Tata Steel will cut 366 jobs in its Scunthorpe plant in the North Eastern part of England.
The process has already started and the management is in consultations with the employees and their representatives. This is the third job cut announced by Tata Steel in this calendar year and adds up to a 14 per cent job cut by Corus, out of a total employee strength of 41,800 in Europe.
Corus said that the job cuts are done “to improve the competitiveness of its Scunthorpe site by aligning employment cost with anticipated steel demand.”
Corus is running at almost half its capacity with a production cut of 47 per cent currently due to lower demand and may be looking at a further decline in steel demand in Europe.
Tata Steel Group has a target of reducing the costs by 700 million pounds in FY10. A large part of it is expected to come from the cost cutting measures on the wage bills. In January 2009, the company announced a job cut of 3500 workers, which would save 200 million pounds.
In June 2009, Tata Steel announced another round of layoffs at 2045 jobs, this is expected to reduce costs by 70-80 million pounds. The current job cut of 366 workers is expected to add to the cost cutting measures.
Tata Steel Group with a turnover of 12 billion pounds spends over 1 billion pounds in wage bills. Through the job cuts the company is reducing its wage bill by 20 per cent this fiscal.
It could increase further as the Teesside Cast Products has 1900 workers and the company may mothball the operations if the talks with the customers fail.
Corus follows a 90-day consultation period with the workers and most of their job cuts are under negotiations.
Source: NDTV Profit
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