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| Caparo goes into administration in further blow to British steel industry | |
| (about 1 hour later) | |
| Caparo Industries, part of the business empire of the Labour peer Lord Paul, has called in administrators in the latest blow to Britain’s steel industry. | |
| The steel products company, based in the West Midlands town of Oldbury, appointed PwC as joint administrator to 16 of its companies on Monday. Only three businesses within the group were unaffected by the move. | |
| PwC said that just over 1,700 employees across the affected businesses would be briefed on the implications of administration and would be paid as normal. | |
| The strength of sterling against the euro and poor trading in the steel industry are understood to be the main causes of its problems. | |
| Related: Lord Paul: philanthropist with links to Labour party, London zoo and children's charities | Related: Lord Paul: philanthropist with links to Labour party, London zoo and children's charities |
| The joint administrators said they would be working closely with the senior management team at the Caparo group to rapidly contact key customers and suppliers, with the objective of stabilising trading, while they assess opportunities to restructure or sell the businesses and their assets. | |
| Matt Hammond, lead administrator and partner at PwC, said: “The impact of steel prices and exchange rates has had an impact on some parts of the Caparo Industries group. However there are businesses in the group that are not directly affected by steel prices, and likewise many where there is both strong customer demand and critical supplier support. | |
| “Our focus for the next 36 hours is on briefing staff across the group and working closely with their management teams to ensure that every opportunity for these businesses is considered. We will be working with all parties to ensure the best outcome for all creditors of each business.” | |
| Britain’s steel industry is under pressure from cheap Chinese imports, high energy prices, slowing demand and the strength of the pound. The government held a summit in Rotherham on Friday to discuss the industry’s future after the closure of the SSI plant in Redcar with the loss of 2,200 jobs. | Britain’s steel industry is under pressure from cheap Chinese imports, high energy prices, slowing demand and the strength of the pound. The government held a summit in Rotherham on Friday to discuss the industry’s future after the closure of the SSI plant in Redcar with the loss of 2,200 jobs. |
| Related: Can the government galvanise Britain's ailing steel industry? | |
| In a further sign of the strain on the sector, Tata Steel is cutting up to 1,200 jobs in Scunthorpe and at two plants in Scotland. Tata had already cut production at its sites in Newport, Port Talbot and Rotherham with the loss of about 1,000 jobs. | In a further sign of the strain on the sector, Tata Steel is cutting up to 1,200 jobs in Scunthorpe and at two plants in Scotland. Tata had already cut production at its sites in Newport, Port Talbot and Rotherham with the loss of about 1,000 jobs. |
| The crisis in the steel sector threatens to cloud the state visit to the UK of Xi Jinping, the Chinese president. UK Steel, the industry’s trade group, has questioned how strongly the chancellor expressed concern about the dumping of cheap steel on his recent trade trip to China. | The crisis in the steel sector threatens to cloud the state visit to the UK of Xi Jinping, the Chinese president. UK Steel, the industry’s trade group, has questioned how strongly the chancellor expressed concern about the dumping of cheap steel on his recent trade trip to China. |
| Swraj Paul founded Caparo in 1968 after he moved to Britain from India and the business became the source of his fortune, estimated at £2bn. | Swraj Paul founded Caparo in 1968 after he moved to Britain from India and the business became the source of his fortune, estimated at £2bn. |
| Paul’s business spans the UK, Europe, India and the US. Caparo Industries Plc is Caparo’s UK arm and is run by a separate management team though Paul, who became a peer in 1996, is a big shareholder. | Paul’s business spans the UK, Europe, India and the US. Caparo Industries Plc is Caparo’s UK arm and is run by a separate management team though Paul, who became a peer in 1996, is a big shareholder. |
| Caparo was unavailable to comment. | |
| Angela Eagle, Labour shadow business secretary said: “This is a further blow to the steel industry which is now on its knees, and my thoughts are with the employees of Caparo who are facing uncertainty over their future. | Angela Eagle, Labour shadow business secretary said: “This is a further blow to the steel industry which is now on its knees, and my thoughts are with the employees of Caparo who are facing uncertainty over their future. |
| Related: Tata Steel to axe 1,200 jobs in the UK | |
| “The industry needs urgent action from the government, however this government seems content to let the industry fail. | “The industry needs urgent action from the government, however this government seems content to let the industry fail. |
| “Rather than setting up more talking shops, the government should be taking action to tackle higher energy prices, they should be providing export and procurement support and be looking at what temporary measures could help the industry, including looking again at business rates. | “Rather than setting up more talking shops, the government should be taking action to tackle higher energy prices, they should be providing export and procurement support and be looking at what temporary measures could help the industry, including looking again at business rates. |
| “With the Chinese president in the UK this week, I hope the government will raise the issue of anti-competitive dumping which is driving down steel prices.” | “With the Chinese president in the UK this week, I hope the government will raise the issue of anti-competitive dumping which is driving down steel prices.” |
| Roy Rickhuss, general secretary of steelworkers’ union Community, said: “This news is a tragic reminder of the urgent need for government action to help our steel industry survive. Crippling energy costs and the dumping of cheap Chinese steel is threatening the very future of the UK’s steel sector. | Roy Rickhuss, general secretary of steelworkers’ union Community, said: “This news is a tragic reminder of the urgent need for government action to help our steel industry survive. Crippling energy costs and the dumping of cheap Chinese steel is threatening the very future of the UK’s steel sector. |
| “We will be working to support our members within Caparo at this difficult time and are seeking an urgent meeting with the company. | “We will be working to support our members within Caparo at this difficult time and are seeking an urgent meeting with the company. |
| “This is an industry-wide crisis. It is vitally important that Britain’s steel companies hold their nerve and that government works with unions and the industry to build a sustainable future for UK manufacturing with steel at its heart.” | “This is an industry-wide crisis. It is vitally important that Britain’s steel companies hold their nerve and that government works with unions and the industry to build a sustainable future for UK manufacturing with steel at its heart.” |