Tata Steel plans to cut up to 3,000 jobs across its European operations, the company said, as the sector wrestles with excess supply, weak demand and high costs.
In a statement on Monday, the company said about two-thirds of the job losses were expected to be office-based roles.
The Indian-owned company, which has steel-making facilities in the United Kingdom and the Netherlands, as well as downstream operations across the rest of Europe, did not specify where the job losses would be.
Tata said that its transformation programme would involve increasing sales of higher-value steels, optimising production processes, and reducing employment and procurement costs.
There would be no plant closures, Tata said, adding the aim was to shield Tata Steel Europe from challenges, such as weak demand, excess capacity and trade issues, and to become cash positive by the end of its financial year ending March 2021.
European steelmakers largely blame China for the surplus in the global market, but the world’s biggest steelmaker says it has made its own deep cuts to capacity.
“Stagnant EU 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,” Tata said in its statement.
Tata’s quest to boost profitability follows a European anti-trust decision to block a proposed joint venture with Germany‘s Thyssenkrupp.
In the first six months of its financial year starting in April 2019, Tata Steel Europe reported a drop of 90 percent in earnings.
Meanwhile, ArcelorMittal, the world’s biggest steelmaker, has idled a series of plants across Europe. It said in November that European steel consumption will drop by up to three percent this year.
In the United Kingdom, Chinese steelmaker Jingye announced last week it has signed a provisional deal to buy British Steel, which went into compulsory liquidation in May.
The agreement is politically sensitive ahead of British elections as job opportunities have become a major issue. If confirmed, the rescue could save thousands of jobs.
Eurofer, which represents the European steel industry, told Reuters in an email that job losses were “a worrying and upsetting trend” caused by global overcapacity and hesitant demand.
It urged European Union policy makers “to help stabilise the EU market by warding off import surges and supporting vital steel sector workers during this challenging period”.