‘Life’s on hold’: Port Talbot’s steelworkers face up to a darkening future
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Version 0 of 1. The smell of fried food wafts from the door of the Docks Cafe, which sits in the shadow of Tata Steel’s sprawling Port Talbot steelworks. It is lunchtime and the place is rammed with hungry, soot-smudged men in blue overalls who huddle around the Formica tables and tuck into the all-day breakfast. Some brave souls tackle the monstrous breakfast roll, which offers five sausages, three rashers of bacon, plus black pudding, egg and beans. Sharon Evans, who runs the cafe, says: “We are packed for breakfast and packed for lunch. The talk now is all about jobs. We’re worried about our business too. We’ve been going for five years and are doing OK, but we rely on the works.” These are worrying times for Port Talbot’s steelworks. Tata, the Indian conglomerate that acquired Corus in 2007 in a debt-fuelled £6.7bn deal, sent shockwaves around the town when it announced 1,050 job cuts at several UK sites last week. Port Talbot will feel the sharp edge of the axe, with 750 of its 4,000 workers going over the coming months. In addition, from Sunday, Tata is putting an end to the employment of agency staff, which will result in a further 80 to 100 young workers leaving. This steelworks is Britain’s biggest, accounting for about one third of the country’s total annual production: every Heinz food tin sold in the UK, every roof for the Nissan Juke car and every new 1p and 2p coin (plated in copper) is made from Port Talbot steel. Tata has invested £300m in the plant over the past four years, including £200m for a new blast furnace. However, it is still losing £1m a day and sources close to Tata reckon it needs a further £500m – for new stripping and rolling mills – to make it viable. One source believes the savage round of cuts will give management a clearer view of whether it is worth pumping in more cash. “The meltdown in the steel industry is getting worse, not better, and Tata can’t find an easy way to cut its losses,” the source says. “But even after this restructuring, the problems [in the market] will still be there. It’s the last roll of the dice.” Britain’s once proud steel industry is in danger of being swept away by a tsunami of cheap Chinese product, slowing demand and high energy costs. About half of the 1.6bn tonnes of steel made globally each year comes from China, giving it huge pricing power. In the past 18 months, it has flooded the market with cheap, subsidised steel as its economic growth has slowed. Beijing wants to grab whatever foreign cash it can on global markets by selling its products at a knockdown rate. Consequently, exports of steel from China nearly doubled to 88.6m tonnes in the year to the end of 2014 – more than the combined annual production of Mexico and Canada. There is evidence that British steel users are being seduced by the cheaper material – imports of Chinese steel into the UK have quadrupled from 2% to 8% in the past three years. Significantly, the glut of discounted product has virtually halved the steel price in the past 12 months, making it hard for domestic producers to compete. This toxic economic cocktail has sent the British steel industry into a nosedive. Last year, Thai group SSI shut its Redcar plant, with 2,200 jobs lost. Losses at Tata Steel doubled last year to £768m and the country’s biggest steelmaker has responded by cutting thousands of jobs, shutting sites in Scotland and selling its Scunthorpe mill, which makes steel for the construction and rail industries. David Cameron is under pressure from opposition MPs to crack down on what they say is Chinese dumping. Ministers argue they are bound by EU trade rules that prevent interference. But any hopes that Brussels can act are fast evaporating. Beijing could actually tighten its grip on the steel market if, as expected, China is granted market economy status by the EU from December 2016. Beijing says this is its right after 15 years as a member of the World Trade Organisation. Market economy status would make it harder for Europe to impose anti-dumping duties on cheap Chinese goods. Axel Eggert, director general of EU steel industry body Eurofer, warns that this will threaten nearly all the 330,000 jobs in Europe’s steel industry. “We do not see any way to maintain a similar level of trade defence measures if China is granted market economy status. Most of the EU steel industry may disappear,” he says. Stephen Kinnock, the Labour MP for Aberavon, says: “There is a sense that this government seems more interested in cosying up to Beijing than saving British jobs. The British government is now cheerleading for the Chinese to get market economy status. It just beggars belief.” In Port Talbot, there is palpable anger at the government for not doing more. Dave Bowyer, a 40-year veteran of the plant and member of trade union Unite’s executive council, said: “Central government … has been very weak. They don’t seem to understand that if you lose your manufacturing base you become a third-class country.” The economic significance of steel to the town is clear, but the effect stretches way beyond Port Talbot. A study by Cardiff University’s Welsh economy research unit found that Tata Steel supports more than 18,000 jobs in Wales and estimates it is worth around £3.2bn to the Welsh economy. The decline of the steelworks has been reflected in Port Talbot. Station Road, once its bustling commercial hub, is now stuffed with betting shops, payday loan stores and charity outlets. The town and the steelworks are long past their 1960s and 1970s peak, when there were 20,000 working at the mill. Michael Cosker, 63, president of the chamber of commerce and owner of the Rolls Choice cafe in the Aberafan shopping centre, still calls it the Abbey Works or simply “the steel company”. Few here call it Tata. He is old enough to remember the halcyon days. He recalls how, at the end of shifts, the bar staff at Taibach rugby club would line up half-filled pints of bitter in readiness. “There were 30 pints on the bar ready to be filled and drunk. This was when 20,000-plus were working there. That’s all gone,” he says. While some remember the past, others can’t bear to think about the future. Sue (not her real name), says her husband is approaching his 40th year at the works. “There’s a lot of fear there at the moment,” she says. “We’ve got a mortgage and grandchildren that we like to help. My husband’s not far short of 60. I don’t know what is in store for us. Life’s on hold at the moment. We’ve usually got a holiday booked by now. But we’re waiting to see what will happen.” |