Memorandum submitted by the Steel Industrial
Managers Association (SIMA)
INTRODUCTION
1. The Steel Industrial Managers Association
(SIMA) is an independent trade union representing middle managers,
professional engineers, and scientific personnel working within
Corus and has 3,500 members in the company, 400 in the technical
centres based in South Wales (WTC), Rotherham (STC) and Teesside
(TTC). The bulk of these are covered by collective bargaining.
THE MERGER
2. Since the formation of Corus (the merger
of British Steel and Koninklijke Hoogovens) significant changes
have been announced in the combined Research, Development and
Technology (R,D&T) function of the company. Most of these
changes appear to be impacting on the UK side of the business,
however, it is entirely possible that if the merger had not taken
place, under the present trading conditions, British Steel would
have been forced into a retrenchment programme. It can be argued
that Hoogovens is, to some extent, currently supporting a massively
unprofitable British Steel, particularly in the Flat Products
Business based mainly in South Wales.
FORWARD PROPOSALS
3. It has been indicated that in future
the research programme will concentrate on long term development
and "blue sky" research projects. In the UK, research
has tended to be fixed on shorter term projects with a minimum
term pay back. Merging with an organisation whose goal appears
to favour longer term objectives should be beneficial in achieving
this change in emphasis. On the other hand it is not clear how
this future programme will be funded. In British Steel the research
programme was clearly funded by various businesses who preferred
to support work with a clear link to improving their profitability.
It is by no means certain that they will be prepared to contribute
to projects with an uncertain result. Another factor is that the
current Director of Research, who is an Executive Board Member
of Corus, has announced his retirement and Corus have indicated
he is not to be replaced. One must question whether R,D&T
is seen as less important by Corus than the former British Steel?
R,D&T ORGANISATION/RE-ORGANISATION
4. The initial R,D&T organisation maintained
the existing three Technology Centres in the UK and added the
IJmuiden Technology Centre (IJTC) in the Netherlands. The concept
was "One Technology Centre on Four Sites". The management
structure appeared top heavy with a Managing Director and five
Directors. This structure was not viable from the start and after
a long period of deliberation a new structure emerged in which
the closure of the three existing UK Technology Centres was announced
together with the proposed building of a new Centre in Sheffield.
This meant that all the technologists in Teesside and Wales would
be forced to either relocate to Sheffield or IJmuiden, or into
their local business units, or leave the company. Optimistic estimates
of the number of jobs to be transferred into the business units
were announced, which subsequently have been shown to be completely
unrealistic.
5. One obvious effect of the R,D&T reorganisation
announced by Corus is a dramatic fall in the number of people
who will be employed in the new structure. British Steel's R,D&T
manning level was 830 spread across across three sites. In 2002
this will be approximately 450 people employed on one site (Sheffield).
By 31 October 150 jobs will already have been lost in the UK.
Although there have been no compulsory redundancies since most
of the reduction has been achieved by allowing staff to take early
retirement, there has been an enormous loss in experience which
will take years to replace. According to Corus the balance of
the remaining job losses in R,D&T in order to achieve the
target figure of 450 will be accomplished by transferring staff
to works based jobs. In view of the current trading position of
Corus this is looking increasingly less likely to happen and it
would appear that future redundancies are inevitable. These will
most likely occur when the Welsh and Teesside TCs close and staff
who do not wish to transfer to either Sheffield or Ijmuiden will
leave Corus. A knock on effect of these job losses is that Corus's
image as a good place to work will be tarnished in the eyes of
many potential recruits. Corus R,D&T needs to employ the best
people possible and adverse publicity will only make this harder.
Until the new centre opens, there will be continued uncertainty
and loss of experienced staff. As part of this uncertainty, new
research projects are not being started at WTC but are being started
and managed in IJTC.
MORALE
6. Experience over many years in the UK
of relocating groups of people has shown a very low take up rate
for transfers, with 20-25 per cent of people moving. It is likely
that an even lower success rate for international transfers will
be achieved. This again has accelerated the loss of experience
and knowledge which has now also become a loss of future potential
as the younger scientists and engineers leave the industry in
what has now become a flood. We now have an R&D organisation
in which the older, most experienced and knowledgeable staff have
opted to leave in the "synergy" exercise, and many of
the younger graduates with potential have found, or are looking
for, alternative employment. This leaves a group who are not old
enough to draw a pension, but may be too old to find suitable
alternative employment, who feel embittered that their loyalty
to the company has been so clearly a one way process. Their reward
is to be forced to uproot their families and relocate, in many
cases to a foreign country. For many people this is simply not
possible for family reasons. The choices they face cause stress,
desperately low morale, and the work output and quality is suffering
as a result.
EFFECT ON
CUSTOMERS
7. The customers for R&D are the operating
plants and business units, roughly two thirds of which are in
the UK. Process R&D is to be concentrated in the Netherlands
and the UK plant managers are expressing the view that, because
of longer response times and increased costs, they will reduce
the level of support for process R&D. This reduction in investment
will have major adverse consequences on the efficiency of operations
in the UK in the future. This at a time when the company faces
extremely difficult trading conditions and needs every bit of
process efficiency it can muster to survive. This then is a vicious
spiral, R&D is cut for so-called synergy reasons, process
R&D is relocated to Holland and the customers respond by cutting
support, this means further cuts in R&D are likely to follow
and the spiral takes a further twist. It is clear that this spiral
has been triggered by management action and is therefore a self
inflicted wound.
THE SUMMARY
8. Overall, the merger to form Corus has
had little benefit to research in the UK. Research is being carried
out preferentially in Holland, with less involvement of the experienced
UK staff. The fact that the bulk of process research is to be
undertaken in Ijmuiden (only 25 jobs in the UK) would leave UK
steel production in a very vulnerable position should the merger
collapse. The loss of experience as a result of job losses in
Wales and Teesside is incalculable and cannot be replaced in the
short term.
23 October 2000
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