Tata Steel to transform Netherlands operations, plans to cut 1,600 jobs

Tata Steel's Netherlands operations were impacted in FY24 due to a delay in the relining of one of the blast furnaces

Tata Steel on Wednesday announced plans of cutting 1,600 jobs in the Netherlands as part of a transformation programme. This comes as the Dutch unit of the steel major battles escalating costs amidst economic uncertainty.

 

Tata Steel Netherlands’ operations were impacted in FY24 due to a delay in relining one of the blast furnaces. In FY25, liquid steel production volumes were near capacity at 6.75 million tonnes per annum.

 

However, challenging demand conditions in Europe, driven by geopolitical developments, trade and supply chain disruptions and escalating energy costs, have affected the operating costs and financial performance, Tata Steel said in a statement.

 

The company said that it was committed to ensuring that its Netherlands operations becomes one of the most competitive, successful and efficient in Europe.

 

In order to achieve this, Tata Steel Nederland (TSN) has adopted a transformation programme built on a multi-pronged approach of maximizing production efficiencies, lowering fixed costs and optimising product mix and margins, it said.

 

The reorganisation is expected to lead to a loss of 1,600 management and support function roles. The total workforce of TSN is approximately 12,000 employees across Europe, of which 9,000 are at the Ijmuiden site.  

 

As part of the programme, the total cost improvements vis-à-vis FY25 in FY26 is expected to be in excess of €500 million. The people cost part will flow in this year and also on a full-year basis in FY27.

 

Tata Steel on Wednesday submitted a Request for Advice for the transformation plan to the Central Works Council and trade unions have been informed. The Central Works Council is a group consisting of Tata Steel Nederland employees. 

 

The company said that over the weeks, an effective and comprehensive consultation process will be run on the proposed changes.

 

T V Narendran, chief executive officer and managing director of Tata Steel and Chairman of the Supervisory Board of Tata Steel Nederland, said: “We are working closely with the Dutch government and other stakeholders, and are in constructive discussions about our joint investments in the Green Steel plan going forward.”

 

“This transformation is a building block towards a future where we ensure that TSN has the required robust operating and financial profile enabling it to move towards its future as one of the best and most sustainable steel companies in Europe,” he added

 

In an investor call, Koushik Chatterjee, executive director and chief financial oifficer, Tata Steel, said the company was proactively taking measures to ensure the operations remain “fit for purpose” and “fit for the transition”, and continue to generate positive cash flows.

 

Highlighting the challenging operating environment in Europe, he said that elevated energy and carbon costs weighed in on steel spot spreads over the last couple of years. Steel spot spreads in the third quarter were at multi-year lows of about €170 per tonne versus average historical levels of about €240 per tonne.

 

Meanwhile, in the UK, Tata Steel has signed contracts with suppliers for a pickling line, a key component of steelmaking for its Port Talbot site. 

 

This is a part of the transition from blast furnace to electric arc furnace-based green steelmaking entailing an investment of £1.25 billion (includes £500 million of support from the UK government). The move impacts about 2,800 jobs.  

The issue as it is

  Tata Steel to cut 1,600 jobs in the Netherlands, mainly in management and support roles

  Restructuring part of a comprehensive transformation programme to tackle high costs and weak demand

  FY24 operations were hit by blast furnace relining delays; FY25 steel output was 6.75 mtpa

  Geopolitical tensions, energy costs, and supply chain issues impacted profitability

  The restructuring aims to boost efficiency, reduce fixed costs, and improve margins

  Total workforce at TSN is around 12,000, with 9,000 at the Ijmuiden site