Up to 550 workers are at risk at Tata Steel in South Yorkshire - 490 in Rotherham - due to “crippling” electricity costs and cheap imports, bosses say.
Some 485 positions within the bar business on the Thrybergh site are under threat, with a further 60 in Stocksbridge and five at Brinsworth. The firm says its Rotherham bar business has been “underperforming” in the face of imports due to the strong pound and “high electricity costs which are more than double those of key European competitors.”
The main Rotherham site, on Doncaster Road, Thrybergh, employs 1,200. It includes the Aldwarke melt shop, which produces bars of steel from scrap, and the Thrybergh rolling mill. A spokesman said both sections of the business were affected by the announcement.
In total 720 UK jobs are at risk at the Indian-owned company.
The Swinden Technology Centre, also in Rotherham, which is Tata’s main R&D site in the UK, is unaffected, the spokesman added.
Karl Koehler, chief executive of Tata Steel’s European operations, said: “I realise how distressing this news will be for all those affected, but I am also extremely aware of our responsibility towards the ongoing survival of this business which will continue to employ about 1,500 people in South Yorkshire.
“We have invested more than £20 million in recent years in our speciality steels business. These investments have created a stronger and more technically advanced platform from which we can meet the needs of our customers, with an improved range and quality of products and services.
“However, energy is one of our largest costs at our speciality and bar business and we are disadvantaged by the UK’s cripplingly high electricity costs. And while the UK Government announced helpful measures to reduce the impact of its high energy taxes a few years ago, these measures still haven’t been introduced.
“We want to play our role in reinvigorating the UK’s manufacturing industry, but increasing imports and high energy costs have further undermined the competitiveness of foundations industries.
“Now is the time for government to act. Foundation industries like ours urgently need a competitive business environment and a government willing to strengthen UK manufacturing supply chains. This would ensure the UK remains an attractive place to invest.
The company would work closely with those at risk and their trade union representatives to redeploy employees and minimise the number of compulsory redundancies, he added.
Mark Broxholme, managing director of Tata Steel’s speciality and bar business, said: “We have to recognise that economic circumstances continue to undermine the work Tata Steel has done to build a sustainable business here.
“We started the journey of refocusing our speciality business in 2009 on making and supplying high quality safety-critical steel to the world’s most demanding applications. That work has led to significant investments in our capability to make high-value steels for the aerospace and other demanding markets. Today, we are the world’s third largest supplier of aerospace steels and we want to build on this.
“Today’s announcement about reshaping the bar business is the next stage in that journey and would give it the best chance to succeed in these fiercely-competitive markets.
“The consultation process begins today with our employees and their trade union representatives. Of course, we will seek to minimise the impact of this restructuring on our employees.”
Recent investments by Tata Steel in its speciality steels business include five new remelting furnaces capable of producing the advanced materials demanded by customers.
Rotherham MP John Healey said: “This is the worst possible news. It’s simply devastating for the workers and their families, many of whom waived pay, holidays and other entitlements to help keep Tata going through the global economic crisis from 2008. They kept faith in Tata and now feel massively let down.”
Sarah Champion, MP for Rotherham Central, said: “I’m completely floored and I am paticularly angry because we have been pushing the Government for years now because the energy prices that we pay in this country are up to ten times higher than in Europe so it’s just not a level playing field. All that has been promised is a report in 2016 and that is too little, too late.”
She added: “The most important thing for me is to get the support in place for workers.”
Roy Rickhuss, general secretary of Community said: “This will be devastating news for our members in Wednesbury and across South Yorkshire. This is a business that has seen a lot of restructuring and change over recent years and another round of potential redundancies will hit the workforce hard. It will be natural for workers to be sceptical about this plan too as commitments given by the same management team in previous restructurings have not been delivered.
“We will give our members every support in the coming weeks and months and will oppose any compulsory redundancies. We will also engage independent experts to study Tata Steel’s proposals and look at alternatives that could save jobs and create a sustainable business. It’s only right and proper that Tata Steel allows sufficient time for that work to be carried out.
“While we still need to study the full rationale behind today’s announcement, it is clear the UK steel industry is in a perilous state and as the biggest producer, Tata Steel is particularly affected. There is already a case for government action. We have been saying for years that uncompetitive UK energy costs are damaging the UK steel industry.
“The electric arc furnace operations in Rotherham have been impacted by higher electricity prices. The government needs to stand up for steel and take urgent action to support energy intensive industry while there is still chance to save the jobs at risk.”
Stuart Sansome, Community national executive councillor and chair of the multi-union committee at Speciality Steels said: “This is a smack in the face for the workforce who have given everything and more to see the business survive and grow. Since 2009 the business will have gone through three restructurings, which if this proposal goes through, will have seen the loss of 2,500 jobs.
“There have been too many promises made to the workforce that have then been broken by management, which makes today’s news all the more damaging to morale. Although our faith in the way the business is being run has been destroyed, our belief in the workforce to deliver is unshaken and so we will be doing all we can to save jobs, hold the company to account and secure a future for speciality steel making.”