Welcome for Tata Steel’s bid to sell UK operation to Greybull

UNION leaders have welcomed the announcement that Tata Steel is in talks to sell its UK operation to the investment firm Greybull Capital, but they have also warned that the industry remains in crisis.

File photo dated 20/10/15 of the Tata Steel Plant in Scunthorpe, as Tata Steel signed a Letter of Intent with Greybull Capital for the potential sale of its Long Products Europe business, the firm has announced. PRESS ASSOCIATION Photo. Issue date: Tuesday December 22, 2015. See PA story INDUSTRY Steel. Photo credit should read: Anna Gowthorpe/PA Wire

Britain’s largest steelmaker has been trying to sell its long products unit, which makes steel for use in construction, since last year. One source said the deal was probably worth less than £500m, and that the buyer was not likely to take on any debt.

In October, Tata Steel said it could axe about 1,200 jobs at its long products unit, which is based in Scunthorpe, and employs some 4,700 people across Europe.

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The news came as a huge blow to Britain’s embattled steel sector. Including the Tata cuts, the sector lost some 4,000 jobs in October alone, which is equivalent to about a fifth of its workforce.

The job cuts have sparked protest marches led by union leaders. British steelmakers pay some of the highest energy costs and green taxes in the world and are also struggling to compete with record Chinese steel imports, which they say have been unfairly subsidised by the government.

Tata Steel has been forced to slash costs and cut thousands of jobs since 2007 when it bought Anglo-Dutch producer Corus for $13bn (£8.7bn), making it Europe’s second largest steelmaker. The company employs about 30,000 people across Europe, including about 17,000 in Britain.

Roy Rickhuss, general secretary of the Community steelworkers’ union, said: “We welcome the interest from Greybull in giving Long Products a future outside Tata Steel. Of course the devil will be in the detail of the deal, and we will be seeking further discussions with both Tata Steel and Greybull to fully understand their intentions and the implications for steelworkers.

“We welcome any credible investor who has a vision for a sustainable business and is prepared to invest for the future. It’s this sort of long-term commitment that will give the unions and the workforce the confidence that they want to make a success of the business and secure steel jobs at the Long Products sites.

“There is a highly skilled and experienced workforce within Long Products, who have consistently delivered in the face of a difficult global market.

“The steelworkers are the bedrock of the business and are an asset to any investor. Now we want to see all stakeholders, particularly the Government, fully focused on establishing a sustainable future for the Long Products business so it can continue to fill its role as a vital foundation industry that produces world-class steel and has provided secure employment for generations.

“It is also clear from today’s announcement that any future for the Dalzell and Clydebridge mills in Scotland will be with a different investor. Again, this should bring renewed focus to the work of the Scottish Government’s Task Force in ensuring that the skills and assets are preserved and a buyer is found.”

David Hulse, national officer of the GMB union, said: “GMB see this news as a welcome development. The next step is the due diligence process and we expect local GMB representatives to be fully involved.”

Harish Patel, the national officer of the trade union Unite, said the announcement that Tata had entered into talks with Greybull Capital was “good pre-Christmas news” for Scunthorpe and the other sites.

He added: “However, there is a lot of work to be done in formulating the details and the future business plan.

“We will need to consider whether jobs are safe with this potential sale, the impact on the supply chain, and will the current terms and conditions for the workforce be affected.

“Ministers also need to realise that the matter does not end here – the industry is still in crisis.”