Tata Steel will shut down a small loss-making business at its Llanwern plant in Wales; an acknowledgement of the persisting weakness of Britain's construction industry.
The Construction Products division, which employs 70 and consumes a fraction of the steel produced at the Port Talbot and Margam steel complex, made decking systems, highway barriers for roads and frames, but was hit hard by the sharp fall in British construction activity during the financial crisis. Volumes of sheet steel consumed by the division fell by two thirds from pre-crisis levels, and has been loss making for Tata Steel since 2008.
Tata Steel said it had made every effort to turn around the business, including attempting to move into new markets such as safety platforms for people dealing with freight and solar array structures — the frames used to hold solar panels. “Despite these efforts, most reluctantly, we have come to the conclusion that there are no prospects for generating sufficient viable new business to sustain this operation,” said Mr Paul Steele, Tata Steel's Managing Director for Distribution, UK and Ireland, adding that the decision had followed a “detailed” review of the business.
He attributed the problems to the troubles in the construction industry and markets that depended on public procurement. The company would review whether some parts of the order book could be maintained. No other businesses within Llanwern, which employs 1,400, would be impacted, it said.
Tata Steel has recently warned of weakness in the European steel market. In October, Mr Karl-Ulrich Koehler, the chief executive of Tata Steel's European operations, told the Reuters news agency that it could cut production further in the following months, after reducing production capacity to 80-85 per cent from 85-90 per cent in the first six months of 2011.
At the same time it has been stepping up activities in other areas. Most recently, the firm has been investing into its Stocksbridge plant in Yorkshire to increase production of aerospace steels from next year.