Tata Steel has struck a deal with the agitating trade unions of Tata Steel UK plant to invest 1 billion pounds in the loss making Port Talbot steel plant over the next decade and also to avoid any compulsory job losses. Tata Steel also began a process to shut down the expensive British Pension Scheme and replace it by defined contribution scheme, which shall reduce uncertainty in payouts. The unions said in a statement that the novel scheme shall have a maximum contribution of 10 per cent from the company and 6 per cent from the employees.
According to the deal, Tata Steel will also secure the future of the downstream sites. The Port Talbot plant shall continue the existing blast furnace configuration in Port Talbot until the year 2021. Based on financial performance in the next 5 years, future investments shall continue.
At 14:36 IST, Tata Steel share price was trading 4.02 per cent higher on the NSE.
Contradicts Cyrus Mistry:
Tata Steel's novel strategy is in sharp contrast to former Chairman Cyrus Mistry's strategy to either merge UK steel making operation without any commitment on jobs or simply exit it.The company didn’t give any clear information regarding the ongoing discussion to merge with Thyssenkrupp.
Koushik Chatterjee, Group Executive Director at Tata Steel and Executive Director for its European business stated that Tata Steel UK had developed a long term investment plan to make the business even more competitive in the near future.
Steel Union Community in a statement stated that these significant commitments on production, jobs and investment were most welcome. However to shut down the BSPS - British Steel Pension Scheme was a concern. After a detailed discussion, union reps had agreed to ballot all members on the proposal in the new year which is knocking at the door.
For more details, visit Tata Steel share price history.
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