In
a Personnel Today exclusive, Mike Broad talks to the man in the hot seat at
Corus, Allan Johnston. The personnel director at the steel giant explains the
background to the job cuts at an emotionally charged time
When
steel giant Corus announced 6,050 job losses on 1 February, the ensuing clamour
by politicians and the media drowned out much of the company’s explanation and
new priorities.
A
great deal was made of the affected workforce finding out about the
redundancies on the same day as the media. But little was known about the
sophisticated internal communication strategy, implemented by the company’s HR
team, which successfully informed most of the employees – through a combination
of face-to-face meetings, e-mails and freephone information – before the media
did.
Also,
little has been made of the fact that the redundancies are proposals and are
not set in stone. Corus claims to be taking the 90-day consultation period with
staff and unions seriously.
“We
were accused of not consulting, and of not giving people the opportunity to
respond. We were even accused of being arrogant,” said Allan Johnston,
personnel director of Corus. “But what we have put to the unions is a set of
proposals.”
The
steel manufacturer offered the unions a two-week period following the
announcement to consult with members before the 90-day consultation period
started. Under UK law, companies are only obliged to offer the 90-day period
after the announcement of mass redundancies.
Johnston
said, “It is my intention to make it obvious [to the unions] that if what they
have to say to us is sensible then it will be considered in all seriousness.”
There
has only been one formal proposal so far, which involved the unions buying
Corus’ large plant in Llanwern, South Wales.
Under
Corus’ proposals basic steel making will cease at the plant with the loss of
more than 1,300 jobs. But, according to Johnston, the unions’ proposal was
not feasible. “The competitive position
of the company would be undermined,” he explained.
Other
solutions are being developed, including a plan for cutting the hours of
threatened employees to protect their jobs.
Corus
has two sets of priorities during the consultation period. Johnston said, “The
first set is to get to a position where we’ve taken into account people’s
alternatives and come to a final view of the configuration. Once that is done,
we move on to how we deal with the people-consequences of the restructuring.”
The
“people consequences” will be tackled through a combination of counselling and
retraining that the company is currently developing. It will also be working
with local agencies and employers to create jobs. Johnston is also chairman of
UK Steel Enterprise, the job creation arm of the Corus, which has been provided
with an additional £10m to spend in the affected areas.
The
company has, for example, already started discussions with Ford which intends
to invest £220m and create 600 jobs at its Bridgend plant in Wales. Corus has
also launched a pioneering deal with the AEEU union and EXi Telecoms to create
hundreds of jobs for redundant steel workers in the telecoms industry.
The
company’s planned strategy should cut £180m a year from operating costs. It is
thought the company made an operating loss of £350m last year on its UK steel
production, which the company has blamed on reduced domestic demand, high
transportation costs and the strength of the pound. The City reacted favourably
to the plans with the group’s shares increasing by 10 per cent the following
day.
Johnston
said, “If you want to sell steel in Europe then you sell it in deutschmarks.
Four years ago, you could sell a tonne of steel for 500DM which was about £220.
If you sell the same tonne of steel at the same price today you would receive
£147.”
Johnston
believes staff were “generally happy” with the efforts the company made to
inform them of the restructuring. He said, “We were determined that the people
who should find out first what was going to happen were the people most
affected.
“Obviously
once announced the proposals were big news and were on the news wires within
one minute, but not before consultative meetings had begun in every plant
affected.”
The
company was vilified for not informing the Government of the decision, but
Johnston explained that this was to prevent leaks. Only 30 staff at Corus knew.
He
said, “We trust the politicians, but at every meeting there are always half a
dozen civil servants around. In our experience, there is a danger that they go
back to their departments, start to discuss their response and the news gets
out.”
Internal
communication is only a small part of Johnston’s role. He is one of seven
executive committee members who developed the plan, and was integral to the
decision-making process. He said, “I’ve got a responsibility for HR but it is
not compartmentalised. I was fundamentally involved in the choice of the
options.
“In
a situation like this, where a major restructuring is taking place, there are
plenty of options and there could have been a great many different outcomes to
the deliberations. One of my roles has been to ensure that the right decision
was taken when it came to the chosen option.”
While
Johnston believes the 90-day consultation period will allow the proposals to be
fine-tuned, he welcomes Trade and Industry Secretary Stephen Byers’ decision to
review the laws requiring consultation “in good time”.
He
said, “We have to be careful – we don’t want one package for every situation.
Neither is it right that UK consultation is crap and European consultation is
good.”
Unless
restructuring has significant national implications, such as in Corus’ current
situation, Johnston would prefer consultation at a local level. “I’d like to
see consultation take place where it has most effect – which is generally in
the workplace. If you are someone who works in Port Talbot or Scunthorpe what
you really want to know is, ‘What the hell is going on in my plant?’
“We
are certainly more comfortable having works council meetings at plant level
rather than at national level. Whether we then need to consult at a national
level is highly questionable.”
He
believes that if the EU directive on information and consultation did become
law next year, forcing employers to talk to the workforce before major changes
were announced, then employers and unions would have to mature in their
relationship.
Johnston
said, “We’d have to get into a situation where the trade unions and ourselves
are able to talk a lot more in confidence than we currently do. If we had gone
into this particular announcement with very significant prior consultation with
senior trade unionists they would have been in a totally impossible position.
“Don’t
forget our predecessor, British Steel, was one of the few companies in the UK
to have employee directors. They sat on the board as we agreed to close their
plants – it was almost an impossible position for those people to find
themselves in.”
Last
week staff at Vauxhall’s Luton plant voted for strike action following the
December announcement that 2,000 workers would be made redundant.
But
Johnston is confident that Corus will not be crippled by industrial action. He
said, “We will still have 20,000 people in the industry in dozens of sites
around the UK if all the restructuring goes through as we envisage.
“I
believe people will be very sympathetic to those affected but will get on with
what they need to at their own works.”
As
the consultation period develops, the HR team will be focusing on the
outplacement of staff and will look to rebuild lost confidence. He said,
“Negative publicity is inevitable – you don’t expect laurel wreaths for putting
out this sort of information. What we need to do now, in the middle of an
emotional period, is a really professional job and look after the people as
best we can.”
Corus:
the knock-on effects
–
Corus’ restructuring will result in the reduction of 3 million tonnes of iron
and steelmaking capacity in the UK. The plan includes making 6,050 staff
redundant.
–
Sites that will be closed include Ebbw Vale and Bryngwyn, with the loss of 780
and 127 jobs respectively. Plants that will be reduced in size include
Llanwern, Shotton and Teeside, with the loss of 1,340, 319 and 234 jobs.
–
If the proposals still represent the company’s strategy following the 90-day
consultation period then the redundancies will occur between 2001 to 2003,
although Corus’ personnel director Allan Johnston claimed that all but a few
hundred job losses would occur this year.
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–
The company’s UK manning levels will be 22,000 after the restructuring.
–
The company estimates that the measures will save it £180m a year.
