Steel giant to axe 2,500 UK jobs

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Steel giant Corus is to axe more than 10 per cent of its UK workforce, delivering a massive fresh blow to British manufacturing which is now being battered by the recession.

The company will cut 3,500 jobs from its worldwide workforce, including 2,500 in the UK.

Corus, owned by Indian firm Tata, announced a series of cost-cutting measures including the mothballing of a mill in South Wales and restructuring several parts of its business.

Workers were told the grim news in a series of meetings at plants across the UK this morning.

John Wilson, senior officer of the GMB union, said: "This is a body blow for UK manufacturing."

Corus said it was taking a series of measures aimed at improving its competitiveness, adding that, in the last quarter of 2008, the measures it had already taken are expected to make savings of around £600 million to the end of March.

These measures included giving extra training to workers temporarily laid off and Corus said it would continue to discuss with unions how it can match production with falling demand.

"Today's initiative is strategic and structural in nature. Elements of the initiative comprise long-term plans that were already under consideration but which have been brought forward as a result of the slowdown," said a spokesman.

The company said today's measures would improve profits by more than £200 million.

Corus currently employs around 42,000 workers around the world and it said it will make every effort to achieve the 3,500 cuts through voluntary redundancies.

A comprehensive range of redundancy packages and help for workers leaving the company will be made available.

Chief executive Philippe Varin said: "The structural changes we are proposing today have been carefully considered. They are essential for the future of the business.

"The company will keep its focus on priority areas such as training, research and product development, which, together with today's initiative will ensure Corus is in the best possible shape to compete strongly in the future."

Corus said it will mothball its hot strip mill at Llanwern in South Wales and restructure its engineering steels businesses, which will affect factories including Rotherham in South Yorkshire.

The company will also undertake an efficiency improvements review of areas including finance and human resources with a target of reducing costs by around 20 per cent.

The company also announced changes to its pension scheme, saying it will close its defined benefits scheme to new recruits offering them instead a defined contribution scheme.

Mr Wilson, of the GMB, said: "It is essential that the UK Government offers this industry the same support being offered to the banking sector because, just like banks, steel is the bedrock of our economy."

Derek Simpson, joint leader of Unite, said the union will not accept any compulsory redundancies, adding: "We understand that Corus do face difficulties but before this recession Corus had been making extremely healthy profits.

"Our members have supported Corus through good times and bad and now expect Corus to support them."

Unite said the job losses brought in to focus the "hardship" being faced by manufacturing.

"The UK's manufacturing sector desperately need support from our Government similar to the support provided by the German, French and Swedish governments.

"We cannot afford to let a short-term problem deprive Britain of the skills we will depend on to compete in the world economy", added Mr Simpson.

Union leaders were seeking further information about which factories will be affected by the job losses but it is believed that South Wales will be worst hit.

Between 1,000 and 1,200 jobs will be cut from Corus plants in South Wales, including 600 at Llanwern.

Corus also announced that it was in advanced discussions on the sale of its majority stake in its cast products business based at Teesside.

This business employs around 2,000 workers who are not involved in today's job loss announcement.

The company said it was planning to restructure its engineering business in Scunthorpe which will lead to the loss of 93 jobs.

Sean Lyons, site director at Scunthorpe, said: "I know this will be distressing news for those adversely affected by today's restructuring announcement and we will do everything we can to minimise the impact and to help them find another job.

"If we are to survive this downturn and develop a sustainable business in this community we need to take these difficult steps."

As part of the plans announced today Corus said it will be restructuring its engineering steels business, expected to lead to the loss of around 920 jobs.

This includes extensive restructuring at the Rotherham factory and the closure of a number of smaller sites at Wednesbury in the West Midlands, Wolverhampton, Bolton, Hetton in the North East and Slough.

The business, which has its largest sites in Rotherham and Stocksbridge, South Yorkshire, will continue to supply specialist steel products to the automotive, aerospace, energy and other sectors after the restructuring, said the company.

Most of the job losses will be at Rotherham where more than 700 workers will be affected.

Corus's divisional director Phil Dryden said: "The economic downturn has accelerated our strategic plans to strengthen our underperforming businesses. At the same time we will retain the capability to meet existing and future demand.

"If we are to survive this downturn and develop a sustainable business in the communities in which we work, we need to take these difficult steps.

"Tough market conditions have led to a significant reduction in orders, particularly from the automotive and construction sectors, which have hit us hard.

"I know this will be extremely distressing to the people affected and we will do everything we can to minimise the impact and help them find another job."

Corus added that its proposals included the closure of a number of manufacturing areas and engineering workshops.

Paul Flynn, MP for Newport West, a constituency where many of the Llanwern workers live, said news that the hot strip mill will be mothballed is a "bitter blow".

"The last thing we want to see is a short-term decision because of a temporary crisis and mothballing is a very severe blow to the hundreds of workers involved," said Mr Flynn.

"It is better than closure, which has happened in the past. We bitterly regret what has happened but understand the collapse of demand in the motor industry and construction industry has put Corus in an extremely difficult position.

"We are all looking forward to the end of the recession, knowing that Corus are doing the right thing as far as extra training is concerned to make sure they will be fully prepared to take advantage when they get back to full production again.

"I worked in the steel industry for 30 years and there was never a period of stability. It was always feast or famine."

He added: "This is a bitter blow for the workers and their families. There is virtually no alternative for blue-collar workers with skills from the steel industry. It is going to be an extremely difficult period."

