut 1,000 jobs at Netherlands plant
It will also invest Rs5,250 crore over the same period to raise capacity to 7.7 mt per annum.
Tata Steel, world’s 10th largest steel maker, is planning to cut 1,000 jobs out of total 8,500 at its 7.2 million tonne (mt) steel plant in The Netherlands over five years under its ongoing cost pruning across its European operations.
It will also invest Rs5,250 crore over the same period to raise capacity to 7.7 mt per annum, increase product quality, mix and reliability of the plant, a company statement said.
Analysts said considering current market conditions in Europe and the US, all companies are going for cost management after having suffered in the 2008 recession.
ArcelorMittal, the world’s largest steel company, announced shutdown of one of its blast furnace in Germany due to reducing demand for steel.
“Due to the current seasonal slowdown and some regional demand fluctuations in Europe, ArcelorMittal is optimising production flows and aligning production capacities to seasonal demand,” the company had said in a statement on September 7.
While Tata Steel did not attribute job cuts to any demand slowdown, analysts say the move to invest in low-cost blast furnace operations and shift its product mix.
“There is an overcapacity situation in Europe and the only way for companies to maintain profitability is to shift their product mix and cut costs,” said an analyst with an international brokerage firm.
The company will also look at adding high-margin products and getting rid of its low-margin long product portfolio, he said. The investment and job cuts will not add to its debt pension liability burden, as they would be made over a period of five years and have been factored in by the company in its annual capex spread over the period, he said.