NEWS
20/09/2017 12:59 BST

Tata Steel And Thyssenkrupp Merger Could Mean Thousands Of Job Losses

Steel giant Tata has taken a big step to merging with German firm Thyssenkrupp in a move which could lead to thousands of job losses.

A memorandum of understanding has been signed although the tie-up will not be completed for another year.

Hans Fisher, chief executive of Tata Steel Europe, said there would be potential job losses of 2,000, split between the two companies, although parts of the business could be sold once the deal is finalised, leading to more jobs leaving the company.

The jobs initially affected will be in sales and marketing, where the two companies see the best opportunities to make savings.

Unions gave a cautious welcome to the merger announcement but warned they would fight any compulsory redundancies.

Merger talks started around 18 months ago after Tata decided not to sell its UK steel business, but were held up as the Indian conglomerate sought approval from workers for pension changes.

The companies employ around 48,000 workers, with Tata owning UK plants including Port Talbot in South Wales, which employs 4,000.

Andrew Robb, chairman of Tata Steel Europe, said: “Today’s announcement marks the latest step in building a future for Tata Steel’s activities in Europe which is sustainable in every sense.

“Both Tata Steel Europe and Thyssenkrupp share a vision of supplying the most advanced quality products and services to customers in the world’s most demanding markets.

“The combination of our two businesses would provide the strongest possible foundation for achieving this vision, creating a global leader for the long term.”

Business Secretary Greg Clark said the announcement was an “important step” for the steel industry, adding: “Today’s agreement between Tata Steel and Thyssenkrupp is an important next step in establishing their shared ambition for Port Talbot as a world-class steel manufacturer, with a focus on quality, technology and innovation.”

Roy Rickhuss, general secretary of Community and chairman of the co-ordinating committee representing the Unite, GMB and Community, said unions recognised the industrial logic of the partnership.

“The devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations.

“As a priority, we will be pressing Tata to demonstrate their long term commitment to steel making in the UK by confirming they will invest in the reline of Port Talbot’s Blast Furnace No.5.

“We must also be assured that Thyssenkrupp’s pension liabilities will be ringfenced with a cast-iron guarantee that UK steelworkers will never fund German pensions.”

Natarajan Chandrasekaran, chairman of Tata Steel, said: “This partnership is a momentous occasion for both partners, who will focus on building a strong European steel enterprise.

“The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that Thyssenkrupp Tata Steel will have a great future.”

Dr Heinrich Hiesinger, chairman of the executive board of Thyssenkrupp, said: “This business combination creates a strong number two and is thus much better positioned to cope with the structural challenges in the European steel industry.

“With Tata Steel, we have found a partner with a very good strategic and cultural fit.

“Beyond a clear performance orientation, we also share the same philosophy of corporate responsibility towards employees and society.”

Mr Rickhuss added that unions have been assured there will be no asset closures or reductions in production capacities across the UK.

He said: “While a merger of this size will inevitably mean a review of support functions such as HR and IT, the vast majority of these roles are no longer located in the UK.

“If the company does seek to implement compulsory redundancies we will fight that using every necessary means.”