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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 push ahead with the closure of the two blast furnaces at its Port Talbot plant in Wales by the end of this year.
The planned move, reported by the Financial Times earlier this week, is part of a four-year transition to a greener form of steelmaking at its UK operations, which employ 8,000 people.
The decision follows a crunch meeting between company executives and union leaders in London on Thursday over the future of Port Talbot, the UK’s largest steel works.
Tata’s management rejected an alternative plan from the unions to keep one blast furnace open until 2032 in a bid to reduce the scale of the lay-offs, pointing out that the business is currently losing about £1mn a day.
The alternative proposal would have cost an additional £650mn, according to sources familiar with the situation.
Tata will invest £750mn to finance the restructuring, backed by a £500mn grant from the British government.
Port Talbot’s blast furnaces are currently used for primary steelmaking, in which iron ore is reduced to molten iron that is then turned into steel. Tata plans to replace them with an electric arc furnace, which uses a less labour-intensive process to make steel from scrap.
The loss of the Port Talbot blast furnaces would leave two remaining in the UK, both belonging to British Steel.
However, the Chinese-owned company said in November 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 Port Talbot’s hot strip mill, which will be used to process imported semi-finished steel or slab, open at least for a transition period, protecting about 200 jobs.
Company executives have sought to play down the impact of the restructuring on the workforce, pointing out that many of those facing redundancy are relatively close to retirement.
But union leaders have reacted angrily. “Large-scale job losses would be a crushing blow to Port Talbot and UK manufacturing in general,” said Charlotte Brumpton-Childs, a national officer at the GMB union. “It doesn’t have to be this way — unions provided a realistic, costed alternative that would rule out all compulsory redundancies.”
Tata’s announcement will trigger a statutory 45-day consultation period over the redundancies.
The government pointed to the £500mn 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.
“Engagement with trade unions is rightly a company-led process. There is a broad range of support for staff affected, including a dedicated transition board backed by £80mn funding from UK government and £20mn from Tata Steel,” it said in a statement.
It added that the transition board would help support affected employees and the local economy, and would be chaired by the Welsh secretary David Davies with ministerial representation from the Welsh government.
Stephen Kinnock, the local Labour MP, urged Tata Steel to “rethink” its approach.
The wider, India-based Tata Group is a big employer in the UK with about 60,000 employees in businesses ranging from Jaguar Land Rover to Tetley Tea.
