Tata Steel Europe, a subsidiary of Tata Steel India, has decided to cut 2,500 jobs, or 25 per cent of its work force, in Europe to save $930 million in costs, Dutch media outlet NH Nieuws reported on Monday.
Quoting a memo to employees, the company said Tata Steel Nederland would have to contribute “a large part of this amount or ^170 million in cost savings”. The job cuts will be across Tata Steel’s Europe plants in the Netherlands, France, England and Belgium, the media outlet reported, citing Central Works Council’s Vice-chairman Gerrit Idema.
The worker union said it will intervene in the matter, considering that the Dutch operations are profitable. “We know that things are not well in the automobile industry and costs for storage are also falling but this was not expected,” the Union was quoted as saying. It said the final plan on job cuts will be ready by November.
A Tata Steel spokesperson in India was not reachable for comment. But in an earlier interaction with the media, the Tata group had indicated that it would invest more in its India operations and expand capacity in Odisha’s Kalinganagar plant instead of Europe. “The idea is to shrink the European business of Tata Steel and grow the Indian business so that in the overall pie, the contribution of European business is less,” said a top Tata Group official. Last year, the Tata Group had taken over Bhushan Steel’s operations for Rs 35,000 crore, boosting its Indian business. The official had said it would cut Tata Steel’s overall debt by 30 per cent.
In June 2018, Tata Steel decided to merge its European operations with ThyssenKrupp — giving it ultimately 45 per cent stake in the merged entity. But the merger idea did not go well with the labour unions of ThyssenKrupp who feared job losses. Besides, investor groups, which held 18 per cent stake in the German company, also did not approve the plans and its share price lost half value in the last one year.
In May this year, Tata Steel plans to merge its European operations with ThyssenKrupp collapsed following objections from the anti-trust authorities of the European Commission.
Tata Steel’s gross debt is Rs 1 trillion and of this, the debt on European operation books is ^2.2 billion (approx Rs 17,308 crore). In one of India Inc’s biggest takeovers overseas in 2007, Tata Steel took over Corus Group Plc for $13 billion. The takeover failed to pay dividend to Tata Steel back home as the Lehman crisis in 2008 hit global markets. Since the takeover, Tata Steel shut plants in the UK and in 2018, decided to sell off all its UK plants but retained one plant in Port Talbot. It expects the UK plant to turn around this year.
Tata Steel’s stock is trading at Rs 360 a share and lost 31 per cent of its value since January this year.