Engineering news
Tata Steel is to refocus its speciality and bar business on high-value markets in a move that will result in up to 720 jobs being lost in the UK.
The proposal is for 685 job cuts at two plants in Rotherham and Stocksbridge in South Yorkshire and 35 job cuts at Wednesbury in West Midlands. These job losses are proposed for the end of March 2016.
The company said the Rotherham site had been underperforming in the face of commodity-grade steel being imported to the UK due to the strong pound and high electricity costs which are more than double those of key European competitors.
Karl Koehler, chief executive of Tata Steel’s European operations, said the company has invested more than £20 million in recent years in its speciality steels business – including five new remelting furnaces capable of producing the advanced materials – but the business is being crippled by high electricity costs.
“We want to play our role in reinvigorating the UK’s manufacturing industry, but increasing imports and high energy costs have further undermined the competitiveness of foundations industries. Now is the time for government to act.
“Foundation industries like ours urgently need a competitive business environment and a government willing to strengthen UK manufacturing supply chains. This would ensure the UK remains an attractive place to invest.”
Koehler added: “I realise how distressing this news will be for all those affected, but I am also extremely aware of our responsibility towards the ongoing survival of this business which will continue to employ about 1,500 people in South Yorkshire.”
Mark Broxholme, managing director of Tata Steel’s speciality and bar business, said reshaping the business would give it the best chance to succeed in "fiercely-competitive markets".
“We want to continue the investment in this business to improve the range of high-value products and services for our target markets,” he added.
The announcement has led to unions calling on the government to act to ensure competitive tariffs for large scale power users.
Dave Hulse, GMB national officer, said: “It is a very big blow for UK manufacturing particularly after all the hard work that has been put in by all concerned to bring stability to the business after the dispute about the pensions scheme.
“GMB will want to assess with BIS how UK is losing out due to the weakness of the euro sucking imports into the UK and the extent to which higher power costs here than for EU competitors is leading to job losses. Government must ensure competitive tariffs for large scale power users so that the push for low carbon does not drive heavy industry out of the UK.”
Gareth Stace, director of UK Steel, added: “The sector is facing a potent cocktail of high energy costs, a strong pound and overcapacity in competitor countries. Whilst factors such as currency are out of our control we simply cannot afford to keep overloading our companies with energy costs which in some cases are almost double those faced elsewhere, otherwise this is the result we will see.”
Roy Rickhuss, general secretary of Community, commented: "While we still need to study the full rationale behind today's announcement, it is clear the UK steel industry is in a perilous state and as the biggest producer, Tata Steel is particularly affected. There is already a case for government action. We have been saying for years that uncompetitive UK energy costs are damaging the UK steel industry. The electric arc furnace operations in Rotherham have been impacted by higher electricity prices. The government needs to stand up for steel and take urgent action to support energy intensive industry while there is still chance to save the jobs at risk."
Tata Steel’s subsidiary UK Steel Enterprise will now look at how it can provide more support to the local communities affected by today’s announcement and help stimulate new job creation in those areas. Over the past four decades the organisation has helped to regenerate local economies with £85 million of support and created 75,000 new jobs across the UK.
The company said it work closely with those at risk and their trade union representatives to redeploy employees and minimise the number of compulsory redundancies.