Tata Steel: Thousands of Port Talbot job losses likely despite £500m worth of government support
Thousands of jobs are expected to be lost at Britain’s largest steelworks despite a £500m rescue package, one of the largest government support packages in history.
The government will make the offer to assist Tata Steel employees who may face redundancy at its site in Port Talbot, as it moves from blast furnaces to greener steel production.
Tata is expected to contribute £1.25bn towards the development of the steelworks, which currently employs 4,000 people.
An estimated 3,000 jobs are to be lost, 2,000 of them at Port Talbot. Without the package a total of 8,000 jobs were expected to go.
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The package amounts to one third of the £1.5bn of taxpayers’ cash initially requested by Tata.
The announcement confirms recent reporting by Sky News.
Flow of information prior to the official government announcement has been criticised.
“The constant leaks around this deal have undermined industrial relations, and worst of all has left our members worrying about the future of their jobs on the basis of here say and rumours,” the general secretary of steelworkers union Community said.
“This is unacceptable, and should not be the way that companies or the government do their business. Unions should have had a seat at the table throughout this process, as it is clear the interests of the workforce have not been considered in the rush to sign off a deal to do decarbonisation on the cheap.”
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Industry sources have told Sky News that as many as 3,000 staff remain likely to lose their jobs in the long term.
The deal has been described as “devastating” for jobs and workers by the GMB union general secretary.
“For years, GMB has called for investment in this critically important industry. Instead of listening the government dithered and delayed until it is too late, and thousands of workers, their families and communities will pay the price,” Gary Smith said.
“Our country cannot be secure without a functioning domestic steel industry and workers must be at the heart of plans to modernise it.”
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Gareth Stace, director general of UK Steel says that Port Talbot’s bailout marks a ‘bold commitment’ to the future of steelmaking in the UK.
The funding is expected to go towards a lower emission producing new electric arc furnace.
Port Talbot is currently the UK’s largest single carbon emitter, the government said.
Replacing the existing coal blast furnaces would reduce the UK’s carbon emissions by 1.5% it added.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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