British steelmaking set for major job losses

(CN) — Indian steelmaker Tata has announced the closure of two major blast furnaces in the industrial heartland of Wales, in a move set to make Britain the first G20 economy unable to make steel from scratch.

Speaking to members of the U.K. Parliament this week, Tata chief executive T.V. Narendran said that the blast furnaces were reaching “the end of their life” and their closure was “the best way to secure the future of steel making.”

However, unions have slammed the decision by Tata, accusing the company of “pleading poverty” while underinvesting in the plant, and suggesting their current revenues could easily support the maintenance of the present workforce.

The Welsh town of Port Talbot is one of the only locations where blast furnaces still operate in the former steel superpower nation, with the other site in Lincolnshire also set to close. Bought by Tata in 2007, the Port Talbot steelworks is the largest in Europe, employing more than 4,000 people and dominating the economy of the local area. It was previously rescued from closure in a government-backed deal in 2016.

In September last year the U.K. government agreed to provide Tata with 500 million pounds ($633 million) toward the transition to low-carbon steel making. Electric arc furnaces, which reuse scrap metal to produce steel, generate a fraction of the emissions associated with the highly carbon intensive blast furnaces.

Electric arc furnaces are also cheaper to run, requiring less energy and a smaller workforce. But the reduction in labor needs spells disaster for the town of Port Talbot, with an economy entirely dependent on the wages generated from the steelworks.

Many in the town fear they are likely to suffer the same fate as much of the rest of south Wales, where thriving mining communities were devastated by the deindustrialization policies of the Thatcher governments in the 1980s.

There is also frustration that counter-proposals suggested by trade unions have been rejected by Tata. Blaming “short termism by government and owner” for the planned job losses, the Unite union has instead developed a 1.5-billion-pound ($1.9 billion) plan to keep open the blast furnaces as the electric arc machinery is built, in order to ensure a steadier transition. Tata currently intend to close the blast furnaces before starting to develop the new electric arc furnaces on site.

The plan has not been without controversy, including within the trade union movement. Other unions representing steelworkers, GMB and Community, have proposed the development of new methods of “virgin” steel production — steel making from scratch — which would require fewer job losses at the site. But Unite has labeled the plan “fanciful and short-sighted.”

Despite the disagreement, the unions insist they have more in common than divides them, and share a sense of outrage the government has handed Tata such a large subsidy without insisting on greater protections for jobs. Despite the taxpayer money, up to 2,800 people — more than half the site’s workforce — are facing the axe, in an otherwise economically deprived part of the country.

In a parliamentary committee meeting on Wednesday, Conservative MP Stephen Crabb suggested to Narendran that his company had received the “deal of the century” from the government, accusing the firm of bluffing in its stated intention of closing the site altogether, and having chosen the “bargain basement option” for the steelworks’ future. In response, the steel magnate pledged to continue working with unions on the transition, but conceded that the closure of the blast furnaces was “pretty much” a done deal.

Unions have urged Tata to wait until the upcoming U.K. general election before turning off the blast furnaces, with the aim of renegotiating a deal with a potential incoming Labour government. Unite claims that Labour has privately pledged extra government money to ensure their smooth transition plan can come to fruition.

The apparently imminent closure of Britain’s last blast furnaces marks the final chapter of an extraordinary industrial story. At its peak, the British steel industry was the world’s largest, producing 40% of the world’s steel, and transforming communities across the country. Though American competitors overtook British Steel in the early 20th century, the industry remained competitive until the 1970s, before suffering a precipitous decline.

That Britain should become the first major economy to cease all ‘virgin’ steel production is a serious blow to national prestige, and the political wisdom of the move has raised eyebrows given current trends toward securing supply chains in the face of geopolitical instability. In order to make steel, Britain will become reliant on scrap metal, much of which will be imported from abroad.

For the residents of Port Talbot, however, the effects of the closure will be far more tangible. Coal mining communities in the local area never recovered from the closure of the collieries, with many becoming ghost towns, left behind and disconnected from the rest of the country.

“The 2,800 job losses proposed are just the tip of the iceberg because of the knock-on effect on people who work in the logistic supply chain, nearby cafes where workers buy their bacon butties, and even dance schools attended by steelworkers’ children,” GMB union officer Charlotte Brumpton-Childs said in a statement.

“We have one member who signed a mortgage agreement two weeks before this announcement was made, and a senior union rep in his late 20s who wants a job for the next 50 or 60 years. This is not a dying industry — it is vibrant and could be providing jobs for the next 100 years.”

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