BRITAIN’s largest steelmaker, Corus, is poised to cut up to 3,500 jobs this week in one of the biggest blows yet to the faltering manufacturing sector.

Further large-scale job losses are expected within weeks, with Jaguar Land Rover understood to be considering another 1,500 layoffs.

Toyota, which to date has refrained from cuts despite the automotive downturn, was yesterday reported to be looking at trimming staff from its UK operations for the first time.

The Corus cuts are likely to overshadow this week’s announcement by Lord Mandelson, the business secretary, of aid for the car industry. Loan guarantees to car-finance firms will be one of a raft of measures aimed at stimulating demand.

Union leaders have been in last-ditch talks with the government in an attempt to fend off some of the job cuts. In the case of Corus, they have pressed ministers to adopt a system offered by the Dutch government. Corus has operations in the Netherlands, where the state makes up the pay of workers put on short working weeks.

It was unclear last night whether the government had turned its back on such a scheme, but it is understood that the Corus job losses will go ahead. They are part of a long-term restructuring drawn up by outgoing chief executive Philippe Varin. Numbers were being finalised this weekend.

Corus management had planned to introduce the changes gradually, but the plan has been accelerated by the crisis in the world steel industry. Production worldwide dropped by a quarter in December, according to figures released last week by the World Steel Association.

The slump has been caused by the paralysis gripping two of steelmakers’ main markets, construction and car manufacturing.

Steel prices, which had been driven to record highs by strong demand from China, have more than halved in the last year.

Corus is Europe’s second-largest steelmaker and the ninth largest in the world. It was formed a decade ago from the merger of British Steel and Dutch firm Hoogovens.

Warring between the two sides of the group and financial problems brought it close to disaster in 2003, but it recovered strongly under Varin’s leadership as steel prices rose.

Two years ago it was bought by Tata Steel, sister company of Tata Motors, the owner of Jaguar Land Rover, for £6.7 billion.

Corus had two suitors – Tata and CSN of Brazil – with the Indian group finally winning the battle after an extraordinary late-night auction.

It is understood the planned job cuts will come across the company’s 23,000-strong British workforce, and are not expected to lead to the closure of any large sites.

Corus’s steelmaking operations are at Port Talbot, Scunthorpe and Teesside, with steel processing at sites in South Wales, Scotland and the Midlands.

“This is not about site closure. This is about making Corus in the UK competitive,” said one industry insider. Some analysts question whether Corus can continue to make steel in the UK in the long term – it struggles to compete with competitors in India and Brazil.

The company’s supporters, however, point to the efficiency of its Dutch plants, and the improved performance of its UK plants, which have given it a dominant market share in Britain.

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