Tata Steel to shut some operations in Europe, affecting around 400 jobs

Inks deal with JFE for Cogent Power

Tata Steel said on Monday that it proposed to close two sites in the United Kingdom, affecting around 400 jobs.

The company in May 2018 had announced about the potential sale of five non-core businesses. Buyers had been found for Kalzip and Firsteel earlier, a move that helped secure 275 jobs. Tata Steel on Monday said that it had signed a sales and purchase agreement with Japanese steel giant JFE Shoji Trade Corporate for Cogent Power Inc (CPI), which is part of Cogent Electrical Steels, one of the five non-core businesses. CPI manufactures cores for electrical distribution transformers and employs nearly 300 people.

Cogent Electrical Steels, however, is made up of Orb Electrical Steels in Newport South Wales and Surahammars Bruks AB in Sweden, apart from CPI in Burlington, Canada.

Tata Steel said it had decided to retain Surahammars Bruks AB, which makes advanced steels for electric vehicles and employs 100 people. “However, despite exploring all options, Tata Steel has been unable to find a way forward for Orb Electrical Steels and so proposes to close the site, with the potential loss of up to 380 jobs,” the company said.

Henrik Adam, chief executive officer, Tata Steel’s European operations, said, “We have been able to secure the future for almost 400 colleagues in CPI and Surahammars Bruks. However, today’s proposal will be sad news for colleagues at Orb in South Wales. This is necessary, enabling us to focus our resources, including investment, on our core business and markets, helping us build a long-term sustainable future in Europe.”

The announcement evoked a sharp response from the UK and Ireland’s largest trade union, Unite, which said it would fight for every job and demanded that there would be no compulsory redundancies from Tata Steel. Unite officer for Tata Steel said, “The closure of the Orb electrical steel base in Newport is yet another body blow for the economy of Wales. Unite will fight for every job and holding Tata Steel’s feet to the fire over assurances that workers affected by today’s announcement would be redeployed. Unite will not sit back and allow decent well-paid jobs and irreplaceable skills to go to the wall. In the coming days, we will be engaging with Tata Steel and pressing for detailed guarantees.”

Tata Steel has also been unable to find a buyer for Wolverhampton Engineering Steels Service Centre in the UK and proposes to close it. This would potentially affect 26 jobs, including a sales office in Bolton.

The Orb Electrical Steels business has been loss-making for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers in which customer requirements have outstripped the site’s capability, Tata Steel. “Converting the site to create steels for future e-vehicle production would cost in excess of £50 million in a highly-competitive market where Tata Steel faces higher volume competitors both in Europe and globally,” the firm said. 

“Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. We saw no prospects of returning Orb business to profitability in the coming years,” Adam said.

After the collapse of Tata Steel Europe’s proposed tie-up with ThyssenKrupp, the aim is to make the European business self-sufficient and cash positive. Tata Steel has invested £2 billion in its UK business since the acquisition of Corus in 2007, including £100 million last year.