Select Committee on Science and Technology Minutes of Evidence

Memorandum submitted by the Steel Industrial Managers Association (SIMA)


  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.


  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.


  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?


  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.


  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.


  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.


  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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