Tata Steel, Long Products Hub

Posted: 1st Jan 2014 in Case studies

The situation

In 2013 Paul Herbert was appointed as CRO to this iconic Scunthorpe business which produces 3.1 million tonnes of liquid steel per year and converts this into sections, rail, plate and rod with a turnover c£1.6bn and 8,200 employees. Fuelled by a drop-in demand for construction steel and a global decline in steel prices, the business was in financial difficulty and needed to add c£30m to its current year P&L and c£60m to its next year forecast in order to attract new investment.

Our approach

Effecting the savings

Paul established a matrix structure representing the key revenue streams and the key material, variable and fixed costs. An open ‘war room’ under a ‘path to profit’ banner provided a visual engagement for all stakeholders and tracked many saving opportunities including a scrap drive, mining for iron units, electricity triad management and deferral of non-critical maintenance.

Restructuring was needed to drive profitability and cash earnings. In October 2013 a reduction in 500 heads across the Scunthorpe, Workington and Teesside sites was announced. The Community Union rightly opposed compulsory redundancies and Paul worked effectively with the site HR team on a restructuring which achieved all the annual savings, c£20m, through voluntary redundancies.

Finding the new investor

Paul facilitated initial meetings between the Tata Steel Europe Board and Greybull Capital who would eventually buy the business for a nominal £1.

Results

The Greybull deal came with a promise to invest £400m in the business and reviving the British Steel brand name. Then Business Secretary Sajid Javid said he believed "there really is a viable, sustainable future for world-class steelmaking in this country". In 2017 and 2018 British Steel returned to profit.