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Tata steel crisis: unions plea for state help as potential buyers emerge Tata steel crisis: Welsh government opens talks with possible buyers
(35 minutes later)
Steelworkers are to make a fresh plea for government support for the industry after shop stewards from sites across the UK hold talks on Monday with the Community and Unite trade union leaders. The Welsh government has said Port Talbot and Tata Steel’s other UK sites cannot be allowed to close and has opened talks with potential buyers about a rescue deal.
Their calls for intervention come amid a series of planned meetings between Tata and the government and as potential buyers emerge for the Indian company’s UK business. Carwyn Jones, the first minister, told the Welsh assembly:“Welsh steel – British steel - cannot be allowed to die.”
David Cameron will on Tuesday meet with the Welsh first minister, Carwyn Jones, to discuss the steel crisis, with the embattled business secretary, Sajid Javid, meeting Tata’s chief financial officer on Monday. Jones said there had been early expressions of interest in Tata’s UK operations but called on the Indian owner to allow a realistic time frame for the sale to go through.
http://www.theguardian.com/business/2016/apr/04/british-steel-name-could-return-as-part-of-tata-scunthorpe-deal “This should be months, not weeks,” he told the assembly, which has been recalled to deal with the crisis. “As they prepare to withdraw from Wales, Tata must have regard for its legal and moral responsibilities. Tata has duties and obligations to its workforce and steel communities. It is a company with a global reputation for corporate social responsibility and they should not surrender that reputation cheaply.”
His intervention came as steelworkers prepare to make a fresh plea for government support for the industry. Shop stewards from sites across the UK are holding talks with the Community and Unite trade union leaders in London.
Related: Steel crisis: UK response 'slow and inadequate' says Welsh first minister - Politics live
A series of planned meetings between Tata and the government are also taking place as potential buyers emerge for the Indian company’s UK business.
David Cameron will on Tuesday meet with the Welsh first minister to discuss the steel crisis, with the embattled business secretary, Sajid Javid, meeting Tata’s chief financial officer on Monday.
The government was caught out when Tata announced last week that it plans to sell off its British assets, putting 15,000 jobs at risk at the company itself and a further 25,000 jobs in the supply chain.The government was caught out when Tata announced last week that it plans to sell off its British assets, putting 15,000 jobs at risk at the company itself and a further 25,000 jobs in the supply chain.
The prime minister’s spokeswoman hit back at claims by Brexit campaigners, including Boris Johnson, that coming out of the EU would help Britaintackle Chinese steel dumping. Jones called on the UK government to put nationalisation on the table. They must “take the plants into public ownership until a buyer can be found”, he said, adding that the Welsh government would contribute from its resources.
“Around 50% of our steel exports go to the EU so it is very important to retain access to that market. By being in the EU we are a market of 500 million consumers,” she said, insisting that Britain had more power than it would have alone. He called the Tata decision “deeply disappointing”, saying the company had rejected a turnaround plan from its European management, and said it was not the fault of the workforce.
Welsh assembly members will discuss the future of the steel industry on Monday afternoon. They were recalled from the Easter break. The first minister will make a statement outlining the latest situation before taking questions. “The plants are well managed and the workforce has done everything asked of them – and more,” he said.
“The current situation has been created by distorted conditions in the global steel market, and not by any inefficiency on the part of the workforce.”
He sounded a positive note about potential buyers. “I’ve spoken to one potential buyer this morning. How we deal with these expressions of interest is the substance of our joint work with the UK government.
“I expect there will be support for our steel communities in every part of this chamber. As I said at the outset, the workforce, their families and their communities are at the front of our thoughts. But we are driven not just by sentiment. We are not arguing to prop up a dying industry. Wales needs steel. Britain needs steel.”
He argued that it was vital to the country’s long-term strategic interests, including over the economy and defence.
“A United Kingdom without steel making is a United Kingdom which is enfeebled and smaller in the world.”
Tata’s UK business includes the Port Talbot steelworks – the biggest steelworks in the UK which employs 4,000 people.Tata’s UK business includes the Port Talbot steelworks – the biggest steelworks in the UK which employs 4,000 people.
A small group of parties interested in buying sites from Tata have emerged. However, they would all need significant support from the government and it is doubtful whether they would want to buy the entire business or Port Talbot itself.A small group of parties interested in buying sites from Tata have emerged. However, they would all need significant support from the government and it is doubtful whether they would want to buy the entire business or Port Talbot itself.
