Big freeze adds pressure to TATA Steel Europe sales

Monday, 17 Jan 2011

This is Scunthorpe reported that the big freeze has had a knock on effect on sales from the TATA Steel works in Scunthorpe. Company chiefs have also blamed the ever soaring cost of raw materials for a near 8% drop in deliveries.
In the October to December period 2010, TATA Steel Europe recorded deliveries of 3.5 million tonnes from Scunthorpe and the rest of the business. That was nearly 8% lower to the corresponding quarter in 2009 and almost 1% lower than in the second quarter of 2010.
The product and delivery figures are subject to limited audit, but the company has warned it will not be able to maintain the financial improvements made in the first half of 2010-11.
A company spokesman said that "TATA Steel expects net sales for the third quarter will be flat compared to the second quarter. Due to the increased raw material experienced in the third quarter, TATA Steel further expects its operating results for the third quarter to decline somewhat in comparison to the second quarter."
The spokesman said that as well as higher prices for raw materials, the reduced apparent demand due to seasonal slow down had aversely affected margins within the company's European operations.
In December 2010, the Scunthorpe site director Mr Sean Lyons warned the town's 4,500 employees. He said that "Unfortunately the bad weather will only add further pressure to our financial performance, which isn't what it needs to be by a long way. The next quarter is very important for us, especially for the company's cash position, so we need to be careful in this regard. Hugely important for us in the long term is for us to focus on eliminating inefficiency and waste and for us to be sharing best practices across the sites and learning from elsewhere."
The impact of the worst winter in 50 years has also led to concerns among the town's employees over the level of quarterly production bonuses to be paid this month. The town's main steel union Community has called for a meeting with TATA to discuss the bonus issues.
National steel officer Mr Roy Rickuss said that "We understand this could be an issue at a number of sites across the UK and we are writing to TATA Steel management to find a way forward. We hope the company will recognize the efforts our members made to continue to work during the adverse weather."
Mr Lyons himself earlier acknowledged the spirit and determination shown by the town's steelworkers throughout the big freeze was nothing short of amazing.
Courtsey news by www.thisisscunthorpe.co.uk