Tata Steel to consider 'all options' for UK business
30 Mar 2016
Tata Steel announced today it would "explore all options” for its loss-making UK business, which could spell thousands of job cuts if its local steel plants are sold.
The announcement follows a review of Tata’s UK business, where its total workforce is estimated at around 15,000.
In January the global steel company announced over 1,000 job cuts, with the Port Talbot operations bearing most of the brunt.
This is potentially a massive blow for the UK steel industry, wider manufacturing and for the local community.
Terry Scuoler, chief executive of EEF
The latest announcement is expected to impact employees at its Port Talbot plant as well as those working in facilities in Rotherham, Corby and Shotton.
Tata Steel Europe said it would “explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts”.
It said the recent “deteriorating financial performance” of the UK subsidiary had resulted from a global oversupply of steel, higher “third country” exports into Europe, high manufacturing costs, continued weakness in the domestic market and a volatile currency.
“These factors are likely to continue into the future and have significantly impacted the long term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years,” the company said.
It added that discussions with government to achieve the “best possible outcome for the UK business," would continue, within the restrictions of State Aid Rules and other statutory limits.
Steel workers union GMB has called on the government to step in to protect steel assets in the UK.
"We have to look at nationalising the steel industry. Even over a short period of time this will be needed to protect the assets. Otherwise, we will end up with the same situation we had with SSI in the North East where the government badly let everyone down," said Dave Hulse, GMB national officer.
Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, described today's announcement as "potentially a massive blow for the UK steel industry, wider manufacturing and for the local community."
He said it was essential ongoing support was provided by the company to continue operation of the plant, to provide time to find a suitable buyer.
"In tandem with this, the UK and Welsh Governments must match words with action and take all necessary steps to ensure there is a future for the steel industry in the UK by any means possible."
He added that the UK had one of the highest electricity costs for the energy intensive industries in Europe, owing to current domestic policies.
“We need to see a level playing field with our European competitors to ensure a positive future for the steel sector. Finally and, perhaps most importantly, it is vital the UK government supports aggressive measures at EU level to prevent Chinese dumping.”
Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers (IMechE), said: “Not only will this mean significant losses of around 14,000 jobs but it could lead to a serious long-term impact on UK manufacturing.
“The Institution encourages the government to think long and hard about how they can help the steel industry, making sure that it enables our manufacturing sector to have a sustainable future. To do this they must ensure that we do not become solely dependent on imports of all raw materials such as steel."
