The truth behind the headlines

first_imgIna Personnel Today exclusive, Mike Broad talks to the man in the hot seat atCorus, Allan Johnston. The personnel director at the steel giant explains thebackground to the job cuts at an emotionally charged timeWhensteel giant Corus announced 6,050 job losses on 1 February, the ensuing clamourby politicians and the media drowned out much of the company’s explanation andnew priorities.Agreat deal was made of the affected workforce finding out about theredundancies on the same day as the media. But little was known about thesophisticated internal communication strategy, implemented by the company’s HRteam, which successfully informed most of the employees – through a combinationof face-to-face meetings, e-mails and freephone information – before the mediadid. Also,little has been made of the fact that the redundancies are proposals and arenot set in stone. Corus claims to be taking the 90-day consultation period withstaff and unions seriously. “Wewere accused of not consulting, and of not giving people the opportunity torespond. 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 ofproposals.”Thesteel manufacturer offered the unions a two-week period following theannouncement to consult with members before the 90-day consultation periodstarted. Under UK law, companies are only obliged to offer the 90-day periodafter the announcement of mass redundancies. Johnstonsaid, “It is my intention to make it obvious [to the unions] that if what theyhave to say to us is sensible then it will be considered in all seriousness.” Therehas only been one formal proposal so far, which involved the unions buyingCorus’ large plant in Llanwern, South Wales. UnderCorus’ proposals basic steel making will cease at the plant with the loss ofmore than 1,300 jobs. But, according to Johnston, the unions’ proposal wasnot  feasible. “The competitive positionof the company would be undermined,” he explained. Othersolutions are being developed, including a plan for cutting the hours ofthreatened employees to protect their jobs.Corushas two sets of priorities during the consultation period. Johnston said, “Thefirst set is to get to a position where we’ve taken into account people’salternatives 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 andretraining that the company is currently developing. It will also be workingwith local agencies and employers to create jobs. Johnston is also chairman ofUK Steel Enterprise, the job creation arm of the Corus, which has been providedwith an additional £10m to spend in the affected areas. Thecompany has, for example, already started discussions with Ford which intendsto invest £220m and create 600 jobs at its Bridgend plant in Wales. Corus hasalso launched a pioneering deal with the AEEU union and EXi Telecoms to createhundreds  of  jobs for redundant steel workers in the telecoms industry.Thecompany’s planned strategy should cut £180m a year from operating costs. It isthought the company made an operating loss of £350m last year on its UK steelproduction, which the company has blamed on reduced domestic demand, hightransportation costs and the strength of the pound. The City reacted favourablyto the plans with the group’s shares increasing by 10 per cent the followingday.Johnstonsaid, “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.” Johnstonbelieves staff were “generally happy” with the efforts the company made toinform them of the restructuring. He said, “We were determined that the peoplewho should find out first what was going to happen were the people mostaffected.“Obviouslyonce announced the proposals were big news and were on the news wires withinone minute, but not before consultative meetings had begun in every plantaffected.”Thecompany was vilified for not informing the Government of the decision, butJohnston explained that this was to prevent leaks. Only 30 staff at Corus knew.Hesaid, “We trust the politicians, but at every meeting there are always half adozen civil servants around. In our experience, there is a danger that they goback to their departments, start to discuss their response and the news getsout.”Internalcommunication is only a small part of Johnston’s role. He is one of sevenexecutive committee members who developed the plan, and was integral to thedecision-making process. He said, “I’ve got a responsibility for HR but it isnot compartmentalised. I was fundamentally involved in the choice of theoptions.“Ina situation like this, where a major restructuring is taking place, there areplenty of options and there could have been a great many different outcomes tothe deliberations. One of my roles has been to ensure that the right decisionwas taken when it came to the chosen option.” WhileJohnston believes the 90-day consultation period will allow the proposals to befine-tuned, he welcomes Trade and Industry Secretary Stephen Byers’ decision toreview the laws requiring consultation “in good time”. Hesaid, “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 isgood.”Unlessrestructuring has significant national implications, such as in Corus’ currentsituation, Johnston would prefer consultation at a local level. “I’d like tosee consultation take place where it has most effect – which is generally inthe workplace. If you are someone who works in Port Talbot or Scunthorpe whatyou really want to know is, ‘What the hell is going on in my plant?’“Weare certainly more comfortable having works council meetings at plant levelrather than at national level. Whether we then need to consult at a nationallevel is highly questionable.”Hebelieves that if the EU directive on information and consultation did becomelaw next year, forcing employers to talk to the workforce before major changeswere announced, then employers and unions would have to mature in theirrelationship. Johnstonsaid, “We’d have to get into a situation where the trade unions and ourselvesare able to talk a lot more in confidence than we currently do. If we had goneinto this particular announcement with very significant prior consultation withsenior trade unionists they would have been in a totally impossible position.“Don’tforget our predecessor, British Steel, was one of the few companies in the UKto have employee directors. They sat on the board as we agreed to close theirplants – it was almost an impossible position for those people to findthemselves in.” Lastweek staff at Vauxhall’s Luton plant voted for strike action following theDecember announcement that 2,000 workers would be made redundant. ButJohnston is confident that Corus will not be crippled by industrial action. Hesaid, “We will still have 20,000 people in the industry in dozens of sitesaround the UK if all the restructuring goes through as we envisage. “Ibelieve people will be very sympathetic to those affected but will get on withwhat they need to  at their own works.” Asthe consultation period develops, the HR team will be focusing on theoutplacement of staff and will look to rebuild lost confidence. He said,“Negative publicity is inevitable – you don’t expect laurel wreaths for puttingout this sort of information. What we need to do now, in the middle of anemotional period, is a really professional job and look after the people asbest we can.”Corus:the knock-on effects–Corus’ restructuring will result in the reduction of 3 million tonnes of ironand steelmaking capacity in the UK. The plan includes making 6,050 staffredundant.–Sites that will be closed include Ebbw Vale and Bryngwyn, with the loss of 780and 127 jobs respectively. Plants that will be reduced in size includeLlanwern, 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-dayconsultation period then the redundancies will occur between 2001 to 2003,although Corus’ personnel director Allan Johnston claimed that all but a fewhundred job losses would occur this year. –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. 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