Europe's second largest steel maker, Corus, which is part of Tata Steel, has shed 3,500 jobs, initiated divestments, asset restructuring and a company-wide efficiency review, in view of the economic downturn where demand for steel has collapsed in the global market.
Corus currently employs about 42,000 people, out of which 2,500 are being rendered redundant in the UK and another 1,000 in Europe, though the company said that it will make every effort to restrict the job losses to voluntary redundancies, whilst retaining critical skills in the business.
''The structural changes we are proposing today have been carefully considered,"Corus CEO Philippe Varin said. "They are essential for the future of the business. The company will keep its focus on priority areas such as training, research and product development, which, together with today's initiative, will ensure Corus is in the best possible shape to compete strongly in the future.''
The strategic and structural changes along with the job cuts will enable the company to improve its operating profits by more than £200 million per year, the company said.
The Tata owned steel company said it will continue to discuss with employee representatives options to match payroll costs with the new production and demand levels.
Union workers in the UK and the Netherlands are not happy with the large scale compulsory job cuts and were seeking to urgently talk with the management of Corus to minimise the job cuts. GMB union official John Wilson said that that the UK government should give the same support to the steel industry as it has given the UK banks as the steel sector is the bedrock of the country's economy.
The company also hopes to reduce costs by nearly 20 per cent by improving company- wide efficiency, including a review of support functions such as IT, finance and human resources.
The steel maker intends to make changes to the British Steel Pension Scheme, where it will not offer the Defined Benefit scheme to new recruits and the company contribution to future service for existing members will remain at 12 per cent.
The Federation of Dutch Unions, the FNV, said last week that the steelmaker in reorganising its operation in the Netherlands, may lead to axing nearly 1,000 workers out of the 9,500 at the Ijmuiden plant to save nearly €250 million. (See: Corus to cut 1,000 jobs in the Netherlands)
Corus also said that it plans to disinvest to improve company-wide efficiency. Last week it decided to sell two aluminum smelters to Briand Investments B V, an affiliate of London-based Klesch, one of the biggest private-equity firms in the metals industry. (See: Corus sells last aluminum smelters to PE firm)
In the UK Corus has already mothballed two blast furnaces at its Scunthorpe and Port Talbot plants and is now in advanced discussions on the sale of a majority stake in Teesside Cast Products, which would bring clarity to the future of the Teesside operations beyond the current offtake agreement.
It will also restructure its assets by mothballing the Llanwern hot strip mill; restructuring of engineering steels into two businesses - a specialty steels business at Stocksbridge fed by electric furnace steel from Rotherham and a bar business at Rotherham with steel sourced from the integrated works at Scunthorpe and streamline the downstream facilities in distribution, building Systems and tubes.
The impact of the economic turmoil, which has dragged many countries into recession, has also hit the steel industry with steel makers in Japan, China and Russia cutting production as demand slows and inventories rise.
Last month Corus had announced 400 job cuts to align its production with a demand slowdown in Europe, caused by the global economic downturn, in its distribution and building systems division in its units at Shotton, Wolverhampton, South Wales and Leeds. (See: Corus raises production cuts to 30 per cent; axes 400 jobs)
Europe's second largest steel producer with annual revenues of more than £12 billion and annual crude steel production of about 20 million tones, had approached the UK government last month seeking aid to tide over the present economic slowdown by helping it pay workers 70 per cent of their wages while the company pays the rest, which would temporary idle thousands of Corus workers at home, rather than making job cuts.
It also announced last month that it will scale back production by 30 per cent to the end of next March comes after it announced last month that it would reduce production 1 million tonnes or by 20 per cent between October and December by a million tonnes of crude steel. (See: Tata cuts steel output at Corus)