Eurozone slump costs 900 jobs in UK steel industry

Tata cuts jobs in face of an expected 10 per cent slide in European demand

British workers were revealed as the latest victims of the eurozone recession yesterday, as Tata Steel yesterday announced it will cut 900 jobs across the UK, almost 4 per cent of its British workforce, in response to rising losses and plunging demand in its all-important European markets.

Around 580 jobs will go at the Indian group's Port Talbot plant in South Wales, with most redundancies coming from management and administrative posts. Another 155 redundancies will be made in Yorkshire, 120 in the West Midlands and 30 on Teesside.

In a further blow to the UK economy, which many analysts expect to contract again in the fourth quarter of the year, there are also plans to close 12 steel finishing and processing plants in England and Wales. The bad news was slightly offset, however, by Tata's announcement that it will push ahead with the restart of a blast furnace in Port Talbot next year as part of a £250m investment programme.

The steel firm, which supplies the construction, car manufacturing and aerospace industries, reported a second-quarter loss of $67m (£41m) this month. There has been a four-year decline in demand for steel across Europe, which accounts for two-thirds of Tata's 28 million tonne capacity. It forecast demand across Europe would fall by another 10 per cent this year.

Earlier this month, official figures showed that the eurozone returned to recession in the third quarter of 2012, contracting by 0.1 per cent after a 0.2 per cent shrinkage in the previous three months. The outlook for 2013 is equally bad, as governments across the 17-member bloc push on with synchronised austerity programmes and grapple with an unresolved banking and sovereign debt crisis.

Karl Kohler, Tata's chief executive of European operations, expressed his sympathy for the UK workers who will be made redundant, but stressed that the restructuring was necessary.

"These restructuring proposals will help make our business more successful and sustainable, but the job losses are regrettable and I know this will be a difficult and unsettling time for the employees and their families affected," he said.

As well as an economic slide in Europe, the global steel industry has also been struggling due to a slowdown in the Chinese economy, which grew at a rate of 7.4 per cent in the third quarter, down from the 10 per cent rate seen over the past three decades.

The world's largest steel manufacturer, ArcelorMittal, recently reported a quarterly loss. And Japan's Nippon Steel & Sumitomo Metal Corporation has warned that profit in the second half of 2012/13 will be down by more than 50 per cent.

The Unite union secretary for Wales, Andy Richards, called the Tata job losses "devastating news" for an industry that has still not recovered from the shocks of the 1980s. He said: "It is a dark day for Welsh workers and for the steel industry in Wales – another twist in the knife of decimation started by Thatcher over 30 years ago."