The troubled steel producer Sheffield Forgemasters has been thrown a lifeline after a trio of British industry heavyweights agreed to help bail out the business.
Rolls-Royce, BAE Systems and Babcock International will stand behind £30m of support loans provided by banks to keep the historic company going amid a sharp drop in sales. The deal was brokered by the Ministry of Defence.
Forgemasters, which makes parts used in UK submarines and has operated since 1805, is one of numerous firms feeling the pinch following the plunge in steel prices as cheap Chinese steel flooded the market. It was forced to lay off 100 of its 700 staff last week after a slump in performance.
The £30m loan, provided by the US bank Wells Fargo, will be underwritten by Submarine Entreprise Partners, a joint venture between BAE, Babcock and Rolls-Royce to build a replacement fleet of submarines.
Unions welcomed the move, with Tony Burke, the assistant general secretary of Unite, saying: “The thousands of workers, who depend on Forgemasters in some way for their job, will rest a bit easier today, but we are still deeply concerned about the plight of the UK steel sector more generally.”
The company had been in line for rescue by a Chinese state-owned backer but the deal fell through amid security concerns. The Ministry of Defence was reportedly concerned about giving a Chinese firm sway over a company making kit for British submarines, and government ministers privately warned that they would block any deal.
- More about:
- Iron And Steel Manufacturing