The 215-year-old firm has been entirely bought out by the Ministry of Defence in a £2.56m deal and the promise of £400m investment in the next 10 years.
Speaking to The Star today, the manufacturer’s chief finance officer Stephen Hammell said the move was “very positive news for the city” and staff.
“At the heart of the deal announced today is the intention to invest up to £400m on site to develop our ability to support defence,” Mr Hammell said.
“That’s great news for our employees and our customers.
“This will transform our capabilities over the course of the next 10 years.”
The CFO said the nationalisation of Sheffield Forgemasters has been in talks for over two years and was agreed on the grounds that the Government invests £400m in replacing and upgrading much of its machine shop and forging equipment.
It includes replacing the firm’s 65-year-old forges, strengthening flood defences and over the next 10 years installing 19 new machine tools, each of which is bigger than a two-storey house.
It will also fund the construction of a large warehouse as a base for a 13,000 tonne press the business bought last year from a Japanese competitor for £125m.
It comes after the firm made 95 roles redundant in October 2020 over the pandemic’s impact on its commercial manufacturing.
It has been a long term steel supplier for MoD defence components on projects such as the UK’s Trident nuclear submarines.
Mr Hammell said there were “no immediate intentions” to change its workforce numbers following the buyout.
He said: “There is going to be a huge amount of of investment flowing into the company, and that will flow into the local and regional economy and we expect that to create jobs.
“Over the longer term we would expect by moving into new markets like off-shore windfarms and civil nuclear markets to be able to create new and highly skilled engineering jobs in the city.”
The nationalisation comes on the basis that the Government has become the owner of the firm and all of its shares while appointing two non-executive members to its board of directors, who have not yet been selected.
Mr Hammell said the business would not be akin to the Post Office through its “quasi-independence” from the MoD.
He said: “The MoD, having agreed to this investment, has quite reasonably looked to take ownership of the business if it’s going to be supporting us with that much money.
“We’re looking to grow and recover in commercial markets over the coming years.
“I think for Forgemasters this heralds a very bright future for the firm.”
The deal is set to complete on August 19. It will continue to be led by its existing management.
Union leaders at the firm branch of Unite has welcomed the buyout with what they called “a huge sigh of relief”.
The move is an unusual move for a Government led by the Conservative party, which has historically been opposed to nationalisation.