Tata Steel to Sell Struggling U.K. Operations

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K.'s largest steelmaker, Tata Steel Limited (Mumbai, India), has announced plans to sell off its entire U.K. steel business.

Blaming continued weakness in the European steel sector and years of losses and cutbacks in its U.K. operations, the company is considering selling off everything. The move puts thousands of jobs at risk, including around 4,000 at the company's Port Talbot steelworks in Wales--the largest U.K. steel plant.

In January, Industrial Info reported on Tata Steel Europe's decision to axe 1,050 jobs at its struggling U.K. steel operations, mostly in Port Talbot and Scunthorpe. For additional information, see January 20, 2016, article--Tata Plans to Axe 1,050 Jobs at U.K. Steel Plants.

The company has directed its loss-making Tata Steel Europe (London, England) subsidiary to "explore all options for portfolio restructuring, including the potential divestment of Tata Steel UK, in whole or in parts".

It added: "Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe Board will be advised to evaluate and implement the most feasible option in a time-bound manner."

Tata Steel launched itself into the European steel industry when it bought U.K. company Corus for $13 billion in 2007. A year later, the global recession struck Europe particularly hard, and the company has failed to turn a profit despite a number of restructuring efforts, plant sales, shut-downs and job cuts.

The company expressed "deep concern" at the rapidly deteriorating financial situation of its U.K. operations.

"While the global steel demand, especially in developed markets like Europe has remained muted following the financial crisis of 2008, trading conditions in the U.K. and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency," Tata stated. "These factors are likely to continue into the future and have significantly impacted the long term competitive position of the U.K. operations in spite of several initiatives undertaken by the management and the workers of the business in recent years."

The U.K. and Welsh government have vowed to explore all options to help the situation and have not ruled out financial support if a sale fails to emerge.

A joint statement from the U.K. and Welsh governments read: "This is a difficult time for workers in Port Talbot and across the U.K.. During the review process, we remain committed to working with Tata and the unions on a long-term sustainable future for British steel making. Both the U.K. and Welsh governments are working tirelessly to look at all viable options to keep a strong British steel industry at the heart of our manufacturing base."

Unite, the U.K.'s largest workers' union, called on the government to renationalise the steel sector in order to save it.

Len McCluskey, Unite's general secretary, said: "We are now in the grip of an industrial crisis. Decisions taken in the days to come will determine not just the futures of 19,000 workers and their families, across 14 sites, but the very success of this government's own economic programme. This is the time for the government to say categorically, without hesitation, that these assets will be taken into safe-keeping by the nation because without them our economy will not flourish. We are already seeing jobs going in the supply chain because of the uncertainty over Tata's future--our fear is this will snowball if insecurity is allowed to swirl around our steel sector."

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