British Steel today announced it’s undergoing a streamlining process to ensure the long-term growth of the business.
As part of the company’s ongoing transformation – which has already seen it commit £170 million to improving its manufacturing operations during its first three years – the company is taking a number of further steps to secure a sustainable future.
They include the proposed reduction of 400 managerial, professional and administrative roles at its operations throughout the UK, Ireland, France and the Netherlands. Other steps include continuing to improve manufacturing performance and increasing turnover through strong sales.
The company remains committed to making significant investments in its core products – rail, wire rod, construction and special profiles – along with its iron and steel-making operations.
No closures are being considered as part of the process.
Roland Junck, British Steel’s Executive Chairman, said: “Following our launch and early growth as a new company, it’s important our business continues to evolve. It’s imperative we enhance our products and services and become more competitive so we can increase our foothold in the market.
“We’ve already committed £120 million to capital expenditure projects and are pressing ahead with the £50 million upgrade to our Scunthorpe Rod Mill, which we announced in July. However, the pace of change we need in this challenging industry requires further and continued investment along with more agile and efficient operations.
“To help us achieve this, we have to make difficult decisions and our plans unfortunately include the proposed reduction of 400 roles across our global workforce.
“We’re sad to be making this announcement, particularly for our colleagues who could be affected. The skill and dedication of our employees has helped us come a long way in a short period of time. However, it’s vital our transformation continues so we can build a sustainable future for the whole business, nearly 5,000 employees and many more people in the supply chain. We’re confident these proposals will help achieve this.
“We’ll further discuss our proposals, which would consider applications for voluntary redundancy, with senior union representatives. We’ll ensure this process is handled in a sensitive manner. We haven’t set any deadlines but aim to keep the period of uncertainty for our people as short as we can.
“We know this will be a worrying time for many and we’ll do everything possible to ensure our people continue to get the support they deserve, now and in the future.”
Since its launch in 2016, British Steel – which employs more than 5,000 people across the globe – has turned a business losing tens of millions of pounds a year into one making profit.
Under previous ownership in FY16, the business made a loss of £79 million. In British Steel’s first year, FY17, it secured a profit of £47 million – a £126 million turnaround. This summer it announced an EBITDA of £68 million pro forma for FY18 (excluding the £47m one-off cost of a blast furnace chill for which the company is pursuing an insurance claim). It reported a profit of £21 million for Q1 FY19.
Gerald Reichmann, British Steel’s Chief Financial Officer, said: “We’ve made a strong start to life as British Steel but our external environment is constantly changing. For example, raw materials are all traded in US dollars, so the weakening of the pound and euro have implications for us. Like any business we need to be able to flex and adapt to these changes.
“Strong market conditions support the approach we’re taking – we have a robust order book and continue to secure significant contracts with customers, old and new, around the world.
“It’s unfortunate we need to go through the proposed redundancy process but by focusing on profitable, niche products I’m confident we’ll create a long-term future for our business and the communities in which we operate.”