The crisis facing the UK steel industry continued to escalate this week, as Tata Steel confirmed it would cut up to 1,200 jobs in northern England and Scotland.
It will also close one of the two coke ovens at Scunthorpe, and mothball plate mills in Scunthorpe, and Dalzell and Clydebridge in Scotland.
The move came just a day after parts of Lord Swraj Paul’s Caparo Industries, which makes steel products, went into administration, impacted by falling steel prices, a strong pound, and tepid demand.
The job cuts are being made at Tata Steel’s long products division, which Switzerland-based Klesch Group decided not to acquire earlier this year. The vast majority of the job losses will happen in Scunthorpe, with around 270 in Scotland and the rest in other sites.
The job cuts will happen as part of a restructuring that will reshape the division and allow it to focus on the most profitable parts. Over the past few years, Tata Steel has been focusing increasingly on high value-added products to withstand the downturn and cope with increased competition.
Karl Koehler, Chief Executive of Tata Steel’s European operations, pledged to work with unions to redeploy employees wherever possible.
He warned that without action from the European Commission to deal with the dumping of steel from outside Europe, the future of the steel industry was under threat. He also repeated calls for Britain to improve conditions for the manufacturing sector — the industry has repeatedly pointed to the high levies on energy usage, coupled with high business rates (a form of non-residential property tax), which they argue has made things even harder for British manufacturers than it has for continental European ones. A compensation package for energy intensive users is yet to come into effect.
Struggling industry “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,” said Koehler.
The developments pile pressure on British Prime Minister David Cameron to raise the issue of dumping by Chinese steel producers with President Xi Jinping, who is currently visiting the UK.
“[Business Secretary] Sajid Javid is becoming increasingly isolated by his failure to act swiftly to support the steel industry,” said Tony Burke of the Unite union on Tuesday.
“He and the UK government know what needs to be done and they need to do it quickly. A failure to act and tackle the dumping of cheap Chinese steel will spell the end of steel in the UK.”
Speaking in the House of Commons, Javid pledged to set up a taskforce, and take steps to increase public procurement from British steel makers. However, he warned there were limits to what the government could do to tackle the enormous challenges facing the industry, with last year seeing some 570 million tonnes of excess capacity.
On Tuesday, shares of Tata Steel closed 3 per cent lower at ₹240.80 on the NSE.