The restructuring will see cut 440 jobs and manufacturing suspended at its plant in south Wales, turn its Newport manufacturing plant into a distribution centre, idle a site at nearby Tredegar and another at West Bromwich, in the West Midlands, and cut back production of primary steel and steel products in Rotherham.
The company said the four-point restructuring plan will "create an entity positioned to better withstand challenging market conditions, serve strategic supply chains and provide the foundation for a decarbonised UK steel industry".
With the support of major customers, LSUK will focus on high value alloy steel production at Speciality Steel UK (SSUK) sites in Rotherham, Stocksbridge and Brinsworth serving strategic aerospace, energy and engineering supply chains.
SSUK will ramp up high value production at specialist plants through the year with a view to breaking even in September, laying the ground for further upside potential. LSUK has halted the sale process for the Stocksbridge and Brinsworth plants.
A reduction in primary production at Rotherham, replaced by imported billet and slabs to feed rolling and finishing lines at Rotherham, Scunthorpe, and Dalzell as an interim measure to mitigate the impact of uncompetitive energy costs.
The idling of Liberty Steel Newport and downstream processing facilities, and Liberty Performance Steel West Bromwich, with the former transformed into a sales and distribution hub for Liberty products.
A commitment to restart commodity production and idled plants when the market and operating conditions allow, and a longer-term aim of growing Rotherham into a 2 million tonnes per year green steel facility.
Despite the injection of £200m of shareholder capital over the last two years, Liberty Steel says the production of some commodity grade products at Rotherham and downstream mills has become unviable in the short term due to high energy costs and imports from countries without the same environmental standards. Primary production through Rotherham’s lower carbon electric arc furnaces (EAFs) will be temporarily reduced while uncompetitive operating conditions prevail.
These actions together with the idling of Liberty Performance Steels in West Bromwich and the reconfiguration of Liberty Steel Newport into a storage, distribution and trading hub, may potentially impact up to 440 roles across the business. The company will consult with employee representatives, trade unions and UK government throughout the process.
Liberty will offer an alternative to redundancy through its unique Workforce Solutions programme, which aims to retain, redeploy and reskill affected colleagues. Under the programme employees will be offered a level of guaranteed salary and outplacement opportunities, with the intention of being redeployed within Liberty Steel UK on previous employment terms when market conditions allow.
The steps laid out Liberty said will forge a viable way forward for the business, provide a safety net to affected employees and help safeguard jobs in Liberty wider workforce of 1,900 permanent employees, and up to 5,000 including contractors.
Jeffrey Kabel, chief transformation officer for Liberty Steel Group, said: “Refocusing our operations will set the right platform for Liberty Steel UK’s high-quality manufacturing businesses to adapt quickly to challenging market realities.
"The support of our marquee customers will enable us to produce high value, differentiated products through 2023 and beyond for strategic sectors such as aerospace, defence and energy. We remain committed to our longer-term growth plans in the UK including our plan to grow Rotherham into a 2 million tonne green steel hub.
“While our action is expected to regrettably impact the roles of some of our workforce we will provide a level of guaranteed salary and out placement opportunities through our unique Workforce Solutions programme as an alternative to redundancy.
"Liberty’s shareholder Sanjeev Gupta has supported the business through a very difficult period and remains committed to the workforce here in the UK and ensuring our lower carbon operations help deliver a sustainable, decarbonised UK steel industry.”
Commenting on restructuring plans at Liberty Steel UK, director general of UK Steel, Gareth Stace, said: “Today’s restructuring announcement from Liberty Steel highlights the significant challenges UK steel companies face navigating the current harsh market conditions.
"There will naturally be concern regarding the 440 jobs potentially impacted, but this is unfortunately an ongoing risk that accompanies a persistently uncompetitive business environment here in the UK, further exacerbated by global supply chain difficulties.
“High energy prices have played an important role in the decisions announced today, with long-standing uncompetitive electricity prices having constrained UK investment and steel production for some time.
"This highlights again the need for government to fully address the UK’s structurally high industrial energy prices, looking beyond the important announcements made regarding the Energy Bills Discount Scheme earlier this week. It is crucial we also now see the development of a long-term decarbonisation plan for the sector, ultimately ensuring that the UK can be seen as an attractive place to invest in steel production.”
