1,500 jobs axed at steel giant Tata
Friday 20 May 2011
A Government task force was set up today to help workers at steel giant Tata after the firm dealt a "devastating blow" by announcing 1,500 job losses.
The Indian company 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 site on Teesside.
Tata blamed a decline in the construction industry for the cuts, but it also announced that it will invest £400 million in its Long Products business over the next five years.
Unions said the jobs losses amounted to 8% of Tata's UK workforce, pledging to try to mitigate the impact of the decision, while Labour said it was a "hugely worrying" sign for industry.
Tata, which completed the sale of its Teesside Cast Products site in Redcar to Thai steel firm SSI earlier this year, launched a 90-day consultation with unions today before the redundancies will start.
The firm said it was "reasonably confident" of achieving most of the job losses through voluntary redundancies, although it could not rule out compulsory lay offs.
Business Secretary Vince Cable said the news was "disappointing", adding: "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."
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, added: "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."
Keith Hazlewood, national officer of the GMB union, said: "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."
Michael Leahy, general secretary of Community, said: "We are 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 £400 million over the next five years."
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: "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."
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