UK and Europe
As part of the Tata Steel Group (TSG) of companies, Tata Steel Europe (TSE) is committed to the Group’s vision of being a global benchmark in Value Creation and Corporate Citizenship. Maintaining this commitment during the deepest peacetime contraction in European steel demand for 80 years has been challenging given the necessity of returning the European operations to profitability.
Though there were no fatalities during the year, a customer’s employee suffered a fatal accident in April 2009, as did an employee in April 2010, tragedies that reinforced the need to focus on safety. The combined contractor and employee Lost Time Injury Frequency Rate (LTIFR) for the financial year of 1.5 (down 15% from 1.8 in 2008-09) was a record low. In order to build on this achievement, this year the company intends to shift its focus to ‘recordables’, which are defined as all work-related incidents resulting in harm to people, excluding those that require no more than first aid treatment.
To further improve the competitive position in Europe, work on transforming TSE into a more customer-focused company, operating as an integrated manufacturing and sales organisation is in progress. The ‘Customer First’ programme is aimed at better serving customers’ needs through developing a more customer sector-focused marketing organisation. In parallel, TSE is also investing in systems to improve the supply chain in order to improve customer service and reduce working capital.
The preceding financial year of 2008-09 was one of extreme contrasts, with strong demand and prices in the first half followed by a sharp drop in orders and prices in the second half, as the global recession severely affected the steel industry. The depressed market conditions evident at the end of 2008-09 continued into 2009-10 and, whilst some modest recovery was evident by the third quarter, sales volumes and prices remained well below those experienced in the first half of 2008-09. The first half of 2009-10 was also significantly affected by losses incurred at Teesside Cast Products (‘TCP’) as a result of 4 international slab buyers withdrawing from a 10-year Offtake Framework Agreement. This was all in part offset by a fall in raw material prices and the measures taken by the Group to reduce costs through its ‘Weathering the Storm’ and ‘Fit for the Future’ initiatives. These measures included announcements in January 2009 that put around 3,500 jobs at risk, in June and July 2009 when additional measures identified a further 2,410 jobs at risk, and in December 2009 when the partial mothballing of TCP was announced. By the end of March 2010, employee numbers had reduced by 13% compared to March 2009. The overall effect of the actions taken and the modest recovery during the latter part of the year was a sharp improvement in the financial performance during the second half of 2009-10, leading back to profit by the end of the financial year.
Though investment budgets were necessarily constrained because of the downturn, the company did announce a joint venture with Tata Power Limited to set up a 525 MW combined heat and power plant at the IJmuiden works, and a €35 million expansion of its rail mill at Hayange in France. Among the investments completed during the year were the installation of a new continuous galvanising line and 3-stand cold rolling mill, the conversion of the 7-stand finishing mill with heavy bending and hydraulic gauge control, and a ladle furnace scheme – all at IJmuiden – and a £60 million BOS gas recovery equipment and energy management system at Port Talbot, Wales.
During the year, as market conditions improved, the company brought back on stream several facilities that had been temporarily taken out of production including the Nos 4 and 6 Blast Furnaces at Port Talbot and IJmuiden, the “Queen Bess” Furnace at Scunthorpe and the Llanwern Hot Strip Mill. New operating and productivity records were achieved at Port Talbot.
In September 2009 the structure of the research and development activities within TSG was changed from separate organisations in Europe and India to one global organisation working for the benefit of TSG as a whole.
Process developments
The downturn resulted in much of the effort in process research during the year being focused on improvements delivering cost reductions or a stronger competitive position. The Process Improvement Teams set up to ensure application of best practice across the Group have spent much time in benchmarking its operations, particularly in Europe, against major competitors and identifying best practices within the Group that can be transferred to other sites.
Product developments
Responding to growing demand from the motor industry for stronger, formable material at a competitive cost, TSE has launched the DP800 HyPerform® steel grade. This is a high strength, formable and weldable steel that combines the advantages of dual phase (‘DP’) and transformation induced plasticity grades. The HyPerform product is considered a leading development in the automotive field and key customers have already started their approval procedure for the new grade in anticipation of commercial production. A new cold rolled dual phase steel grade (DP600CR) was also commercialised during the year, aimed at the automotive and gas bottles market, but with further deployment opportunities for the grade being explored.
Application developments
TSE has provided to Jaguar Land Rover (‘JLR’) technical assistance (Early Vendor Involvement, ‘EVI’) on the LRX baby Range Rover programme. This included detailed reviews of the concept body structure and component design. JLR accepted 37 ideas to be progressed for production in 2010-11, with resulting cost and weight savings and reductions in CO2 emissions over the programme lifetime.