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Tata Steel plans to lay off about 2,800 workers as part of a major restructuring of its UK operations, dealing a blow to what was once one of the country’s biggest industries.
The company’s Indian owners told trade union leaders on Thursday that they would push ahead with the closure of two blast furnaces at its Port Talbot plant in south Wales, the UK’s largest steel works, by the end of this year.
The planned move, reported by the Financial Times on Wednesday, is part of a four-year transition to a greener form of steelmaking at Tata’s UK steel operations, which employ 8,000 people, and involve sites elsewhere in Wales and the Midlands.
Tata will invest £750mn to finance the restructuring, backed by a £500mn grant from the British government.
The restructuring announcement by Tata follows a crunch meeting between company executives and union leaders in London on Thursday over the future of Port Talbot, which is expected to bear the brunt of the 2,800 redundancies.
The job losses will be a major blow to south Wales — Tata is the largest private employer in Port Talbot.
Tata’s management rejected an alternative plan from the unions to keep one blast furnace at Port Talbot open until 2032 in a bid to reduce the scale of the lay-offs, pointing out the business is losing about £1mn a day.
This would have cost an additional £650mn, according to people familiar with the situation.
Port Talbot’s blast furnaces are currently used for primary steelmaking, in which iron ore is reduced to molten iron that is then turned into steel.
Tata plans to replace them with one electric arc furnace, which uses a less labour-intensive process to make steel from scrap.
The loss of the Port Talbot blast furnaces would leave two remaining in the UK, both belonging to British Steel.
However, the Chinese-owned company said in November it plans to close its Lincolnshire furnaces and replace them with two electric arc facilities, which could be operational as early as 2025.
Without the two companies’ blast furnaces, the UK will be the only major economy unable to make steel from scratch.
Tata accepted one of the unions’ proposals, which was to keep open Port Talbot’s hot strip mill for processing imported semi-finished steel or slab, at least for a transition period. This will protect about 200 jobs.
Company executives have sought to play down the impact of the restructuring on the workforce, pointing out that many of those facing redundancy are relatively close to retirement.
But union leaders reacted angrily. “Large-scale job losses would be a crushing blow to Port Talbot and UK manufacturing in general,” said Charlotte Brumpton-Childs, a national officer at the GMB union.
“It doesn’t have to be this way — unions provided a realistic, costed alternative that would rule out all compulsory redundancies.”
The government pointed to the £500mn grant to help restructure Tata Steel’s operations, which it said would help protect thousands of jobs and ensure a “sustainable and competitive future” for the country’s steel industry.
“Engagement with trade unions is rightly a company-led process,” it said. “There is a broad range of support for staff affected, including a dedicated transition board backed by £80mn funding from UK government and £20mn from Tata Steel.”
It added that the transition board would help support affected employees and the local economy, and would be chaired by Welsh secretary David Davies.
Stephen Kinnock, the Labour MP whose Aberavon constituency includes Port Talbot, urged Tata to “rethink” its approach.
Tata Steel is part of Tata Group, which is a big employer in the UK, with businesses ranging from Jaguar Land Rover to Tetley Tea.
