INDIA’S Tata Steel says it wants rid of its unprofitable UK operations, casting doubt on the future of thousands of jobs across the country.
Noting with deep concern “the deteriorating financial performance” of its UK operations, the group’s board has ordered its European subsidiary to explore all options for divesting them. The decision continues the spate of site closures and job losses suffered by the UK steel sector in the past 12 months, with Tata Steel blaming the need to quit on global oversupply, poor regional demand and high manufacturing costs.
Giving a hint to the scale of the troubles facing the company, Tata says it has written down the value of its UK assets by more than £2bn (US$2.8bn) in the last five years. Steelworkers will have been hoping Tata would greenlight an ambitious turnaround plan devised to make operations profitable within two years but the group described them as “very risky” and has ordered a quick sale.
Responding to the news, Roy Rickhuss, general secretary of the steelworkers union Community, called for time to find a buyer. “Our worst fear that Tata would announce plant closures today has not been realised…it is vitally important that Tata is a responsible seller of its businesses and provides sufficient time to find new ownership.”
Tata Steel employs 15,000 people in the UK. Around 5,000 are employed at plants in Lanarkshire and Scunthorpe, which are already in the process of being sold. This leaves 10,000 employers – with 4,000 at the Port Talbot site – at risk of losing their jobs.
There have been calls for a government buyout of the business, but this would expose taxpayers to losses of £1m a day from Port Talbot alone.
Terry Scuoler, chief executive of the manufacturing trade group EEF, described the decision as a massive blow for the steel industry and wider manufacturing.
“As well as short-term emergency measures, in the longer term we need to see all major procurement projects, from HS2 to Hinckley Point, all using British steel,” he said, adding that government must do more to reduce business rates and high energy costs.
“Finally and, perhaps most importantly, it is vital the UK government supports aggressive measures at EU level to prevent Chinese dumping [of steel].”
The UK government has faced vociferous calls from unions to address China’s export of artificially-cheap steel to the EU following the closure of the SSI’s steelworks in Redcar last year, and the loss of 1,000 jobs at Tata plants earlier this year.
China is not immune to the troubles, with its minister of human resources and social security saying last month that 1.8m workers will need to lose their jobs in the mining and steel industries in the face of oversupply and a slowing economy.
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