Row over British Steel jobs

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The Independent Online
BRITISH STEEL yesterday found itself in the middle of a political row after signalling another round of major job cuts to fend off the effects of a strong pound and the Asian crisis.

The company said a "significant" number of employees would lose their posts over the next 12 months but would not endorse some analysts' expectations that 10,000 jobs could go within four years.

Chairman and chief executive, Sir Brian Moffatt, said 2,400 positions were lost over the last year as pre-tax profits plunged from pounds 451m to pounds 315m.

The high pound wiped pounds 500m off group profits but the company was also hit by the effect of the Asian crisis, which made exports to that area difficult and imports cheaper. The BS problems were seized on by opposition MPs like the shadow president of the Board of Trade John Redwood who called on Chancellor Gordon Brown to change economic strategy.

Mr Redwood said the job losses within BS were typical of what was happening throughout industry, adding: "The British Steel results show the enormous damage Labour's economic policy is now doing the efficient heartland of UK manufacturing."

Sir Brian himself would not speculate on how long the pound would remain at its current level but said his company would proceed on the assumption that it would remain strong.

He said the company was in good shape despite the difficulties, adding: "The engine room for profit is the company's UK asset base which again put in a very strong performance with a significant number of new production and efficiency records."

He said the company would continue to protect shareholder value by a three-part strategy started in 1997. this includes streamlining the organisation structures and working practices to improve productivity, create a more cost-effective supplier base and build on the information technology gains it had established by outsourcing work to Cap Gemini. "Such significant changes will take some three to four years to become fully effective but good progress has already been made," the company said.

BS has continued to invest heavily in its businesses but has still built up a cash pot of pounds 446m. Sir Brian might consider a further share buyback similar to the pounds 146m one last year, but it had not given up on the search for acquisitions.

He said:"With the current uncertainty in south east Asia it is unlikely that we will invest in that region in the short term. However other areas of the world, particularly Europe and North America, could present profitable prospects."