Sheffield steel company Outokumpu is set to axe 50 jobs and close its pension scheme as it battles to prevent operations being shut down altogether.
All 550 staff have been warned the firm has failed to make a profit for eight years and the outlook for 2016 ‘remains challenging’ and ‘significant action’ needs to be taken.
All of Outokumpu’s UK operations are in Sheffield. The firm has a meltshop and sales and distribution centre off Europa Link at Tinsley and an alloy steel rod unit in Brightside.
In an email to staff, Kari Tuutti, chairman of Outokumpu Stainless Ltd, said: “Outokumpu’s financial performance continues on a very unsatisfactory level.
“The company has made losses for the past eight years and the outlook for 2016 remains challenging.
“The competitiveness of Outokumpu’s UK manufacturing units is also weak and we need to take significant actions in order to improve the competitiveness and to minimise the risk of discontinuation of operations in the UK.”
He announced plans to:
n axe 50 jobs in the 350-strong meltshop and ‘rationalisation’ of white collar jobs
n close the defined benefit pension scheme from September 30 to save £2m a year and cut the pension deficit by £30m. All employees would be transferred to the defined contribution scheme
n freeze salaries at 2015 levels
n cut spending on raw materials and energy.
Mr Tuutti added: “We regret to take the above mentioned actions as we recognise that they are very difficult to the OSL personnel.
“However, ensuring best possible cost competitiveness is the only way to improve the viability of the UK operations.”
The aim was to reach an agreement on all matters ‘as quickly as possible’, he added.
The note states staffing at the meltshop - SMACC - had been kept high in anticipation of extra work following the closure of a facility in Bochum, Germany.
But it had not materialised due to weak demand for stainless steel in Europe and Asia.
Outokumpu is Finnish-owned and has 11,000 employees in 30 countries.
The Sheffield site was previously owned by British Steel Stainless, Avesta Sheffield and Polarit.