These parties include Liberty House, run by Sanjeev Guupta, and investment firm Greybull. These businesses are already buying assets from Tata – Greybull is close to acquiring its Scunthorpe steelworks and could also revive the British Steel brand by buying it from Tata.These parties include Liberty House, run by Sanjeev Guupta, and investment firm Greybull. These businesses are already buying assets from Tata – Greybull is close to acquiring its Scunthorpe steelworks and could also revive the British Steel brand by buying it from Tata.
Another potential saviour is ThyssenKrupp, the German industrial conglomerate. ThyssenKrupp was in talks to buy Port Talbot and Tata’s other UK sites as part of a deal to buy its European business, including a major steelworks in the Netherlands. However, talks broke down around three months ago over concerns about the mounting losses in the UK and its pension liabilities of £15bn.Another potential saviour is ThyssenKrupp, the German industrial conglomerate. ThyssenKrupp was in talks to buy Port Talbot and Tata’s other UK sites as part of a deal to buy its European business, including a major steelworks in the Netherlands. However, talks broke down around three months ago over concerns about the mounting losses in the UK and its pension liabilities of £15bn.
Reports in Europe claim that ThyssenKrupp is now interested in merging its steel business with Tata Steel’s European division after the sale of its UK arm, with the new business spun off as a joint venture.Reports in Europe claim that ThyssenKrupp is now interested in merging its steel business with Tata Steel’s European division after the sale of its UK arm, with the new business spun off as a joint venture.
However, sources close to Tata believe a deal could potentially be rekindled if the UK government provides financial support and the pension scheme is restructured.However, sources close to Tata believe a deal could potentially be rekindled if the UK government provides financial support and the pension scheme is restructured.
The dire financial situation facing Tata’s UK steel business makes the prospect of any rescue deal difficult. It is understood that Tata Steel is losing £2.5m a day in the UK, up from the initial £1m, and that it will lose at least £100m in running a sales process until the end of April.The dire financial situation facing Tata’s UK steel business makes the prospect of any rescue deal difficult. It is understood that Tata Steel is losing £2.5m a day in the UK, up from the initial £1m, and that it will lose at least £100m in running a sales process until the end of April.
The government’s preferred option is thought to be securing a rescue deal by arranging a loan for a new buyer. This loan would need to be on commercial terms so as not to fall foul of EU state-owned rules.The government’s preferred option is thought to be securing a rescue deal by arranging a loan for a new buyer. This loan would need to be on commercial terms so as not to fall foul of EU state-owned rules.
It is also trying to sound out potent buyers, including private investors and international steel companies. The billionaire tycoon Wilbur Ross, who bought a stake in Virgin Money, is to be approached, according to reports.It is also trying to sound out potent buyers, including private investors and international steel companies. The billionaire tycoon Wilbur Ross, who bought a stake in Virgin Money, is to be approached, according to reports.
The government will appoint a financial adviser to support its efforts as early as Monday.The government will appoint a financial adviser to support its efforts as early as Monday.
Sajid Javidhas said that any buyer is likely to need support with the cost of energy, the pension scheme, and modernising Tata’s plants.Sajid Javidhas said that any buyer is likely to need support with the cost of energy, the pension scheme, and modernising Tata’s plants.
Tata’s pension liabilities are a major hurdle for any buyer. The British Steel Pension Scheme (BSPS), which was inherited by Tata when it bought Corus in 2007, has £14.5bn of liabilities and 130,000 members, making it one of the biggest pension schemes in the UK.Tata’s pension liabilities are a major hurdle for any buyer. The British Steel Pension Scheme (BSPS), which was inherited by Tata when it bought Corus in 2007, has £14.5bn of liabilities and 130,000 members, making it one of the biggest pension schemes in the UK.
Accounts for the business show Tata last year had to pump £129m into the scheme and will spend even more in 2016.Accounts for the business show Tata last year had to pump £129m into the scheme and will spend even more in 2016.
One option for the government is to nationalise the scheme – as it did with Royal Mail – although this could be blocked by EU state-aid rules. Alternatively, the scheme could be taken over by the Pension Protection Fund, although this would mean members having their pensions cut.One option for the government is to nationalise the scheme – as it did with Royal Mail – although this could be blocked by EU state-aid rules. Alternatively, the scheme could be taken over by the Pension Protection Fund, although this would mean members having their pensions cut.
The prime minister’s spokeswoman hit back at claims by Brexit campaigners, including Boris Johnson, that coming out of the EU would help Britaintackle Chinese steel dumping.
“Around 50% of our steel exports go to the EU so it is very important to retain access to that market. By being in the EU we are a market of 500 million consumers,” she said, insisting that Britain had more power than it would have alone.