How China killed Tata Steel in the UK

How China killed Tata Steel in the UK


How China killed Tata Steel in the UK

9 Dimers

A move by Tata Steel, Europe’s second-largest steel producer, to end operations in Britain following heavy losses is the latest in the growing list of the causalities of China’s economic slowdown. The prospect of massive layoffs by Tata Steel, which acquired British-Dutch steel company Corus Group in 2007 at a high premium, has arisen during the run-up to the referendum on British exit from the European Union (EU). Such are the ripples of globalisation that China’s economic downturn brings impact to distant shores.


There was a time when American economy used to rule and even small moments used to shake the world but now China has take them over and anything bad with Chinese economy has greater impacts on world economies.

China not able to digest it’s own success and now things going bad for them. The way China’s stock markets were swinging due to some manipulators tells you they are much sensitive than India. But both India and China making waves because of foreign money. Due to slowness in other economies most look at these two only.

By running UK plant Tata Steel would have suffered more in future. So it’s good to exit before than never. India’s foreign ventures rarelt give fruits.

Achilles armour
Dimer Of The Year 2012

@Navneet what’s your take on Tata steel share …
Short it ?

Break the bottle
Deal Captain

Sad news indeed..

Atleast happy to know that Jaguar and Rover acquisition paid off for Tata and gaining in sales and profits.

Bal ganesh
Deal Lieutenant

Corus acquisition itself was very bad step, high premium, so much loan, very risky trade, now the result. Trade unions or labour laws are very strict in Europe, so this TATA jumper could not get those extra free hours like in India. Feel sorry for employees but a lesson for RT who has no family so no value for family life.

RT says
“It’s a work ethic issue,” Mr Tata said. “In my experience, in both Corus and JLR [Jaguar Land Rover], nobody is willing to go the extra mile, nobody. I feel if you have come from Bombay to have a meeting and the meeting goes till 6pm, I would expect that you won’t, at 5 o’clock, say, ‘Sorry, I have my train to catch. I have to go home.’ Friday, from 3.30pm, you can’t find anybody in their office.”

Deal Major
@Achilles wrote:

@Navneet what’s your take on Tata steel share …
Short it ?

I think this is good decision by Tata Steel
Though time will tell whether their decision proves to be fruitful or not

Leicester city v liverpool
Deal Subedar

what will be the impact ?

Open uri20161119 27009 2xv7rv
Deal Captain
@hese wrote: .. Tata Steel, which acquired British-Dutch steel company Corus Group in 2007 at a high premium ..

they had their reason to do so. in hindsight we can all talk of strategies.

but personally, i was always sceptical of similar instances, where organisational culture or biting more than one can chew resulted in big gaps and erosion of capital

I had this intuition when:
#] amidst the uncertainty of airline industry or its de-growth, Air-Deccan’s assets were acquired by the King of good times
#] Bharti’s ambitious acquisition of unreasonably priced assets of MTN and other telco’s in Africa
#] simple folks like Telnor partnered Unitech or Vinod Goenka bet on Shahid Balwa (the young billionaire of the family that runs the famed restrau.)

telcom and India’s back-and-forth style of policy making had every hint of a disaster in making, with such marriages.

Richard Branson that way was a smart entrepreneur with Virgin

back on the commodity business that too picking up heavy investments in a market like Europe, Tata always had a weaker suit.

in-fact ever since the acquisition they had had to sell of parts of the family jewels like their hotel properties, beverage (tea/ coffee/ others) businesses and in general try to close the debts early ( the leverage taken during Corus acquisition)

now doing a post-mortem to shift the onus on Chinese economy is easy, but the fact is that not every Indian business has that organisational culture to be truly global and a successful conglomerate operating in various regions.
[this is not to downplay Tata’s. They are very successful in numerous businesses outside India and have a footprint all across the globe. But Corus might have been one bad call.]

Even Posco in India had it tough. Similarly Sesa Goa or Sterlite were not easy for Anil Agarwal.

P.S.: Lakshmi Niwas Mittal isn’t comparable in all this. He was a prodigy from a very young age who branched out to Indonesia when India had licence raj, thus ArcelorMittal (or its predecessors) have always had a better vision of things and are truly MNC.

Deal Subedar

it was an ego purchase for Ratan Tata, just as Jaguar LR, not backed by business judgement. but good decision for the share holders.