British Steel has made a comeback in Scunthorpe, after the sale of Tata’s Long Products Division in Scunthorpe was officially agreed this morning (April 11) and new owner, investment firm Greybull, confirmed its intention to rename the business after the iconic government-backed British steel producer.
About 4,400 jobs in the UK – which hung in the balance for months as negotiations took place – have now been saved following the sale.
The deal will mean that the entire Long Products business in Europe, which includes a steelworks in Scunthorpe, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York as well as a mill in France will also be saved.
The Long Products business makes steel for use in rail and construction projects.
Investment firm Greybull has said it is arranging a £400m finance and investment package, mostly funded by a combination of banks and shareholders, which will “fund working capital and future investments.”
An additional £100m in loans from the government is also said to be offered to support the business.
Greybull partner Marc Meyohas said he wanted to personally thank the company, British and French governments and trade unions for their support, which, he noted, “was essential in ensuring the agreement”.
“We are now focused on taking the deal to completion in order that the business can start its next chapter with confidence,” he said.
Greybull specialises in turning around companies in financial trouble –the investment firm took on airline Monarch, which had posted a loss of £94m in 2014, and under its management, returned a £40m profit the following year.
Executive director of Tata’s Long Products division Bimlendra Jha paid tribute to the workforce.
“This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival, and helped to make it attractive to a potential buyer,” Jha said.
Government must support
But Unite has warned that the new deal will secure a viable future for Scunthorpe steelworkers only if the government plays a strong and continuing role in supporting the beleaguered steel industry.
The remaining steel workforce in Scunthorpe has made substantial sacrifices as part of the deal – they are now being balloted to accept a 3 per cent pay cut for one year and changes to their pensions.
“It should not be forgotten that many workers have already lost their jobs at Scunthorpe and those that remain are making huge sacrifices with their pay and pensions to secure their jobs,” said Unite convenor for Tata Steel Scunthorpe Martin Foster.
“Unite is asking our members to back the deal, but government ministers must now play their part too,” he added. “The government cannot now leave Scunthorpe’s steelworkers high and dry and must take decisive action to allow them to compete on an even playing field with their global competitors.
“This means supporting steelworkers by ensuring infrastructure such as HS2 and defence projects are built with British steel, as well as tackling the dumping of cheap imports and high energy costs, which is leaving steelworkers fighting with one hand tied behind their backs.”
Foster added that, although the deal is not “signed, sealed, delivered” quite yet – a handful of agreements need to be confirmed before the sale is completely finalised – the affected steel workers and their communities can now “breathe a sigh of relief”.
“With this sale we can now see the light of the end of the tunnel,” he noted.
Foster said that the company has given assurances that there would be no need to make further changes to pay, terms or conditions in the future beyond what’s laid out in the current proposal.
“We’ll have to wait and see, but Greybull has given us confidence that we have a long-term, profitable future with them,” he said. “They’ve said that there’s no reason that the business cannot be successful.”
‘World class workforce’
Unite assistant general secretary Tony Burke noted that the sale and purchasing agreement was a “testament to the commitment of a world class workforce.”
“It demonstrates that steel production can have a future here in the UK and that given a fighting chance it can be profitable,” he said. “The workforce is making great sacrifices and we expect Greybull to stand by assurances that it is in it for the long-term.
“While the future of the Scunthorpe workforce looks more secure, we should not overlook the uncertainty and turmoil the rest of Tata Steel UK’s workers find themselves in,” Burke added.
“With the sale process for the rest of Tata’s steel operations starting today, steelworkers across the remaining sites expect Tata to live up to its assurances that the business will be sold as a whole to a responsible buyer.”
So far, the only company which has publically declared an interest in acquiring the rest of Tata’s UK business, officially up for sale today (April 11), is metals firm Liberty House – but business secretary Sajid Javid said other potential investors have also come forward.
The search for a buyer has begun in earnest as tens of thousands of jobs in Wales and throughout the UK are under threat if the remaining Tata sites now up for sale were to close. In Port Talbot alone, 4,000 jobs and the future of an entire community are on the line.
Unite has argued that the steel industry now in turmoil can be stabilised through specific government measures.
These include ministers throwing UK steel a financial lifeline and backing investment to get it through these tough times and creating an even playing field by dropping opposition to European Commission proposals to slap higher tariffs on cheap Chinese steel.
Unite also wants ministers to taking swift action on sky high energy costs so that UK steelworkers can compete on a level playing field with their European counterparts, as well as compelling British steel to be used in British infrastructure such as HS2 and defence projects.
Foster said that, despite the successful deal between Greybull and Tata’s long products division, its future, along with the future of the entire industry, is still dependent on government support.
“The survival of the steel industry is firmly in the hands of number 10,” he said. “This isn’t just about Scunthorpe – this is about steel communities throughout the UK.
“The government needs to wake up – on Chinese dumping, business rates, procurement and other forms of support for the steel industry,” he added. “Even at this late stage in the steel crisis, they still remain standoffish; they need to take action and they need to do it fast before it’s too late.
The business secretary is expected to make an announcement in the House of Commons today (April 11) updating MPs on the latest in the steel crisis.
Stay tuned on UNITElive for more updates on steel.