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Outokumpu to Close Sheffield Thin Strip Business
09/25/2008 - Outokumpu announces plans to close its thin strip business at Meadowhall in Sheffield, U.K.
Outokumpu announced this week its intention to close its thin strip business at Meadowhall in Sheffield, U.K. The proposal—which the company said is prompted by market over-supply for stainless precision strip and several loss-making years for this business in Sheffield—is part of Outokumpu's performance improvement actions to ensure global competitiveness.
The company estimates the closure of Meadowhall operations would result in a EUR 16 million reduction in annual fixed costs from the second quarter 2009 onwards. Write-downs and provisions of EUR 65 million (of which EUR 28 million is cash) would be recorded in the third quarter of 2008.
"Today's difficult announcement is a result of a very thorough analysis,” said Bo Annvik, Executive Vice President Specialty Stainless, Outokumpu. “We aim to continuously improve our competitiveness and despite the commitment and excellent work in the Sheffield Thin Strip business, we do not anticipate material improvement in the highly competitive precision strip market.”
In 2007, the Meadowhall plant’s total stainless steel deliveries were 12,000 tonnes. Its products—specialized, very thin forms of stainless steel strip products—are also produced at the company’s Outokumpu Kloster unit in Långshyttan, Sweden. The company intends to transfer most of the Meadowhall plant’s business to Kloster, which enables Outokumpu to utilize synergies and to deliver full benefits of Kloster's production capacity.
“In the next coming weeks we will work closely with union representatives to find solutions to support our personnel in this process,” said Annvik.
Local consultation is to start immediately with the workforce and the appropriate trade unions to consider different alternatives to find a suitable solution for all parties. Outokumpu said it also will commence discussions with customers to put in place possible alternative supply routes in order to maintain the best possible customer service.
