STEEL giant Tata plans to cut more than 1,500 jobs including nearly 400 on Teesside in an attempt to slash costs after a slump in its sales.
The Indian company said it intends to axe 300 workers at its Lackenby Long Products and Skinningrove Special Profiles plants near Redcar and 90 at its steel tubes plant in Hartlepool. It is also shutting or mothballing its Scunthorpe plant which employs 1,200 workers.
Politicians were shocked at the size of the cuts, which amount to 8% of Tata’s UK workforce, and unions called them a “devastating blow” to the regions affected.
But Tata said that it was reacting to a decline in the market for steel, particularly with the collapse of the construction industry and said it will invest £400m in its loss-making Long Products business over the next five years.
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.
“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.”
He also complained that EU carbon legislation threatens to impose “huge additional costs” on the steel industry and said it was concerned about the UK’s plans for more carbon costs.
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.
“Some of our key markets are not forecast to fully recover from the global economic downturn for a number of years.”
In Hartlepool last year Tata recruited 100 staff to its 250-strong workforce following a contract win but has no major orders beyond this summer.
Remco Blaauw, managing director of Tata Steel Tubes, said: “The proposals being announced today are necessary to match employee numbers to order levels for the remainder of the year.”
Middlesbrough South and East Cleveland Labour MP Tom Blenkinsop said he was “gutted” for local workers and families.
“After fighting for two and a half years to rescue Teesside Cast Products, I, and the local community, just feel gutted for our local family members, neighbours and friends working at the Beam Mill.”
Teesside is still recovering from the blow to its historic steel industry after the company axed 700 of the 1,700 staff at the Teesside Cast Products plant in Redcar, 18 months ago, before it was bought this year by Thai company SSI.
Keith Hazlewood, national officer of the GMB, said: “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 the job losses.”
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.”
Ian Lucas, Labour’s shadow industry minister, said: “This seriously calls into question how the Tory-led Government is facing up to the challenges facing the economy, which has flat-lined 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. 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.”
