* Says steel demand, prices to stay under pressure for years
* Move will impact economy beyond Port Talbot-regional MP
* Union reiterates opposition to any forced redundancies
By Aman Shah and Maytaal Angel
MUMBAI, July 1 Tata Steel said on
Tuesday it will cut about 400 jobs at its Port Talbot plant in
South Wales, around 10 percent of the workforce, as it looks to
reduce costs in order to compete more strongly in the EU's
Dealing a blow to the UK government's pledge to support
British manufacturing jobs and diversify the economic base, Tata
Steel Europe's chief executive, Karl Koehler, said in a
statement the measures were "vital if we are to build a
competitive future for our Strip Products business in the UK".
Koehler added that steel demand and prices were likely to be
under pressure for some years.
Producing steel profitably in the UK has become increasingly
difficult given shrinking demand plus higher energy, labour and
logistics costs compared even with mainland Europe - itself
struggling to compete with Asia and the United States.
Under the company's new management, Tata Steel has
intensified cost cuts and focused on high-margin products to
improve performance in Europe, its main market, where demand is
down some 25 percent since the financial crisis.
Last year, Tata, Europe's number two steel producer, said it
could cut around 500 jobs at sites in northern England,
primarily Scunthorpe, under plans to restructure its
construction and engineering supplies business.
"We will be seeking an urgent meeting with the company to
discuss our concerns about manning levels and reiterate our
opposition to any compulsory redundancies," Roy Rickhuss, chair
of the UK trade unions' steel committee, said in a statement.
European steel prices are currently at around 4-year lows
ST-CRUEU-IDX and prospects are dim, given a global surplus fed
in large part by top producer China, where steel exports have
risen 41.5 percent in the year to date.
In his annual budget, UK finance minister George Osborne
offered to help UK manufacturing by extending a compensation
scheme that offsets some of the industry's carbon costs out to
2020, and by freezing the country's carbon price floor.
Despite these measures, UK energy-intensive industries such
as steel pay about 30 percent more for electricity than their
main EU competitors and are subject to some of the highest
carbon taxes in Europe.
Indian-owned Tata Steel became involved in Europe through
its $13 billion acquisition of Britain's Corus in 2007.
(Reporting by Aman Shah in Mumbai and Maytaal Angel in London,
Editing by Jeremy Gaunt)