Loss of 1,200 steel jobs confirmed in Scunthorpe and Scotland

ThE Government was accused of feting the President of China while his country’s cheap steel exports undermines the British steel industry today.

By The Newsroom
Tuesday, 20th October 2015, 4:25 pm
A sign at a Tata facility.  Photo: Anna Gowthorpe/PA Wire
A sign at a Tata facility. Photo: Anna Gowthorpe/PA Wire

Shadow Business Minister Kevin Brennan claimed the Government was happy to let Britain’s steel industry collapse after it was confirmed Tata Steel is to cut 900 jobs at its Scunthorpe plant and 270 in Scotland.

The firm said the cuts were in response to a shift in market conditions caused by a “flood” of cheap imports, particularly from China, a strong pound and high electricity prices.

Asking an urgent question about the job losses in the Commons, Mr Brennan said: “No-one is trying to minimise the challenges that being faced, what we can’t understand is why Ministers don’t appear to even have a view on what represents a minimum credible steelmaking capacity in Britain’s long term strategic interest.

A sign at a Tata facility. Photo: Anna Gowthorpe/PA Wire

“The overwhelming impression given by the Secretary of State and his colleagues is that despite their high flown rhetoric about northern powerhouses and the march of the makers they seem content to allow Britain’s entire steelmaking capacity to disappear in the face of blatant Chinese dumping.”

Mr Brennan said Scunthorpe workers could offer to work for nothing and still be unable to compete with Chinese steel prices.

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“While the Chinese president is riding down the Mall in a gilded state coach, British workers are being laid off because the Government is not standing up for them,” he said.

Business Secretary Sajid Javid announced North Lincolnshire Council leader Liz Redfern will lead a new taskforce which will look at ways of helping those affected by Tata’s decision.

He promised to look at ways to help British steelmakers benefit from the Government’s investment in major infrastructure and hinted Ministers may look at cutting business rates and energy costs for steelmakers.

Mr Javid also claimed the EU Commission had been slow to approve support which requires clearance under state aid roles.

But he warned there were limits to the help the Government could offer.

He said: “Excess capacity in global steel is enormous - more than 570 million tonnes last year, almost 50 times the UK’s annual production.

“The price of steel slab has halved in the past year alone and in the three years since SSI restarted production at Redcar, the plant has lost more than £600 million.

“There are limits to what the Government can do in response - no Government can change the price of steel in the global market. No Government can dictate foreign exchange rates.

“And no Government can simply disregard international regulations on free trade and state aid - regulations that are regularly used to protect British workers and British industry.”

The latest bad news follows the announcement that the Thai owners of the Redcar steelworks on Teesside, SSI, had gone into liquidation with the loss of 2,200 jobs, then Caparo went into administration yesterday.

Karl Koehler, chief executive of Tata Steel’s European operations, said: “I realise how distressing this news will be for all those affected. We have looked at all other options before proposing these changes.

“We will work closely with affected employees and their trade union representatives. We will look to redeploy employees, wherever possible, and minimise employee hardship.

“The UK steel industry is struggling for survival in the face of extremely challenging market conditions.

“This industry has a crucial role to play in rebalancing the UK economy, but we need a fairer system to encourage growth. The European Commission needs to do much more to deal with unfairly traded imports - inaction threatens the future of the entire European steel industry.”

Tata said that in the past two years, imports of steel plate into Europe have doubled and imports from China have quadrupled, causing steel prices to fall steeply.

At the same time, a stronger pound has undermined the competitiveness of the business’s Europe-bound exports, and encouraged more imports.

In response, Tata Steel said it was concentrating on higher-value markets, with a focus on developing stronger and lighter products for its customers.

Bimlendra Jha, executive chairman of the Long Products Europe business, said: “Today’s proposals mark the next step in reshaping our business to give it the best chance of survival in this fiercely competitive global marketplace. We are looking closely at the performance of all parts of Long Products Europe as part of a focus on returning to profitability.”

Tata said it was starting immediate consultations with workers and their union representatives.

Gareth Stace, director of trade body UK Steel, said: “Our fears about further job losses have now been confirmed.

“If we are to stem this tide then the Business Secretary must now deliver as a matter of urgency the commitments he made at last week’s summit, on energy costs, business rates costs and tackling unfair trade. In addition, we must also see a commitment from all parts of government at the highest level to ensure the sector’s survival in the UK.

“The Prime Minister can demonstrate that he is prepared to lead this commitment by stepping in this week and pressing the Chinese premier about the dumping of under-priced steel, which is one of the major factors killing our industry.”