Axe hangs over 1,200 steel jobs in Scunthorpe

The Indian firm said it was proposing to close or mothball part of its Scunthorpe plant, putting at risk 1,200 jobs, as well as cutting 300 jobs at its sites on Teesside.

The company also announced that it will invest £400 million in its Long Products business over the next five years.

Unions said the cuts amounted to 8% of Tata’s UK workforce and were a “devastating blow” to the regions affected.

Tata said its Long Products division had made losses over the past two years, citing a decline in some of its major markets, particularly the construction industry.

Demand for structural steel in the UK was only two-thirds of the 2007 level and was not expected to recover fully within the next five years.

Karl-Ulrich Kohler, chief executive of Tata Steel’s European operations, said: “We are proposing to take these actions only after going through an inclusive consultative process that involved very careful scrutiny of the Long Products business performance.

“We have used the experience we gained in turning around our speciality steels business in developing this strategy for the rest of long products and we are convinced it represents the best chance of making this business successful and sustainable in the long term.

“Tata steel is showing its commitment to making this strategy work by earmarking £400 million of investment for this business over the next five years.

“At the same time we are aware that our employees and their families will experience a very unsettling few months as a result of this announcement. We will do everything we can to provide them with support and assistance.

“The continuing weakness in market conditions is one of the main reasons why we are setting out on this difficult course of action.

“Another is the regulatory outlook. EU carbon legislation threatens to impose huge additional costs on the steel industry. Besides, there remains a great deal of uncertainty about the level of further unilateral carbon cost rises that the UK Government is planning.

“These measures risk undermining our competitiveness and we must make ourselves stronger in preparation for them.”

Jon Bolton, director of Tata Steel Long Products, said: “As difficult as they are, these steps will help us to shape this business for the future. Over the longer term we will be able to re-invest in our people, our customers, our equipment and the local communities in which we operate.

“Some of our key markets are not forecast to fully recover from the global economic downturn for a number of years. Other market sectors have changed and our customers are demanding new and different products from us, as well as improved levels of service.

“This investment will improve Long Products’ manufacturing capabilities, particularly in the area of plant reliability.

“By closing the Bloom and Billet Mill we will be taking out of production some highly energy-intensive plant that is pretty well obsolete in today’s steelmaking world. By mothballing Queen Bess furnace, we will match our operations to the new market realities, but retain the flexibility to respond to a market upturn.”

Keith Hazlewood, national officer of the GMB, said: “The announcement demonstrates what a roller coaster industry the steel industry is. The recent announcement that steel making is to start again on Teesside is directly followed by these 1,500 job losses across Tata’s long products division.

“The job losses will impact at Scunthorpe, Teesside and Hartlepool and in the steel mill sites making steel joists used mainly in construction.

“These job losses amount to approximately 8% of the Tata UK workforce. This is a devastating blow to UK steel making, to the local communities and to the UK economy.

“GMB and the other steel unions will work with Tata to mitigate as many job losses as possible, and will oppose any compulsory job losses. GMB will fight job losses in steel industry.”

Michael Leahy, general secretary of Community, said: “We are, of course, extremely disappointed at the prospect of further job losses, coming as they do on the back of earlier cutbacks. However, difficult though the current position is for all concerned, we recognise that this is part of a wider strategic review of the business aimed at securing its long-term viability and access to new markets. To that end, we welcome the commitment to invest £400m over the next five years.

“The key now is for the company to engage the local trade unions in consultation on the way forward. We will be seeking an early meeting to explore all possible means of avoiding any compulsory redundancies.”

Unite’s national officer, Paul Reuter, said: “This is a real blow for the region. Today’s announcement highlights just how fragile our economy is and the coalition Government should not be so quick to start talking about growth and recovery.

“Union representatives are currently working with Tata to mitigate the impact of the cuts. Unite has already demanded that there should be no compulsory redundancies and we believe that this should be possible to achieve.

“While the job cuts are very disappointing the investment is to be welcomed and Unite will be working to ensure the money benefits the workers.”

Ian Lucas, Labour’s shadow industry minister, said: “Today’s announcement is a hugely worrying sign for industry in the UK, and a blow to the people of Scunthorpe and Teesside. This seriously calls into question how the Tory-led Government is facing up to the challenges facing the economy, which has flatlined in the last six months instead of moving towards significant growth.

“The public needs to know what measures were taken by Vince Cable to prevent these job losses and to work with the steel industry to plan for the future.”

Business Secretary Vince Cable said: “I am very disappointed at this news. This will be a worrying time for workers at Scunthorpe in particular, and also in Teesside.

“I have asked our local team to establish a task force to work closely with Tata so everything is done to mitigate the impact on jobs and on the local communities in Scunthorpe and Teesside.

“In addition, the JobCentre Plus Rapid Response Service will be on hand to provide a range of support measures.

“Tata Steel has a strong presence in the UK. I welcome its announcement that it’s investing £400 million over the next five years to improve the reliability, productivity, and environmental performance of its manufacturing operations.

“In Redcar, there is also the offsetting good news of the reopening of the blast furnace later this year following the sale of the plant to the Thai steel firm SSI.”

Godfrey Bloom, UKIP MEP for Yorkshire & North Lincolnshire and the party’s business spokesman, said: “As a local MEP my thoughts are with the 1,500 people of Scunthorpe who are about to lose their jobs. My anger is reserved for the Government and the EU whose misguided carbon and green legislation, along with confusing targets, are making a bad commercial situation far, far worse.

“Certain extra costs and additional targets are clearly undermining business confidence. The result, as we see, is lost jobs.”