Home Commodities Tata Steel to lay off 2,800 workers in major UK restructuring

Tata Steel to lay off 2,800 workers in major UK restructuring

by SuperiorInvest

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Tata Steel plans to lay off around 2,800 workers as part of a major restructuring of its UK operations, dealing a blow to what was once one of the country’s biggest industries.

The company’s Indian owners told union leaders on Thursday that they would press ahead with closing the two blast furnaces at its Port Talbot plant in Wales by the end of this year.

The planned move, reported on by the Financial Times earlier this week, is part of a four-year transition towards a greener form of steelmaking at its UK operations, which employ 8,000 people.

The decision follows a crucial meeting between company executives and union leaders in London on Thursday about the future of Port Talbot, the UK’s largest steel plant.

Tata management rejected an alternative plan by unions to keep a blast furnace open until 2032 in a bid to reduce the scale of redundancies, pointing out that the company is currently losing around £1m a day.

The alternative proposal would have cost an additional £650m, according to sources familiar with the situation.

Tata will invest £750m to fund the restructuring, backed by a £500m grant from the British government.

The Port Talbot blast furnaces are currently used for primary steelmaking, in which iron ore is reduced to molten iron which is then converted into steel. Tata plans to replace them with an electric arc furnace, which uses a less labor-intensive process to make steel from scrap.

The loss of the Port Talbot blast furnaces would leave two in the UK, both belonging to British Steel.

However, the Chinese-owned company said in November that it plans to close its Lancashire furnaces and replace them with two electric arc facilities, which could be operational as early as 2025.

Without the two companies’ blast furnaces, the UK will be the only major economy unable to make steel from scratch.

Tata accepted one of the unions’ proposals, which was to keep open the Port Talbot hot strip factory, which will be used to process semi-finished steel or imported slabs, at least for a transition period, protecting around 200 jobs.

Company executives have tried to downplay the impact of the restructuring on the workforce, noting that many of those facing layoffs are relatively close to retirement.

But union leaders reacted angrily. “Large-scale job losses would be a crushing blow to Port Talbot and the UK manufacturing industry as a whole,” said Charlotte Brumpton-Childs, national leader of the GMB union. “It doesn’t have to be this way: unions offered a realistic, cost-effective alternative that would rule out all forced redundancies.”

Tata’s announcement will trigger a 45-day legal consultation period on the layoffs.

The government highlighted the £500m grant to help restructure Tata Steel’s operations, which it said would help protect thousands of jobs and ensure a “sustainable and competitive future” for the country’s steel industry.

“Collaboration with unions is, rightly, a company-led process. “There is a wide range of support for affected staff, including a dedicated transition board backed by funding of £80m from the UK government and £20m from Tata Steel,” he said in a statement.

He added that the transition board would help support affected employees and the local economy, and would be chaired by Welsh Secretary David Davies with ministerial representation from the Welsh Government.

Stephen Kinnock, the local Labor MP, urged Tata Steel to “rethink” its approach.

Tata Group, based in India, is a large employer in the UK with around 60,000 employees at companies ranging from Jaguar Land Rover to Tetley Tea.

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