On Monday, Tata Steel announced that they would be undergoing a cost-effective and restructuring programme. In furtherance of the same, they are planning to cut around 3000 jobs in and around their European operations. The company had to take such a step because there was excessive supply but low demand and high cost.
Before the news was out in public, a source informed that the European chief executive of Tata Steel Henrik Adam is going to role out few of the employees who may be of around 20,000 people, but the number was not confirmed. This came as a result of the loss the company was facing in the market.
The step to roll out employees came after a significant discussion, and the Indian steel major said this was required to make the operation a going concern. If the employee were rolled out, they would be able to run their business even if there occur any market headwinds and it will hasten innovation towards carbon-neutral steelmaking.
The objective behind Rolling out 3000 employees
Earlier this year in the month of June, Tata Steel launched a transformation programme for strengthening their Europe business which included downstream operations across Europe and steelmaking in Wales and the Netherlands.
The objective behind the move is to increase the sale of products that are higher in value, increase their efficiency, improving the performance of the company and most importantly reduce the amount they are paying on wage bill by rolling out around 3000 employees from their European operations.
A spokesperson from Tata steel said that this will in no way means that the company will be close down because of the huge number of Challenges it is facing. It was added that the company is striving for a cash positive operation.
The only aim of the company at present is to be cash positive and face the ongoing challenge of excess capacity but less demand and other trade-related issues. The company was to reach its goal by the end of March 2021.
Who is to be blamed for the current situation if the European Steel Market?
As per the European steelmakers, China is to be blamed for the extra surplus in the market. Whereas according to Tata Steel, they themselves are responsible for such excessive supply.
This decision to reach positive cash blow for the end of March 2021 came as a result of European anti-trust decision to block a joint venture with Germany’s ThyssenKrupp. Tata spokesperson added that this condition in the steel market came and the situation became worse because of the use of Europe as a dumping ground for the world’s excess capacity.
Eurofer, who is representing the steel industry of Europe, said that the trend of rolling our employees is upsetting and this came as a result of global overcapacity and hesitant demand. The company urged to policymakers of the EU to take steps to support the steel industry during the tough time and help in stabilizing the European market.