Tata Steel announces another €60 million in cutbacks at IJmuiden factory
Tata Steel IJmuiden will cut expenditure by another 60 million euros in the first quarter of next year, the Financieele Dagblad reported based on a message sent to employees earlier this week. It is the second round of cutbacks the IJmuiden steel producer announced in a period of three months.
The additional cuts are necessary because the measures announced at the end of September have proven insufficient to improve the cash position. “One way or another, we cannot afford not to achieve the target of 60 million euros,” the Tata Steel management wrote.
The company is also tightening control over its finances. In practice, this means weekly instead of monthly financial checks. “Everyone who spends money does so for a good reason, but we will have to think and act differently than we used to,” the management wrote.
According to FD, Tata Steel is struggling with a weak European steel market. About a third of its production goes to the automotive industry and several of its biggest clients - German car manufacturers - are struggling. Volkswagen, for example, plans to close three factories in Germany. The steel price is also under pressure due to the import of cheaper steel from China.
The developments in the steel market are reflected in Tata Steel’s results. In the first half of the financial year, the company’s gross operating result was considerably lower than average at 73.5 million euros. Last year, Tata Steel IJmuiden suffered a loss of 556 million euros, mainly due to major maintenance on several installations taking much longer than expected. The company’s liquidity position also declined sharply as a result, from 849 million to 104 million euros at the end of March this year.
