Tata Steel closes 2 divisions in Europe

Tata Steel Europe has announced plans to close its subsidiary Orb Electrical Steels in Newport, South Wales, as well as the Wolverhampton Engineering Steels Service Center in the UK, resulting in a potential loss of 406 jobs. Tata Steel shares fell 4% on Tuesday.

Orb Electrical Steels has suffered losses for several years trying to compete in the fast-growing market for the supply of steels used in electrical transformers where customer demands have exceeded site capacity, Tata Steel said in a statement.

Retrofitting the plant to make steel for future electric vehicles (EVs) will cost over £ 50 million in a highly competitive market where Tata Steel faces stiff competition.

Henrik Adam, CEO of Tata Steel Europe, said the Orb proposal is essential to building a long-term sustainable future in Europe. At a time when the European steel industry is facing serious challenges, he said, continuing to fund significant losses at Orb has not been sustainable and there is no prospect of returning it to profitability in the coming years.

Consultations with affected workers and unions will begin shortly, he added.

European Business Overview
Tata Steel has decided to reconsider its business in Europe after regulators rejected its plan to merge its operations with another large steelmaker, thyssenkrupp earlier this year.

Since entering Europe in 2007 with the acquisition of the former Corus, Tata Steel has invested around £ 2 billion in its UK business. More than 8,000 people work in the UK.

Last May, Tata Steel reviewed five non-core European enterprises. Two divisions were sold - Kalzip, a manufacturer of aluminum roofing and claddings, and Firsteel, a manufacturer of coated steel bakeware. Both of these deals helped save 275 jobs, according to a press release.

One of the five non-core businesses was Cogent Electrical Steels, which includes Orb Electrical Steels, Cogent Power Inc in Burlington, Canada, and Surahammars Bruks AB in Surahammar, Sweden.

On Monday, Tata Steel signed an agreement to sell Cogent Power, which makes cores for electrical distribution transformers and employs about 300 people, to Japanese steel giant JFE Shoji Trade Corporation.

It was decided to keep Surahammars Bruks, which produces advanced steel for electric vehicles and employs about 100 people.