Engineering news
Tata Steel has confirmed that it is not selling its long products business to the US-based Klesch Group.
The planned sale, talks for which started in October 2014, covered several UK-based sites and 6,500 jobs, including Tata Steel's Scunthorpe steelworks and mills in Teesside, Dalzell and Clydebridge in Scotland.
The Long Products division makes steel products such as billets, blooms rebars, wire rod, rails, sheet piles and drawn wire used in sectors such as construction, energy and automotive.
The news that the sale abandoned emerged earlier this week. Karl Koehler, chief executive of Tata Steel’s European operations, said: “The long products business has been facing severe challenges. The establishment of long products as a wholly-owned subsidiary of Tata Steel UK has created a new structure that will enable it to determine the strategic options to be assessed and the appropriate actions to be taken.
“The UK steel industry is faced with stiff headwinds in the shape of rising imports, uncompetitive energy prices, a strong pound and the lack of an industrial strategy for the steel sector. Now more than ever the UK government needs to demonstrate commitment to steel as a foundation industry for the UK economy and to take immediate action to mitigate the effects of those issues which it has the power to influence.”
The long products business, has been made a subsidiary of Tata Steel UK as of this month.
The planned sale covers several UK-based sites including Tata Steel's Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington, Cumbria and a rail consultancy in York, as well as other operations in France and Germany.
The Long Products division makes steel products such as billets, blooms rebars, wire rod, rails, sheet piles and drawn wire used in sectors such as construction, energy and automotive.
The Klesch Group was founded in 1990 by Swiss-American Gary Klesch. The company has a reputation for being “vulture capitalists” with a confrontational approach to failing European businesses. Klesch has been involved in a number of high profile European acquisitions, including parts of the Corus business when it was first acquired by Tata.
Gary Klesch blamed rising energy prices and cheap imports from China for the end of the talks, it was reported.