The Telegraph
Monday , July 7 , 2014
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Tata Steel rationale for job cuts in UK

Tough decision

London, July 6: Steel industry bosses and unions have warned that a toxic mix of high business rates, rising energy and environmental costs, and the lack of a state-backed industrial policy are threatening Britain’s much-vaunted manufacturing renaissance, after 400 jobs were cut in South Wales.

Tata Steel, the company that owns the old British Steel empire, will shed about one in ten of its workers at its Port Talbot steelworks. The site employed more than 20,000 staff 30 years ago. Following 500 job cuts in 2012, the total will be down to 3,500.

Port Talbot produces much of the steel seen in British-made cars, in the giant distribution warehouses next to motorways, and in the assembly of white goods such as washing machines and fridges.

After a 250 million investment in a new blast furnace and other upgrades to the Port Talbot plant, Tata said on Tuesday that it would have to lose 400 of its workers to cut costs.

It cited rising energy prices and the environmental costs that heavy users of energy are having to bear in carbon prices and renewable obligation certificates, which are continuing to increase in advance of a freeze scheduled for 2016. Intensive industrial companies claim their energy charges are 50 per cent higher than those facing their direct rivals in Germany, France and the Benelux countries, while business rates are routinely five times as expensive.

Karl-Ulrich Kohler, Tata Steel’s European chief executive, said that these costs come against a backdrop of tough markets for industry and construction in Europe, where demand for steel is down 30 per cent on its pre-recession peak and recovering at only low single-digit percentages each year.

“Steel demand and prices are likely to be under pressure for some years,” he said. Tata Steel lost 16 million euros (13 million) in Europe last year, against a loss of 283 million euros in the year to March 2013.

Unions warned that the installation of new technology could be an excuse for Tata to implement a new era of “undermanning” at Port Talbot.

Roy Rickhuss, representing the Unite, GMB and Community unions on the site, said: “It demonstrates that despite the government’s trumpeting of economic recovery, the steel sector remains under real pressure. This sector, vital for so much of British manufacturing, must be an area of real focus for industrial policy.”