Europe’s second largest steel producer, Tata, has revealed that it is preparing to sell its UK plants and while the government has implored the company to keep operations running while a buyer is sought, there has been no “open ended” commitment offered.
Though exact employee numbers are not known, Tata is thought to employ in the region of 15,000 workers in the UK alone, with more than 4,000 located at the Port Talbot plant in Wales. While potential job losses are frightening, the truth of the matter is even worse, with supply chain operations set to feel the impact as well, bringing the total at risk of sudden unemployment to a staggering 40,000. The impact that a closure of all operations would have on the UK employment market would be catastrophic, meaning that the government has little option but to look into every possible means of protecting those workers and the interests of the plants. Ana Soubry, the business minister has reiterated this exact sentiment.
Following in the previous footsteps of the coal mine closures, news that the UK steel industry looks set to dissolve has sent morale plummeting, as thousands of steelworkers and their families prepare to brace themselves for the impending financial crunch. A steadfast part of the UK manufacturing industry, ministers are reacting to the news that steel production looks set to end with the level of seriousness that you would expect, with many being expected to return from summer holidays especially to discuss the issue in Parliament.
As ever, in the wake of bad news, naysayers are claiming that more could have been done before this point was reached. In fact, Stephen Kinnock, Labour MP for Aberavon in south Wales, has come forward and accused the government of “abject failure” for not identifying and reacting to the risk of industry crisis sooner.
While the potential for temporary government funding has been put on the table as an option, Soubry has revealed that any form of nationalisation of the steel industry is not up for discussion. Any government support would be a non-permanent measure until a suitable buyer could be found for the Tata plants.
With a solid and focused determination to save the Port Talbot plant revealed, ministers are in discussions as to what can be done to slow the process of closure, but with the plant reportedly losing a total of £1m per day, the need to sell grows more urgent every minute for Tata, who themselves have reported staggering losses of £2bn in the UK, over the last five years. Understanding just how severely the company is hemorrhaging profit, it becomes clear that finding a seller quickly is in everybody’s best interests.
As demand for UK steel continues to fall, in the wake of China being a superpower in the industry, the long-term competitive edge of the UK could drop away and with a very real risk of plant closures in the next few weeks, there could be significant turbulence ahead.