'Glimmer of hope' for Stocksbridge steelworks after £50m investment in sister site
The future is brighter for 750 staff at up-for-sale Stocksbridge steelworks after a £50m investment in its sister site in Rotherham and a surge in aeroplane orders.
The cash injection from parent company GFG Alliance aims to get both sites back to full production by the end of the month.
Rotherham, which employs 800, was mothballed following the collapse of the group’s lender Greensill in April.
It will also allow Stocksbridge, which depends 100 per cent on Rotherham for steel, to restart operations and for both to bring back furloughed workers.
It is the best news in Stocksbridge for months after GFG announced plans to sell it in May.
A source close to the company said that was still the intention but it wouldn't be easy because they were ‘complicated businesses’ that were ‘joined at the hip’.
Any deal would have to ensure supply from Rotherham continued.
Stocksbridge was never officially for sale, he added although there had been ‘quite a bit of interest’.
GFG’s plan is to prepare it for ‘responsible sale’ ‘but value can’t be created until both plants are running’.
He added: “Steelworkers in Stocksbridge can feel happy their plant is operating again. But it is not core to the business and the goal is to sell it. It may be that a partner comes in or someone with a similar operation.”
Stocksbridge is also set to benefit from an unexpected surge in orders from airlines that scrapped planes grounded during the pandemic, he added.
Mothballing and re-starting such sensitive machines had not proved possible in many cases.
The £50m announced on Sunday is from group reserves and was possible due to successful refinancing following the collapse of lender Greensill.
It comes after government rejected an appeal for £170m financial support in March.
But the source insisted it was not a ‘make or break’ situation.
“The business is quite profitable around the world. The group and the creditors are signed up to invest in this business and make it viable. I’m confident it will achieve its milestones and hopefully quicker than the first one,” he said.
It is understood the company has continued to pay workers in South Yorkshire 80 per cent of pay following the end of the government’s furlough scheme last month.
A Stocksbridge worker, who asked not to be named, said there was now a ‘glimmer of hope’.
He added: “I’d rather be at work than at home. But Rotherham will burn through that £50m in no time. At full tilt, the site uses the same power as a small city.”
In August he pondered whether the two sites could be successfully split.
He said then: “It would be the first time they have been separated in decades. Stocksbridge buys all its steel from Rotherham and Rotherham relies on Stocksbridge to keep its meltshop going. Any agreement that was unfavourable after a split could see them both go under.”
Rotherham produces steel used in construction and infrastructure projects. Stocksbridge is part of the Speciality Steels division which includes Brinsworth strip mill in Rotherham and Performance Steel in West Bromwich.