Indian steel major Tata Steel is set to pull out of its loss-making UK business, putting thousands of jobs at risk, according to the BBC. Tata Steel blames high manufacturing costs, domestic market weakness and increased imports into Europe for weak performance of UK arm. Shares fell over 2 percent after the statement.
Its European holding company has been told to “explore all options for restructuring”, including the partial or entire sale of its UK operations. Union leaders travelled to Mumbai in a bid to persuade Tata to keep making steel at plants including Port Talbot.BBC
The company rejected an “unaffordable” turnaround plan for Port Talbot and instead given the green light to a sale of its UK business. Port Talbot is Britain’s biggest steelworks and employs 4,000 people. The move will roughly affect Rs 15,000 workers that used to make up British Steel and then-Corus, which was bought by Tata Steel in 2007.
While the global steel demand, especially in developed markets like Europe, has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors, including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency.Tata Steel statement
Reflective of the stress in its Europe operations, Tata Steel reported an Ebitda (earnings before interest, tax, depreciation and amortisation) loss of Rs.339 crore at its Europe operations for the nine-month period ended 31 December.
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)