The global steel industry is currently facing stagnant demand and an unprecedented overcapacity. (Photo Credit: File)
One of the world's leading steel producing companies, Tata Steel has confirmed cuts of up to 3,000 jobs across its European operations as part of cost-cutting strategy to counter slack demand in Europe and unprecedented levels of global overcapicity. In a statment, the Indian steel giant said that the job cuts are aimed at lowering employment costs with the "estimated reduction" in employee numbers. Most of the job cuts are expected to be office-based riles at its Netherlands unit.
"A transformation is needed to mitigate the current structural and cyclical headwinds and create the foundation for the company's future success. Stagnant EU steel demand and global overcapacity have been compounded by trade conflicts which have turned the European market into a dumping ground for the world's excess steel capacity," the company statement read.
"The information shared with the European Works Council select committee lays out the case for change, explains our transformation programme and gives a first overview of the organisational impact," a company statement said.
Tata Steel Europe said that the company is targeting a positive cash flow by the end of its financial year ending March 2021 through the proposed "transformation programme". The company is also eying EBITDA margin of around 10 per cent throughout the market cycle.
"We intend to align on our approach and the process going forward and engage with various stakeholders to develop the proposed decisions and ensure compliance with all European and national obligations. Further details will be provided from this point forward and detailed proposals will be developed from here," the company statement added.
The global steel industry is currently facing stagnant demand and an unprecedented overcapacity. Tata Steel said that the changes were necessary to ensure the business can thrive despite severe market headwinds.
"Today we are highlighting important proposals towards building a financially strong and sustainable European business," said Henrik Adam, CEO of Tata Steel in Europe, in a statement on Monday.
"We plan to change how we work together to enable better cooperation and faster decision-making. This will help us become self-sustaining and cash positive in the face of unprecedented severe market conditions, enabling us to lead the way towards a carbon-neutral future," he added.
(With PTI Inputs)