Corus steel producer to shed 1,700 jobs
In December 2009, the European steel producer Corus confirmed that parts of its Teesside Cast Products (TCP) business in northeast England would be suspended at the end of January 2010, resulting in the loss of 1,700 skilled jobs. However, talks with trade unions are continuing about the facility’s future and Corus has agreed to consider a trade union proposal to extend TCP’s operating programme and postpone the partial suspension to the end of February.
On 4 December 2009, the European steelmaker Corus confirmed that it could no longer sustain the losses at its Teesside Cast Products (TCP) business in northeast England. As a result, it announced that TCP’s Redcar blast furnace, Lackenby steelmaking plant and South Bank coke ovens would be ‘mothballed’ – that is, their operations suspended indefinitely – at the end of January 2010, leading to 1,700 job losses.
Some jobs saved
Corus, which is owned by the Indian conglomerate Tata Steel and whose main steelmaking operations are in the Netherlands and the UK, first announced in May 2009 that its TCP operations might close and that up to 2,000 jobs were at risk (see also the European Restructuring Monitor (ERM) fact sheet on the announcement).
However, the company now intends to keep open a number of TCP operations, including the Redcar wharf, Redcar coke ovens and some of its power generating capacity. As a result, the 1,700 confirmed job losses are about 600 fewer than originally envisaged. Nevertheless, this is the latest in a series of job losses at Corus (UK0902039I; ERM fact sheet) and will bring the total number of Corus job losses in the UK in the past year to more than 6,000.
Background to closures
Under a contract signed in 2004 between Corus and an international steel consortium led by Marcegaglia, it was agreed that the consortium would take about 80% of TCP’s output for 10 years. According to Corus, while the price of slab steel products was higher than production costs, the consortium was able to make a substantial profit – however, once the price fell below the cost of production, they pulled out of the contract. Despite this, Corus had been able to secure some orders on an ad hoc basis, and trade unions and workers had remained hopeful that the Redcar facility would have a future. A 90-day redundancy consultation period, which was due to end in August 2009, was extended when new orders were placed in September. In October, TCP was given a further reprieve when the company said that despite the cancellation of the contract its order book was full until the end of December. However, no orders were secured beyond the end of December 2009.
Announcement of closure
In a statement, the Chief Executive of Corus, Kirby Adams, announced that keeping the plant running had cost the company about GBP 130 million (€148.6 million as at 2 February 2010) and that operating a three million tonnes a year merchant slab plant was ‘not sustainable without a long-term strategic partner’. Mr Adams added: ‘We are acutely aware that this will be devastating news for our employees, our contractors, their families and the local community. We extend our sincere gratitude to all of them, as well as to the management team and the trade unions on Teesside, who have all worked night and day to try and avoid this outcome.’
Government and trade union reaction
In response to the closure, the UK’s Secretary of State for Business, Innovation and Skills, Peter Mandelson, expressed his disappointment that Corus had not been able to find a long-term solution to their difficulties. Lord Mandelson explained that the government had worked hard with all parties following the cancellation of the main supply contract to continue the agreement, ‘but a commercial solution could not be found’. He also confirmed that the government has offered GBP 5 million (€5.7 million) in training support. Moreover, the government has announced that it will invest GBP 60 million (€68.5 million) in the northeast of England for low carbon and advanced manufacturing.
Nevertheless, the main trade unions for the steel industry, Unite and Community, claimed that government action did not go far enough. They argued that the objectives should be to retain manufacturing infrastructure in Teesside, to save the Corus works and to preserve steelmaking.
Talks continue
On 13 January 2010, a joint management-trade union taskforce held a reportedly ‘productive’ meeting. A statement issued by the taskforce outlined that: ‘In the interests of maintaining a continuation of meaningful talks with a view to securing a positive future for TCP, Corus agreed to consider a [union] proposal to extend TCP’s operating programme and postpone the partial mothballing to the end of February’. Corus also confirmed its intention to continue operating the South Bank coke ovens, following an improvement in the market for coke, saving about 120 jobs. Talks are continuing within the taskforce.
Commentary
The closure of the Redcar steelworks, leading to substantial losses of skilled jobs, would be a severe blow to the region. More importantly, however, a steel plant closure would mark a poor beginning to the government’s attempt to re-balance the British economy away from its reliance on financial markets and back towards manufacturing.
Helen Newell, IRRU, University of Warwick