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Tata Steel to fire 3,000 workers in Europe citing slowdown and weak market demand

Tata Steel to fire 3,000 workers in Europe citing slowdown and weak market demand (Photo: Tata Steel)

Tata Steel, the Indian steel manufacturer, has announced that it will be slashing 3,000 jobs across its operations in Europe, citing a global consumption slowdown and the uncertainty surrounding the U.K. general elections and Brexit that is scheduled to follow right after.

“Stagnant EU [European Union] steel demand 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,” said Tata Steel in its statement. 

Macroeconomic trends have been playing spoilsport in Europe, as major economies like Germany and the U.K. were caught in the throes of the deepening U.S.-China trade war and Brexit, dampening their construction, auto and manufacturing industries that consume the bulk of the steel manufactured in the region. 

Steel consumption in the EU fell by 2.5% year-on-year in the first quarter of 2019 – a trend coincidental with weakened exports and trickling investments. “Given these economic and market conditions, the European Commission needs to act now to adapt the steel safeguard measures to reflect these circumstances,” said Axel Eggert, the director-general of the European Steel Association (EUROFER). “The repeated rises in the size of the quota this year and next are completely out of step with the sluggish steel market.”


It is evident that this flattening of demand has hit Tata Steel, with Henrik Adam, the CEO of Tata Steel Europe, confirming that the company is facing conditions that are unprecedented in its history. 

The European market competitors of Tata Steel are not doing very well either, as they bear the brunt of an onslaught of cheaper steel supply coming in from Eastern economies like China and Russia. 

Last week, the Chinese steel production group Jingye took over troubled steelmaker British Steel, which helped save the company’s primary production plant in Scunthorpe, England. The deal, which is conjectured to be worth around £70 million, will allow 4,000 people to hold on to their jobs at the factory. 

Tata Steel’s fortunes have been no better, as the company continues to witness a bloodbath at the stock market, with its share prices decreasing by over 35% since April this year. The company announced that it saw a 90% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) in the first six months since the start of its financial year in April 2019. 


In May, Tata Steel failed in its attempt to merge with German steel major ThyssenKrupp when the European Commission turned down the merger in an antitrust decision. ThyssenKrupp is not doing well either and plans to cut 6,000 jobs in a company-wide organizational shakeup. 

Meanwhile, the steelworkers’ trade union in the U.K. is protesting Tata Steel’s job cuts that are centred around the Port Talbot steelworks in England. “This is a shocking announcement, which will worry many steelworkers and their families in the U.K. and across Europe,” said Roy Rickhuss, the general secretary of the union. “This news has been badly handled and the company should hang its head in shame with the way this development has been communicated.”

That said, the operations of Tata Steel in recent years have mirrored its struggle to match its competition in Europe and more importantly, its inability to best the Chinese steel production juggernaut that is making huge inroads in the European market. 

In September, Tata Steel announced that it would shut down the Orb Electrical Steels plant in Newport, Wales, which left over 400 employees without work. The company also sold British Steel to Greybull Capital in 2016, which became insolvent earlier this year due to continuing weak market demand and political uncertainty. Now, with British Steel being taken over by the Chinese firm Jingye, the ownership of the illustrious Scunthorpe steel plant has come full circle.