Engineering news
Fresh fears over the future of steel jobs were raised after Tata Steel wiped £1 billion from the value of its European operations.
The Indian engineering group, which has UK steel manufacturing sites in Port Talbot, Rotherham and Scunthorpe, blamed the tough economy in Europe, where steel demand has slumped by about a third since the start of the financial crisis.
Unions said the huge write-down will worry its 18,500 staff in the UK who are still reeling from 900 job cuts last year.
Tata, which bought Anglo-Dutch steel giant Corus in 2007 for £6.2 billion, has endured a tough time during the downturn as demand from construction and car-making dived, forcing thousands of lay-offs and plant closures. It employs more than half of its 33,000-strong European workforce in the UK.
The company announced another wave of redundancies last November, including almost 600 inSouth Wales, in an effort to cut costs. Tata warned that the tough conditions are likely to persist for the “near and medium-term”.
The group said: “The impairment is primarily due to a weaker macroeconomic and market environment in Europe where apparent steel demand has fallen significantly in 2012-13 by almost 8%, which in aggregate results inalmost 30% since the emergence of the global financial crisis in 2007.”
In February its European business reported a £51 million underlying loss for the three months to the end of 2012, with steel deliveries falling to almost 10% to just over three million tonnes.
Paul Talbot, from the Community trade union which represents many steel workers, said: “These statements are concerning, there's no question about it.They are concerning to the employees who at this moment are still working their way through the last announcement.
“It's no secret that the steel industry has been going through difficult times.
“Time after time we've been given assurances that Tata have no plans to cut back on investment in the UK again in any further restructure or closure of plants.”
The £1.05 billion write-down of Tata's assets and goodwill is thought to be one of the largest ever by an Indian company. Write-downs are typically reflected in a company's income statement as an above-the-line expense, thereby reducing net income, which will reduce a firm's tax burden.