Tata Steel Europe will cut 3,000 jobs

Tata Steel outlined proposals for a transformation program in Europe. It says: “The program is essential for businesses to thrive despite severe market disruptions that have led to a sharp decline in profitability. At the same time, it aims to provide the foundation for the investment needed to accelerate innovation and move the company towards carbon neutral steel production. The plans include a proposed new way of working to improve productivity and reduce red tape, as well as a focus on increasing sales of more valuable steel products and solutions. ”

The program focuses on four areas for improving financial performance

Increased sales of higher value steel through improved product mix and customer focus

Increase efficiency by optimizing manufacturing processes supported by data-driven and advanced analytics.

Lower employment costs, resulting in an estimated headcount reduction of up to 3,000 across all Tata Steel Europe divisions, of which approximately two-thirds are expected to be white collar roles

Lower procurement costs through smarter supplier selection and stronger partnerships with Tata Steel Group companies

As part of the proposed transformation program, Tata Steel Europe is initially targeting positive cash flow by the end of the fiscal year ending March 2021. It also seeks an EBITDA margin of around 10% over the market cycle. Based on 2019 revenues, EBITDA is £ 750m. With improved revenues and cash flows, Tata Steel Europe will become a financially self-sustaining business, able to invest in the reliability and improvement of assets and service its financial obligations to creditors and shareholders.