Warning of an industry in crisis as 100 jobs are to go at Sheffield Forgemasters

THE CRISIS-HIT steel industry has been dealt a fresh blow with news of more job losses today - at one of Yorkshire's most high profile companies.
Sheffield Forgemasters. Photo: Simon HulmeSheffield Forgemasters. Photo: Simon Hulme
Sheffield Forgemasters. Photo: Simon Hulme

Sheffield Forgemasters has started consultations on 100 redundancies, just days after Tata cut 1,050 jobs mainly at Port Talbot in south Wales.

The announcement led to renewed calls for more Government support to be provided to the industry.

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Almost 5,000 job losses have now been announced in the steel industry since last summer as firms struggle with high energy costs, business rates and cheap Chinese imports.

Previously announced cuts include 2,200 at Redcar (SSI), 900 at Scunthorpe (Tata), 450 at various locations (Caparo), 225 at Dalzell (Tata) and 45 at Clydebridge (Tata).

The company said reduced activity in the traditional oil and gas sector, the slowing down of growth in the global economy and an international collapse in steel prices had adversely affected its results.

Forgemasters, which employs 700 people, also cited acute pricing pressures from international competitors combined with high UK energy costs as key factors.

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A statement said: “The company’s need to restructure the business means consultation on up to 100 redundancies across all its divisions has begun, with the emphasis on creating a more streamlined operation, better able to operate in the tough economic environment.” The announcement was made as it published accounts for the 18 months to December 2014, which showed a loss for the first time since a management buyout in 2005 - £9.4 million.

Sheffield 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 for our sector particularly challenging for several months and this has led to difficult decisions for us. Of particular concern has been reduced activity in the traditional oil and gas sector, with oil prices down to a level that is deferring much potential new investment”.

Harish Patel, Unite’s national officer said: “World class companies like Sheffield Forgemasters need urgent support and a level playing field with their international competitors if they are to survive.

“It wasn’t that long ago that Government ministers pulled the plug on a loan that would have allowed Sheffield Forgemasters to invest in new equipment making it more productive. The Government now needs to right that wrong by guaranteeing that British companies such as Sheffield Forgemasters are never again excluded from tendering for British infrastructure projects.

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Shadow business secretary Angela Eagle said: “These latest job losses will be devastating news for the workers affected especially given the uncertainty that they’ve endured as the plant restructures to secure its near-term future. A Government spokesman said: “It has been a challenging time for the steel industry facing tough global economic conditions. We will work with local partners to help anyone made redundant find new jobs as quickly as possible.

“We understand that Sheffield Forgemasters is taking this step to restructure the business to secure its long-term future and welcome the news that its lending facility has been extended.

“The Government has taken clear action to help the steel industry, through cutting energy costs, taking action on imports, Government procurement and EU emissions regulations, meeting key steel industry asks

Mr Pedder added: “For the first time, we have traded at a loss despite the best efforts of all in the company.

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“In this situation, the company must continue to look to all sources of support. We have been working with our major customers, suppliers and in particular, our secured lender, with whom we have concluded an extension to our financing facility. This will provide adequate funding for the business through to end March 2017.”

Roy Rickhuss, Community’s general secretary said: “Every sector of the UK steel industry is caught up in the current crisis. We keep saying that delays in implementation of support and a lack of swift and decisive action by Government only puts more steel jobs at risk. Today’s announcement by Sheffield Forgemasters just increases the number of steelworkers and their families worried about their futures.

“We will be meeting with the company in the coming days to examine and test their proposals, mitigate the impact on jobs and ensure a sustainable future for the business.

“The spectre of the UK’s cosy relationship with China hangs over the entire steel industry. The Prime Minister needs to stand up to China and stand up for our steel industry. When the UK steel industry is cut out of procurement deals such as at Hinkley Point, or sees its Government cheerleading for China’s market economy status then it’s no wonder the industry is in crisis. We need to see evidence that Government is committed to the long-term future of UK steel making and that needs a lot more short-term action.”

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Meanwhile, French energy giant EDF, which is building a new nuclear power station at Hinkley in Somerset, said the UK does not currently have the capability or capacity of producing the very largest forgings required by the power station, so these will have to be sourced from outside the UK.

There will be opportunity for suppliers, including those in the UK, to compete in the supply of forged components for the turbine generators and in other items such as pumps, motors, valves and the like.

Construction at Hinkley Point C will provide 25,000 jobs in the UK, 1,000 apprenticeships, and more than 60% of the project’s construction value is expected to come from British companies.

“Hinkley Point C is a big opportunity for UK steel, as well as for UK construction and manufacturing more widely,” said EDF.

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