The international steelmaker, which includes the former British Steel, revealed that Llanwern's iron and steelmaking work will end along with a reduction in activity levels at the hot strip mill and cold mill operations. Ebbw Vale will close by mid 2002, Shotton will see the closure of the pickle line, cold mill and one electro zinc line. Other closures include the coil plate mill on Teesside.
A total of 6,050 jobs will be lost with 3,000 from the steelworks and a further 3,050 across other business operations, including 390 at Engineering Steels, the major user of ferrous scrap in the UK.
Corus revealed the details of its strategic review of its UK carbon steel activities this morning and said it is looking to ensure their their return to profitability through margin enhancement and cost reduction measures.
A company statement said: “The proposed restructuring is a result of the continuing high losses, primarily in those activities.
“Corus’ carbon steel operations incurred an operating loss of 301 million in the nine months to 1 July 2000, mainly due to weak UK demand and lack of competitiveness in export markets. In contrast, good progress has been made in the aluminium and stainless steel businesses since the merger in October 1999.”
Commenting on today’s announcement Sir Brian Moffat, chairman and chief executive, said: “The radical measures announced today will significantly improve the Group’s competitiveness and are crucial to the future of Corus’ employees, customers and shareholders. However, it is with deep regret that despite the support and commendable track record of our UK workforce, further significant job reductions have to take place.”
The proposed measures will also feature a major reduction in exports of basic flat products from UK operations and “an even stronger emphasis on servicing our UK customers from our UK facilities.”
Corus also announced an extensive refinancing package to be used to replace its principal existing bank facilities aimed at enhancing the Group’s financial flexibility.
Lack of UK demand
Corus said that the key factor behind the poor financial performance of the Group’s UK carbon steel assets has been the lack of growth in UK demand, particularly for flat products. “As a consequence, through the 1990s as the efficiency of the assets employed improved, an increasing proportion of UK basic flat products had to be exported.
“High transportation costs and aggressive price competition in export markets have more than offset the benefits of the ongoing cost and efficiency improvement measures achieved by Corus’ UK workforce. This adverse situation has been dramatically worsened by the weakness of the Euro and as a result very significant losses have been incurred.
“Against this background the proposed restructuring programme comprises a reduction of over 3 million tonnes per annum in UK flat products capacity.
“This will align capacity closer to a level which is consistent with a sustainable domestic market share.”
Outlook
Looking ahead, Sir Brian Moffat said that with the exception of the UK, demand remains firm in the EU.
Subscribe for free