Britain’s biggest steel making business, Tata Steel is proposing a sale which will put thousand of at risk in an industry that once dominated Britain but has been brought low by falling prices, high costs and Chinese competition.
Following series of board meetings in Mumbai, Tata said it would draw a line under its almost decade-long foray into Britain’s steel industry, exiting the country entirely.
The move could have a great impact on Britain’s closely fought vote in three months over whether to stay in the European Union. Britain’s traditionally anti-EU media have blamed Brussels for preventing London from taking greater steps to protect the industry, although supporters of membership say EU policy is not responsible for the industry’s plight.
Tata, which has about 15,000 employees in Britain at sites including the giant Port Talbot plant in Wales, said its financial performance in Britain had deteriorated sharply in recent months and it wanted to exit as quickly as possible.
The British government and the Welsh authorities said they were looking at all viable options to protect the steel industry, which has already shed thousands of jobs in just the last year.
Minister for business, Anna Soubry in an interview with BBC radio said “We are, and have, and continue to look at all options, and I mean all options. But what we first want to achieve from Tata is this period of time to allow a proper sale process,”
Anna she could not rule out the possibility of the government buying the plants until a new owner could be found.
The sale ramps up pressure on Prime Minister David Cameron’s right-leaning Conservative government, which has sought to cultivate closer ties with China.
Cameron’s fate hangs in the balance when Britain votes on whether to stay in the EU in May, and his government has sought to avoid controversies during the runup to the vote.
The Conservatives are resented in Britain’s industrial heartlands for the demise of mining and manufacturing under former prime minister Margaret Thatcher in the 1980s.
The government has said it is taking measures to help the steel sector but the fundamental problem remained the halving of steel prices in the past year, caused by overcapacity in China.
Once a driver of the economy through the 19th and 20th centuries, many of Britain’s former steel towns have been decimated by the industry’s decline since its peak in the 1970s.
The leader of the opposition Labour party, Jeremy Corbyn, called on the government to take a public stake in the industry which he called “the cornerstone of our manufacturing sector”.
Tata Steel bought Anglo-Dutch steelmaker Corus in 2007 and has since struggled to turn the giant around.
Port Talbot, though far from its 1960s peak, still employs about 4,000 people, and Tata is one of the most significant private companies in Wales.
Unions welcomed the decision not to shutter the plants but called on Tata to be a “responsible seller” and on the government to play its role.
“We don’t just want more warm words. We want a detailed plan of action to find buyers and build confidence in potential investors in UK steel,” Roy Rickhuss, general secretary of steelworkers’ trade union Community, said.
Steelmakers in Britain pay some of the highest energy costs and green taxes in the world and are also struggling to compete with record Chinese steel imports, which they say have been unfairly subsidised by Beijing.