Tata Steel plans to cut jobs across European operations

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LONDON (Reuters) – Tata Steel (NS:) plans to cut jobs across its European operations as it wrestles with excess supply and high costs, the company said on Monday.

Following a weekend interview in the Financial Times with the group’s European chief executive, Henrik Adam, Tata confirmed it was planning to announce job cuts across the European business, which employs around 20,000 people.

No numbers have been made public. Indian-owned Tata Steel, which launched a transformation program in June to strengthen its European business, has operations including steelmaking in the Netherlands and Wales and downstream operations across Europe.

There will be no plant closures but the aim is to shield the company against the “huge number of challenges” it faces, the company said.

“We are working hard on our plans to be operationally cash positive,” Adam said, adding that the company was aiming for “a fundamental change”. A company spokesman confirmed Adam’s comments originally made to the Financial Times.

Steel making in Europe has come under strain from international competition and high energy costs, putting large numbers of well-paid jobs under threat.

European steelmakers blame China for the extent of a surplus in the market, but the world’s biggest steelmaker says it has made its own deep cuts to capacity.

Britain last week announced that Chinese steelmaker Jingye has signed a provisional deal to buy British Steel, which went into compulsory liquidation in May.

The agreement is politically resonant ahead of British elections as job opportunities have become a major issue. If confirmed, the rescue could save thousands of jobs.

ArcelorMittal (AS:), the world’s biggest steelmaker, has idled a series of plants across Europe.

In an emailed statement on Monday, Tata Steel said challenging market conditions had been made “worse by the use of Europe as a dumping ground for the world’s excess capacity”.

The company’s European transformation program launched in June aimed to develop “a simpler and leaner organization, capable of sustainably financing high levels of investment, Tata said.

Changes will include streamlining supply chains and using technology to improve efficiency, as well as seeking to cut employment costs.

Tata’s quest to boost profitability follows a European anti-trust decision to block a joint venture with Germany’s Thyssenkrupp (DE:).

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