CORPORATE NEWS:
Outokumpu to cease its UK coil operation
Outokumpu has confirmed its intention to close down its Coil Products Sheffield (CPS) business unit in the UK. The group’s Sheffield-based melt shop, long products and special strip units, as well as its UK sales and distribution centre are unaffected by this decision.
Since September last year all new orders (excluding bright annealed grades) usually produced at CPS were transferred to Tornio in Finland. The decision to close CPS will enable the Tornio works – which Outokumpu describes as “the most cost efficient and largest single-site stainless operation globally” – to operate at full capacity forthwith and to deliver the full benefits of its low cost base.
Juha Rantanen, Chief Executive of Outokumpu, said: “This announcement demonstrates our commitment to ensuring our global competitiveness. At the same time, however, we regret having to make the difficult decision involving our CPS colleagues. It is certainly not one that has been taken lightly, especially given the commitment and excellent effort of the CPS workforce over the years.”
The global stainless steel supply is gradually concentrating into three regional clusters: Europe, Asia and North America. The clusters are increasingly served by large integrated operations with decentralised service centre networks. Europe, Outokumpu’s current main base of operations, is suffering from over-capacity. CPS, as a medium-scale, high-cost operation with complicated logistics, could not compete with the more cost-efficient integrated operations in the current and foreseeable market conditions.
Outokumpu’s vision is to be the “undisputed number one in stainless” with success based on operational excellence. The first phase in the strategy is to reach the number one position in Europe. The cessation of operations at CPS will help the group reach this goal and achieve its financial targets.
CPS has some 570 employees. Its closure is expected to result in non-recurring write-downs of some €100m and provisions of some €50m, which will be recorded in the fourth quarter 2005 accounts. The effect on the Group’s 2005 gearing will not be significant due to freed working capital.
The improvement of the Group’s future operating profit level is estimated to be some €50m annually from the second half of 2006 onwards, compared to continuing business as usual within the current structure, and with the prevailing price and loading levels.
In addition to ceasing the 300,000 tonnes per year operation of CPS, the operational capacity of the Sheffield melt shop (SMACC) will be adjusted from 500,000 tonnes to 300,000 tonnes to provide feedstock only for the long products and plate operations in the UK, Sweden and the US. This is likely to reduce the SMACC workforce by some
100 employees.
As the Avesta Works in Sweden has been hot rolling SMACC slabs for CPS, the operational hot rolling capacity in Avesta will be adjusted to 450,000 tonnes to reflect the new operational structure. This will result in a review of shift levels in the Avesta hot rolling mill.
In the new operational structure Outokumpu’s melting capacity will be 2.5 million tonnes, hot rolling capacity to match melting capacity and cold rolling mill capacity 1.6 million tonnes annually.
Company: |
Outokumpu Copper AB |
Country: |
Sweden |
Fax: |
+46 21 198113 |
Email: |
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Website: |
www.outokumpu.com |