Business

Steelmaker Corus has confirmed that it is cutting 3,500 jobs worldwide, including about 2,500 in the UK.

The announcement comes after Corus, like all steel firms, has seen a substantial fall in demand.

Corus, a subsidiary of India’s Tata Steel, currently employs 24,000 people in the UK and 42,000 worldwide.

It said it would be “mothballing” a facility at Llanwern near Newport, south Wales, and was trying to sell a majority stake in its Teesside site.

Corus said that 600 jobs would go at Llanwern, as part of a total 1,100 cuts across the firm’s Welsh operations.

A further 1,400 jobs will go at other UK sites, including 713 in Rotherham, 108 at Wednesbury in the West Midlands, 93 in Scunthorpe, and 61 at Wolverhampton.

The other affected Welsh plants include Shotton, Ammanford, and Pontardulais.

‘Carefully considered’

Corus said it would “make every effort to achieve the job losses through voluntary redundancies”.

“The structural changes we are proposing today have been carefully considered,” said Corus chief executive Philippe Varin.

“They are essential for the future of the business.”

Corus workers were told about the job cuts this morning.

The firm said the restructuring work would help it improve annual profits by more than £200m.

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

Newport West MP Paul Flynn said the decision to mothball the Llanwern site was “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.”

And for the Tories, Shadow Work and Pensions Secretary Theresa May said: “This a bitter blow for the thousands of hard working employees at Corus.”

Pension closure

Tata Steel said it would also close the main final salary pension scheme for Corus UK workers to new joiners, who will be offered a “money purchase” scheme to join instead.

“While the scheme is in a healthy position, the company will, in line with market practice, close the defined benefit scheme to new recruits, who will be offered a defined contribution scheme,” the company said.

“Steps will also be taken to ensure that the company contribution to future service for existing members remains at 12%,” it added.

Slump in demand

Steelmakers around the world have been hit by falling demand from carmakers, shipbuilders, construction and heavy engineering sectors, which, in turn, have seen demand for their products drop.

A 40% fall in global demand for steel from its peak of last year caused Corus’s order book to drop by more than a third.

And steel prices have fallen by half since last September.

Corus was formed in 1999 through the merger of British Steel and Koninklijke Hoogovens. In 2007, it became a subsidiary of Tata Steel.

The company says it is Europe’s second-largest steelmaker, producing 20 million tonnes of crude steel every year.

Its annual revenues are about £12bn ($16.3bn).

Government aid?

Corus has requested financial help from the UK government for a rolling programme to provide new skills to its entire workforce.

“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,” added Mr Wilson.

Derek Simpson, joint leader of Unite, said his union would not accept any compulsory redundancies.

“We understand that Corus do face difficulties, but before this recession, Corus had been making extremely healthy profits,” he said.

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