Tata Steel is to cut 400 jobs at one of its plants under restructuring proposals to "improve the competitiveness" of its steelmaking business.
The proposed changes at Port Talbot in South Wales will enable the UK Strip Products business to compete in Europe's "lower market demand era", with predictions that steel demand and prices will be under pressure for years.
"Steel demand and prices are likely to be under pressure for some years,” said Karl Koehler, Tata Steel's European chief executive. “Our business rates in the UK are much higher than other EU countries' and our UK energy costs will remain uncompetitive until new mitigation measures come into effect,” he said.
"We will, of course, engage fully with employees, trade unions and our political stakeholders during this restructuring process, and we will do everything we can to support our employees through this unsettling time."
According to Koehler, Tata has invested more than £250m over the last two years in state-of-the-art steelmaking technology in its Strip Products business with further investments under way in the company’s Hot Strip Mill in Port Talbot. The company is also in the process of upgrading its galvanising line in Llanwern.
The trade unions steel committee chairman Roy Rickhuss commented on the announcement of the redundancies, saying that the British government should focus on supporting the struggling steel-making industry as it is vital for the whole UK manufacturing sector.
"We recognise the company has been dealing with a long-term downturn in European steel markets for more than five years. However, we have also expressed our own concerns about possible undermanning within Strip Products and in Port Talbot in particular,” he said.
"This news also demonstrates that despite the Government's trumpeting of economic recovery, the steel sector remains under real pressure. This sector, vital for so much of British manufacturing, must be an area of real focus for the UK's industrial policy," Rickhuss said, adding that the union representatives will meet with the company executives to discuss their concerns.
Business Secretary Vince Cable said: "This is understandably a difficult time for the workforce at Tata Steel in South Wales as the company tries to weather challenging market conditions.
"I have been in close contact with the chief executive at Tata Steel and understand they will offer voluntary redundancy packages and cross match people to other parts of the business to try and avoid compulsory job losses.
"The company is committed to the UK and is making significant new investments to ensure it is able to meet new challenges and opportunities."