There is possible hope on the horizon for UK steel workers.
Greybull Capital, the specialist turnround company that last year rescued Monarch Airlines, has signed a “letter of intent” with Tata Steel over the possible acquisition of the Indian company’s European long products business which is based in Scunthorpe, North Lincolnshire, writes Nathalie Thomas.
Tata in October announced that it would have to lay off some 1,200 staff at its long products division in Europe, which manufactures steel plates, as the business has come under pressure from falling steel prices and cheap imports, particularly from China.
Greybull is holding exclusive discussions with Tata over the European business but it added in a statement:
Whilst this is an important milestone, much work remains to be done to reach a successful outcome.
Tata said the talks involve several of its steel assets in the UK, including the Scunthorpe works, mills in Teesside and a design consultancy in York. They also involve Tata’s Scottish mills in Dalzell and Clydebridge which are currently being mothballed. Mills in northern France are similarly part of the discussions.
Karl Koehler, chief executive of Tata Steel’s European operations, said:
This is an extremely critical time for the whole industry, and we have been working hard to explore all options that could provide a future for the long products Europe business.
We will now move into detailed negotiations with Greybull Capital. It is too early to give any certainty about the potential outcome of these discussions.
We will continue to work closely with our trade unions and works councils and will communicate any relevant news to employees on an ongoing basis.
The GMB union, which represents steelworkers in the UK, said about 5,000 people are employed at the European long products business and at its distribution facilities.
The union called the letter of intent a “welcome development” but insisted the UK government must also play its part in supporting the industry. The government has come under fire for failing to act early enough to protect Britain’s steel industry compared to other European countries.
David Hulse, GMB national officer, said:
GMB see this news as a welcome development. The next step is the due diligence process and we expect local GMB representatives to be fully involved.
This is an exceptionally challenging time for the UK steel industry. It is essential that the UK Government plays a full part in securing a level playing field to enable this essential industry to survive and thrive.
Monarch has landed its first profit in three years after coming close to collapse in 2014.