Sunday, April 11, 2010

Restructuring claims three bigwigs in Corus

S Kalyana Ramanathan / London April 10, 2010

The new structure aims to service customers better.

An internal restructuring exercise in steel major Corus has so far claimed three big names. Over the last four months, three top executives in the Tata Steel-owned UK steel major have left the company. The three who left were Phil Dryden, division head for Corus Long Products, Marjan Oudeman, head of strip products, and Scott MacDonald, head of distribution and building systems.

Corus, however, remained unfazed by these losses and said the heads of these divisions had chosen to leave on their own.

Details of this new internal structure in Corus are still being worked out. Hence, the company is unable to provide details of the proposed new structure or the possible benefits it hopes to gain from the change. It said the new structure would be a “unified, one-sided, customer facing structure” integrating the management of all divisions within the company. The idea behind attempting to realign the company was to service customers better, the company further said.

From a customer’s point of view, Corus at present has nine major divisions — aerospace, automotive, construction, consumer products, energy & power generation, engineering, packaging, rail and security & defence. Corus is Europe’s second-largest steel producer (after ArcelorMittal) with annual revenues of around £12 billion and a crude steel production of over 20 million tonnes. The combined strength of Corus, along with parent Tata Steel, adds up to 28 million tonnes, with over 80,000 employees in four continents.

Corus has been part of Tata Steel since April 2007, with the latter acquiring the UK-based steel maker for £6.2 billion in that year.

The departure of these top executives also comes at one of the most difficult periods in the company’s history. With the global steel industry still trying to come out of recession and the resultant slack demand, Corus, in particular, has been affected by a forced mothballing of its Teesside Cast Products (TCP) plant in northeast UK. Politicians, community workers and union leaders have been exerting considerable pressure on the company to find a new buyer for the TCP plant or other ways and means to keep the plant running. The partial mothballing of the TCP plant in February this year had resulted in 1,700 job losses in the company. In 2009, a global consortium of steel buyers prematurely dropped out of a 10-year buying contract, directly affecting TCP’s operations. This one contract was expected to consume nearly 80 per cent of the plant’s output.

Political leaders in Redcar (where TCP is located) have been campaigning for the revival of the steel works in the region. Vera Baird, member of Parliament for Redcar, reacting to the exit of Phil Dryden, said, “I intend to ask Tata Vice-Chair Muthuraman, what is going on? Phil Dryden told me that he spent the six months, between March (2009) when the consortium left, and the December decision to mothball the plant, seeking out an equity partner and trying to negotiate a deal which could have saved our steelworks. He was the management member who knew the customers of TCP and the plant’s closest details best. I am disappointed that he has left; however, it is more than a month since a US Dow Jones contact told me of market rumours that he had gone. Corus has simply declined to explain his absence and failed to disclose who is currently carrying out the sale negotiations.”

While there have been media stories suggesting a possible buyer for TCP may have been found, there is no official statement from Corus supporting this. Meanwhile, the company is also proceeding with legal course against the buyer-consortium that had broken the 10-year contract and landed TCP in trouble.

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