Tata Steel to shutdown UK factory, nearly 400 jobs on the line

Indian steel conglomerate Tata Steel on Monday announced the closure of a plant in the southern Welsh city of Newport, with a potential loss of around 400 jobs at the UK site.

The Indian steel giant announced that it had clinched the sale of a Canadian and Swedish plant as part of its worldwide Cogent Electrical Steels division but, despite exploring all options, the company has been unable to find a way forward for the Orb Electrical Steels plant.

"Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. We saw no prospects of returning the Orb business to profitability in the coming years," said Henrik Adam, CEO of Tata Steel's European operations.

"I recognise how difficult this news will be for all those affected, and we will work very hard to support them," Adam said.

The company said it had signed a sales and purchase agreement for Cogent Power Inc (CPI), with Japanese steel giant JFE Shoji Trade Corporation.

CPI manufactures cores for electrical distribution transformers and employs nearly 300 people.

Tata Steel has decided to retain Surahammars Bruks AB, which makes advanced steels for electric vehicles and employs around 100 people.

"We have been able to secure the future for almost 400 colleagues in CPI and Surahammars Bruks. However, today's proposal will be sad news for colleagues at Orb in South Wales.

"This is necessary, enabling us to focus our resources, including investment, on our core business and markets, helping us build a long-term sustainable future in Europe," Adam said.

The company said its Orb Electrical Steels business in Newcastle has been loss-making for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers in which customer requirements have out-stripped the site's capability.

Converting the site to create steels for future electric vehicle production would cost in excess of 50 million pounds in a highly competitive market where Tata Steel faces higher-volume competitors both in Europe and globally.

In addition, Tata Steel has been unable to find a buyer for Wolverhampton Engineering Steels Service Centre, in the UK, and proposes to close it, potentially affecting up to 26 jobs, including a sales office in Bolton.

The Tata Group said every effort will be made by Tata Steel to mitigate the impact on affected employees including offering alternative employment opportunities where possible at other Tata Steel sites.

Consultations with affected employees and trade unions at both Orb and Wolverhampton will commence shortly. This process will include assessing ways to minimise the need for compulsory redundancies.

Tata Steel is the largest steelmaker in the UK employing more than 8,000 people, manufacturing advanced products for the likes of the automotive, construction and engineering industries.

The company has invested around 2 billion pounds in its UK business since acquiring Corus in 2007, including more than 100 million pounds in the last year to support advanced steel manufacturing at a number of UK sites including an essential life extension project at one of the company's two UK blast furnaces.

Unions said Tata which employs nearly 6,000 workers in Wales was breaking its commitments over job guarantees.

Roy Rickhuss of the Community steelworkers' union called it "shocking" news, which "makes a mockery of the understanding we reached with Tata around the jobs guarantee".

"There has been no consultation about this proposal either at UK or European level and company management should hang their heads in shame in the way this has come about," said Rickhuss.

"This is of course extremely devastating news for workers at the Orb, but all Tata Steel workers should be concerned by the way Tata is breaking its commitments," he said, calling on the UK government to intervene.

UK Economy Minister Ken Skates said he stressed the importance in talks with the company of avoiding compulsory redundancies.

"The Welsh government will now do everything it can to support individuals, the community and the supply chain affected by this announcement," he added.

"Today's news clearly demonstrates the fragility of the global steel market and the UK government must now step up and broaden its approach to supporting the industry, including its supply chain, across the whole of the UK," Skates said. 

Cogent Power to be sold

Meanwhile, Tata Steel Europe informed it has signed a deal with Japanese steel giant JFE Shoji Trade Corporation for selling its subsidiary Cogent Power Inc (CPI). However, Tata Steel did not provide any financial details of the deal.

CPI is part of Cogent Electrical Steels, one of the five non-core business units, the sale of which Tata Steel Europe had announced in May 2018, according to a company statement.

Other non-core businesses under potential sales consideration were Gearmany-based Kalzip; UK-based Firsteel; Turkey-based Tata Steel Istanbul Metals; UK-based Engineering Steels Service Centre.

"Tata Steel has signed a sales and purchase agreement (SPA) for Cogent Power Inc (CPI), with Japanese steel giant JFE Shoji Trade Corporation," the company said.

CPI manufactures cores for electrical distribution transformers and employs nearly 300 people.

Cogent Electrical Steels comprises Orb Electrical Steels, Newport, South Wales; Cogent Power Inc, Burlington, Canada; and Surahammars Bruks AB, Surahammar, Sweden.