Tata Steel Europe to shift two R&D centres from UK to India, Netherlands

Tata Steel, Europe's second-largest steel producer after ArcelorMittal, plans to close down two research and development facilities in the UK and shift them to the Netherlands and India, resulting in 300-400 job losses.

Citing unnamed sources, The Sunday Times yesterday said that Tata Steel Europe (earlier known as Corus) plans to close two technology centres on Teesside and in Rotherham over the next 18 months and shift this research to the Netherlands and India,  resulting in 300 to 400 job losses.

The steelmaker, which holds around 45 per cent share in the UK market, is reported to have warned the British government on its impending move.

Tata Steel will close its main R&D site in the UK called the Swinden Technology Centre in Rotherham, South Yorkshire, which focuses on product research and applications research for the transport, engineering and building & construction sectors.

It will also shutter the Teesside Technology Centre in Grangetown, Cleveland, which operates as a satellite focusing on process and long product research.

The report did not say what will happen to a small group of researchers that are based in Port Talbot, Wales providing R&D support to Tata Steel operations in Wales.

Tata Steel already has R&D centres in the Netherlands and India. Its IJmuiden Technology Centre located in IJmuiden, the Netherlands, focuses on process and product research as well as on applications research for the automotive and packaging sectors, while the R&D centre in Jamshedpur, India, focuses on process and product research, with special emphasis on the specific needs of Tata's Indian operations.

Tata Steel, which acquired Corus in 2006 for $12 billion and has net debt of $10.5 billion, had in November 2012 said that it would restructure its business in the UK by closing around 12 sites and axing 900 jobs amid deteriorating economic conditions in Europe.

The cuts included the loss of 580 jobs due to the planned closure of its Tafarnaubach and Cross Keys plants in South Wales, 155 in Yorkshire, 120 in the West Midlands and 30 in Teesside.

Despite having massive debts, Tata Steel has been able to reduce fixed costs by $2.2 billion from the FY08 level of $6.7 billion. It has restructured its UK operations, shut inefficient capacities and divested non-core assets.

The Mumbai-based steelmaker had sold its Teesside Cast Products in 2011 to Thailand's Sahaviriya Steel Industries for $469 million and mothballed its Llanwern hot strip mill in Newport, cutting 115 jobs.

The latest plan to shift its research centre comes after a four-year long downturn in the UK and European steel industry, where the fall in UK steel demand has been steeper than the 30 per cent slump in major European economies.

The European steel industry has been hit hard due to overcapacity and plunging demand as the prolonged economic turmoil continues to ravage the region.

The climate in Europe towards the steel industry is also worsening due to high raw material and energy prices, CO2 allowance trading, Russia's accession to the World Trade Organisation resulting in lower tariffs for Russian steel exports, and in particular the economic downturn that has led to sharply reducing consumption levels in Europe.

Several European steelmakers have resorted to scaling back production, idling plants, and selling non-core assets like Luxemburg-based ArcelorMittal and Germany's Thyssenkrupp.

In February, Tata Steel Europe, one of the biggest employers in Wales, restarted production at its Port Talbot steel plant after spending £185 million in rebuilding a blast furnace, the most significant investment in the UK's largest steelworks.

Last year, Tata Steel said it would spend £800 million ($1.3 billion) at its Welsh facilities over the next five years, including £185 million on rebuilding a blast furnace at Port Talbot, and an additional £53 million on upgrading the steel-making shop

The combined Tata Steel group has crude steel capacity of more than 28 million tonnes and employs around 80,000 people across four continents, including 19,000 in Britain.