Since entering Europe in 2007 with the acquisition of the erstwhile Corus, Tata Steel has invested about £2 billion in its UK business. It employs over 8,000 people in the UK.
Last May, Tata Steel had put five non-core European businesses on the block. It sold two units — Kalzip, aluminium roofing and cladding business, and Firsteel, a coated steel bake ware manufacturer. Both these deals helped to save 275 jobs, said the press release.
One of the five non-core businesses was Cogent Electrical Steels, which consists of 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 manufactures cores for electrical distribution transformers and employs nearly 300 people — to Japanese steel giant JFE Shoji Trade Corporation.
Tata Steel has decided to retain Surahammars Bruks AB, which makes advanced steels for electric vehicles and employs around 100 people.
Today Tata Steel is trading at Rs 333 (+0.54%) at Bombay Stock Exchange.
No buyers for Asset
The Wolverhampton Engineering Steels Service Centre and sales office in Bolton will also be shut as there are no buyers for the assets, it further said.
Henrik Adam, CEO, Tata Steel Europe, said the Orb proposal is necessary to build a long-term sustainable future in Europe. At a time when the European steel industry is facing considerable challenges, he said, continuing to fund substantial losses at Orb was not sustainable with no prospects of it returning to profitability in the coming years.
Indian steel conglomerate Tata Steel on Monday announced plans to close operations at its subsidiary Orb Electrical Steels in Newport, South Wales, and at the Wolverhampton Engineering Steels Service Centre in the UK, leading to a potential loss of 406 jobs. On Tuesday, Tata Steel shares fell 4 per cent on the BSE to ₹331.
The Orb Electrical Steels business had been making losses for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers, in which customer requirements have outstripped the site’s capability, Tata Steel said in a statement.
Converting the plant to make steel for future electric vehicles (EV) would cost over £50 million (₹435 crore) in a highly competitive market where Tata Steel faces stiff competition, it added. Article continues after the Ad -
Consultations with affected employees and trade unions at both Orb and Wolverhampton will commence shortly, he added.
UK Economy Minister Ken Skates said he stressed the importance in talks with the company of avoiding compulsory redundancies.
"The Welsh government will now do everything it can to support individuals, the community and the supply chain affected by this announcement," he added.
"Today's news clearly demonstrates the fragility of the global steel market and the UK government must now step up and broaden its approach to supporting the industry, including its supply chain, across the whole of the UK," Skates said.
European Business Review
Tata Steel decided to review its business in Europe after its plan to merge its operations there with another steel major, thyssenkrupp, was rejected by the regulatory authorities earlier this year.
Read: Thyssenkrupp Tata Steel European JV named their top management