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Tata Steel to cut up to 3,000 jobs in Europe
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SME Times News Bureau | 19 Nov, 2019
Tata Steel has said that it would reduce its work force in Europe by
upto 3,000 employees, in a bid to lower the company's employee cost as
part of its transformation measures.
The steel major released its
proposals for a transformation programme of its Europe operations in
which it also said that most of the employees to be laid off are likely
to be white-collared or office employees.
The statement released
on Monday said that the major focus areas for the transformation include
"lowering employment costs, leading to an estimated reduction in
employee numbers of up to 3,000 across Tata Steel Europe's operations,
about two-thirds of which are expected to be office-based (white collar)
roles".
The company would also focus on increasing sales of
higher-value steels by improving product mix and customer focus, gaining
efficiency by optimising production processes, supported by the
application of big data and advanced analytics.
It said that it
would reduce procurement costs through smarter sourcing and
strengthening cooperation with companies within the Tata Steel group.
The statement said that the programme is "needed to ensure the business
can thrive despite severe market headwinds which have led to a sharp
decline in profitability".
At the same time, the company aims to
secure the foundation for investments required to accelerate innovation
and the company's journey towards carbon-neutral steel production, it
added.
Henrik Adam, CEO of Tata Steel in Europe, said: "Today we
are highlighting important proposals towards building a financially
strong and sustainable European business. We plan to change how we work
together to enable better cooperation and faster decision-making. This
will help us become self-sustaining and cash positive in the face of
unprecedented severe market conditions, enabling us to lead the way
towards a carbon-neutral future."
As per the company, through its
proposed transformation programme, Tata Steel Europe is initially
targeting a positive cash flow by the end of its financial year ending
March 2021. It is also aiming for an EBITDA margin of around 10 per cent
throughout the market cycle. Based on full year 2019 revenue figures,
this would equate to 750 million pounds in EBITDA, it said.
"With
improved earnings and cash flows, Tata Steel Europe will be a
financially self-sustaining business able to invest in asset reliability
and improvements while also servicing its financial obligations to its
lenders and shareholders," the statement said.
Talking of the
adverse market conditions, it said that stagnant steel demand in the
European Union and global overcapacity have been compounded by trade
conflicts which have turned the European market into a dumping ground
for the world's excess steel capacity.
Together with a
significant increase in the cost of emission allowances, this has
created an urgent need for improvements to the company's financial
performance, it added.
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