Engineering news
Tata Steel is to sell its Long Products division, which employs 6,500 workers in the UK, to an industrial commodities group headquartered in Geneva.
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 has a chemicals, metals and oil division and was founded in 1990. The company and its founder, Swiss-American Gary Klesch, has a reputation for being “vulture capitalists” with a confrontational approach to failing European businesses. Klesch has been invovled in a number of high profile European acquisitions, including parts of the Corus business when it was first acquired by Tata.
Gary Klesch, chairman of the Klesch Group, said: “We are delighted to announce this agreement. The Klesch Group has deep experience in the long products sector, and I look forward to sharing this experience with their team. We believe there is a growing market for the first class products made by this business and we intend to capitalise on this demand.”
The trade unions within Tata Steel, Community, Unite and GMB responded with disappointment at the announcement. In a joint statement they said: “Tata Steel has failed to consult at all with the trade unions before making this move, which could have serious consequences for employees and contractors right across Tata Steel, not just within the Long Products business that it wants to sell.
“The unions have been treated with contempt in this process as the level of consultation that we would expect ahead of such a major strategic announcement has not taken place.
“We were made aware of this fait accompli two days ago which is neither within the spirit nor the letter of longstanding Information and Consultation or European Works Council agreements.”
Karl Koehler, chief executive of Tata Steel's European operations, said: “We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.”
The Long Products division currently produces around 3 million tonnes and has the capacity to produce up to 5 million tonnes.
The job losses are the latest in a series of job cuts made since the Indian conglomerate bought Anglo-Dutch steel giant Corus in 2007 for £6.2 billion.
Last month engineers at a Tata Steel R&D centre in Grangetown, Middlesbrough, balloted in favour of strike action after management announced they were to be transferred to a not-for-profit metals research organisation.
Earlier this year Tata cut 400 jobs from its Port Talbot site in South Wales. Last year the firm cut 500 jobs from three steel factories at Scunthorpe, Teesside and Workington. In 2012 the firm cut 900 jobs, 600 at the Port Talbot site. In 2011 it axed 1,500 jobs from its Scunthorpe, Teesside plants and its Lackenby Beam Mill and Skinningrove Long Products' sites in North Yorkshire.