The Prime Minister's spokesman said later: "Obviously it's a matter of great regret that Corus have had to take measures to make workers redundant."

He added that the Jobcentre and other agencies would be offering support to help those affected.

The Welsh Assembly Government said it was "extremely disappointed" by the announcement.

A spokesman said: "The company's decision to reduce headcount by around 1,000 jobs in Wales is bound to have a significant negative impact, not only on the employees at Corus sites in Wales, but on the communities and the wider Welsh economy.

"The First Minister spoke to the company's senior management yesterday and today and has pledged that the Welsh Assembly Government will work with the UK Government and trades union representatives to do everything possible to support the workforce and the communities affected by today's announcement."

He said more than 95% of the Welsh workers made redundant when Corus announced a big round of job losses in 2001 were helped back into work within a year.

"It will be far more difficult to recycle those losing their jobs in 2009 back into today's far more depressed labour market," the spokesman added.

Deputy First Minister Ieuan Wyn Jones will make a statement on the Assembly Government's response tomorrow.

Shadow economy minister David Melding said: "These are quality, highly skilled jobs - just the sort of jobs Wales needs if it is to recover quickly from the recession.

"Every effort must be made to retain as many jobs as possible and retrain those who are made redundant as a result of today's announcement.

"The sheer volume of job losses we have seen in recent months risks overwhelming Assembly Government programmes designed to respond to the economic crisis."

Outside the large Llanwern steelworks, 64-year-old contractor Chris Stevens said he thought today's announcement of job losses would spell the end for the works.

"We've been just on call-outs and working only a day a week or sometimes nothing at all for about three months now," said Mr Stevens.

"Everything is closed down and we've been expecting it for months. It's the last big employer and I believe over 500 are going so that is the end of the factory.

"It won't return."

Speaking outside the Aldwarke works in Rotherham, the local council leader said today's news was "devastating" and "catastrophic" for the town.

Roger Stone was speaking in front of the main entrance, just a few hundred yards from the Burberry plant which announced almost 200 job losses last week.

Mr Stone said: "It is devastating, particularly for those people who have lost their jobs but also devastating for the town of Rotherham.

"One job loss is catastrophic. It doesn't matter if it's one or 713.

"It is catastrophic."

Mr Stone said the 700 losses at the plant itself would almost certainly be doubled when knock-on cuts through the supply chain were taken into account.

But he said the only ray of hope was that Corus decided not to shut the Aldwarke plant down totally.

Mr Stone, who is the leader of Rotherham Metropolitan Borough Council, said his priority now was to help those who had lost their jobs and to make sure the town was ready to respond to any upturn in the economy.

He said: "We've got to be ready for the upturn because it will come and we all need to be ready."

Michelle Roderick said the mood at the Llanwern steel works was "horrible".

The agency wages clerk, from Newport, said: "It is quite possible the job losses will affect me. The mood is horrible on the site.

"I've worked here for two years in the offices and pay the wages."

Wales's First Minister, Rhodri Morgan, said the state of the economy would make today's blow more difficult to absorb than the 3,500 Welsh jobs shed by Corus in 2001.

He said: "That was a remarkably successful exercise. That was a big job loss, but a more buoyant job market.

"We know why Corus has had to do this - because of an enormous drop in orders from the car industry and building industry.

"The question is, when is that demand going to come back and that's where we all lack a bit of visibility about what kind of recession we are dealing with.

"It's going to be tougher than 2001, there's no doubt about that.

"They (Corus) are very, very keen that this should be done in a very socially responsible way, but the problem is that the state of the labour market is still weakening."

He added: "It's a very bad start to the week.

"Everybody has expected it, but when the blow falls it brings a bolt of stark realisation of what it really means."

He suggested the company might want to take part in the Assembly Government's ProAct scheme which offers subsidies to business so they can retrain staff threatened with redundancy.

A further £47 million of funding for the initiative, currently being piloted in the motor industry, was announced today.

Jack Stewart, a 54-year-old sub-contractor from Swansea, said 55 agency workers were given "the boot" at the Llanwern steelworks this morning.

"They are having a good ransacking in there," he said. "There is only going to be a skeleton crew left. It's doom and gloom in there."

He said there was only three weeks work left there after which time he would receive severance pay and redundancy money after working 12 hour shifts for the last 15 months.

When asked what he was going to do for alternative employment, Mr Stewart replied: "I'm a welder and I will have to get on my bike."

He added: "It's a disgrace; it (engineering and steelworks) has gone. Nothing is happening down there."

Only the galvanising and zinc coating part of the works was keeping the site alive, he said.

"This once proud nation has gone," Mr Stewart added.

Local MP John Healey, whose Wentworth constituency includes the Rotherham plant, said: "This is a big blow for a workforce which has done everything asked of it and more in recent years.

"Corus workers in Rotherham are dedicated to the company and highly efficient. This is the news they have been dreading and don't deserve.

"I am already involved in discussions with Yorkshire Forward, Rotherham Council, the union and others about getting into place the fullest possible support and information for those facing redundancy.

"One upside from this bitter blow is that steel making will be kept in Rotherham. There is the capacity in Aldwarke to be able to build back after the downturn. There's some relocation of stock-holding abilities to Rotherham from the West Midlands and as part of the package there will be a £7m investment at Aldwarke for the production of ingots for the aerospace industry.

"This is a sign of the company keeping faith in the Rotherham site and a business on which we need to plan to build as the economy and demand for steel will pick up again."