Wednesday, March 30, 2016

News: Tata talks of selling off UK operations


A review of the European operations of Tata Steel has led to further uncertainty for steelworkers in Rotherham after the Indian-owned steelmaker concluded that it is exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts.

Prompted by uncertainty over the future of the Port Talbot site, a proposed restructuring and transformation plan for Strip Products UK was discussed at a Tata Steel board in Mumbai yesterday. The board said that it would not be able to support the plan believing that it is "unaffordable, requires material funding support in the next two years in addition to significant capital commitments over the long term, the assumptions behind it are inherently very risky, and its likelihood of delivery is highly uncertain."

Whilst the announcement focused on Strip Products UK, based in South Wales, it sent shockwaves through other Tata Steel locations in the country, including in South Yorkshire where the Speciality Steels business is located at Stocksbridge and Rotherham (Aldwarke) sites, and at Templeborough where narrow strip is produced at the Brinsworth works. In 2015, around, 2,000 people were employed by the company in South Yorkshire.

Having discussed the deteriorating financial performance of the UK subsidiary, trading conditions in the UK and Europe, the global oversupply of steel, cheap imports from China, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency, the shock came from the conclusion of the release to the stock exchange.

Tata bosses stated: "Following the strategic view taken by the Tata Steel Board regarding the UK business, it has advised the Board of its European holding company i.e. Tata Steel Europe, to explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts. Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe Board will be advised to evaluate and implement the most feasible option in a time bound manner."

John Healey MP met with Labour leader, Jeremy Corbyn in Dalton last week to discuss the impact of job losses at the Aldwarke plant. The Wentworth and Dearne MP has called for more clarity from Tata on the future of the UK operations. He said: "This is a huge shock overnight. We thought the board in India were looking at the future of Port Talbot but this seems to suggest they have thrown in the towel on UK steelmaking and the number one thing we need now is a clear statement from the company about their plans and a firm commitment that they are going to continue operations in the UK until they get the sales sorted out.

"They gave a really technical statement overnight, which was heavily loaded. It's not very clear. They said they are going to "explore all options for restructuring, including the potential divestment of Tata steel UK, in whole or in parts," and we need to know what it really means for South Yorkshire, what it means for Rotherham, what it means for Stocksbridge.

"It looks like they are trying to get rid of the UK operation, but we need to know the detail. Does it mean everything and what are they going to do in the meantime? We need them to continue operations in the meantime so we can avoid a situation like Teeside.

"We have in South Yorkshire with speciality steels some of the best steelmaking, the best quality and the highest performing, anywhere in the world. So there has got to be a future for steelmaking in South Yorkshire and we cannot sit by and allow this to be the end of steelmaking in the UK. You cannot have an advanced economy without a steelmaking base to support your manufacturing base.

"We need a clear statement from the company about what they mean and what they are going to do.

"From the Government we need to know that they are considering all options, including being ready to back a buyout if management and workers want to do that, including taking temporary ownership if that is required to see these plants safeguarded until they can be sold on to buyers who are prepared to invest and stick with British steelmaking for the long-term."


Tata Steel has for a long time been warning that continuing cheap imports risk undermining Europe's steel industry and that uncompetitive energy costs and the strength of sterling are hurting its UK operations. In July 2015 it announced that another 720 jobs were at risk - including 500 in Rotherham - as it works through proposals to restructure its speciality and bar business.

In response, politicians, business leaders and unions have been working on a joint action plan in a bid to secure a £9m package to help individual workers facing redundancy and supply chain businesses likely to be hit hard in Rotherham and the whole city region, as well as supporting other local companies to create jobs.

Cllr. Chris Read, leader of Rotherham Council, warned of the potential for further redundancies at a recent council meeting. He told commissioners and councillors: "Clearly this is a very difficult time and we are reaching the real crux of the difficult time with further redundancies expected to be announced within the next few weeks.

"I want to credit our RiDO staff on site, leading the resource centre, who have been praised by all sides - trade unions, employers and people who come into contact with them. They have held two jobs fairs so far with 150 referrals made to Rotherham College for staff seeking further training, and of course we expect those numbers to grow."

Tata Steel website

Images: Tom Austen


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