'˜No one is too big to fail' warns loss-making Sheffield Forgemasters

The company, which employs 700, is restructuring to create “a more streamlined operation that can operate in a tough economic environment”.

Directors say a slump in the oil and gas sector, the slowing of the global economy and an international collapse in steel prices has hit the business, as well as high energy costs, green taxes and a strong pound hitting exports.

Forgemasters, which traces its roots back to 1805, makes steel cylinders used as casings for the nuclear reactors in Trident submarines, as well as large castings used to build defence equipment, nuclear power stations and oil and gas platforms.

The firm made a loss of £9.4m in the year to December 2014 - the first time since a management buy-out in 2005. Turnover is £70m.

Chief executive Graham Honeyman said the redundancies were set to be completed by the end of February. They would be spread across the company.

He added: “Business is very poor at the moment. It’s about winning orders anywhere in the world and there’s not enough work for all the forgings companies.”

And in response to rumours about financial support and Chinese investment, he added: “There is no money coming into the company from the Government or the defence industry or anywhere else.”

Accounts for last year - due in March - were set to show a second “significant” but smaller loss, he added. But after looking to “all sources of support” - including customers, suppliers and a loan from their bank - they had enough funding to see the business through to the end of March 2017.

Mr Honeyman said he was optimistic for the company long-term. He added: “This is undoubtedly a long period of contraction, with major recovery seemingly still some way in the future, but we are committed to a return to stronger trading and a long-term view.

“We excel at what we do and our technological advances are the best in the world. We also have strong trading partnerships and these organisations continue to place orders with us.

“But no one is too big to fail. When I came back during the management buy-out the doors were virtually closed. Over the last few years we have worked on improving our technology so people will come to us and pay a premium for quality.”

The oil and gas sector was “of particular concern,” he added. Three years ago it was 40 per cent of business, today orders have halted and the firm is finishing residual contracts.

The firm shed 50 jobs last year.

Forgemasters joined the steel sector in urging Government to help UK manufacturers. A compensation package for green taxes was finally introduced in December.

Mr Honeyman added: “There has been some positive response, particularly with regard to electricity costs, but more remains to be done.”

The news comes after Tata announced 1,050 redundancies centred on Port Talbot in South Wales. In total, some 5,000 redundancies have been announced, and a further 1,700 jobs put at risk, since last summer, including 500 at Tata in Rotherham.

Forgemasters chairman Tony Pedder said: “The storm clouds which seem to gather periodically over the steel and steel-related sectors are once again evident. A confluence of factors has made trading conditions particularly challenging.”