12,500 steel jobs on the line

Up to 12,500 workers, a third of British Steel’s UK workforce, could go by March 2001 as part of the group’s cost cutting drive, City analysts predict. The group, which reports full year results for 1997/98 this month, refused to comment on the estimates by Solomon Smith Barney. A spokesman said, however, that there would […]

Up to 12,500 workers, a third of British Steel’s UK workforce, could go by March 2001 as part of the group’s cost cutting drive, City analysts predict.

The group, which reports full year results for 1997/98 this month, refused to comment on the estimates by Solomon Smith Barney.

A spokesman said, however, that there would be ‘significant manpower reductions as the group continues to improve its productivity’.

Last year British Steel announced a three-pronged cost-cutting exercise comprising job cuts, better supplier management and upgrading of information technology.

While it will not quantify total job losses, the group has earmarked 2,000 job cuts for the year to March 1998. This follows 1,500 job losses in 1996.

Job cuts, particularly among white collar staff, could save up to £300m a year, said Solomon Smith Barney. The analyst predicts a further £160m in savings over the next three years from British Steel cutting the number of its suppliers.

The surge in the value of the pound slashed British Steel’s pre-tax profits from £1.1bn in 1996 to £451m in 1997, with Solomon Smith Barney predicting a fall to £255m for 1998.

However, as cost-cutting measures feed through and capital expenditure generates further savings, the group’s earnings power should return to nearer £750m by 2001.