England

Redcar steelworks: Owners SSI go into liquidation

Redcar works Image copyright Ian Forsyth
Image caption The crisis in steel prices is being blamed on a surplus of cheap Chinese products on the world market

SSI UK, which owns the Redcar steelworks, has gone into liquidation.

The Thai parent company was earlier granted an application to wind up the UK arm of its business at the High Court in Manchester.

On Monday, it was announced the plant on Teesside was to be mothballed with the loss of 1,700 jobs.

In response the government made an aid package of "up to £80m" available for those affected but has ruled out state intervention at the plant.

Media playback is unsupported on your device
Media captionGeorge Osborne: ''We have put in place a huge package of support - many, many millions of pounds''

In an email to staff, the director of SSI UK Cornelius Louwrens said he would try to determine how operations would be affected but there would be a focus on keeping the coke ovens - essential for any future steel making on the site - burning.

Roy Rickhuss, general secretary of the Community union, said it was "devastating news".

He said: "Government must ensure that the industrial assets are protected and skills are retained to give steel making a chance of a future.

"We believe there are parties who could ensure that the industrial assets are mothballed safely, with reduced environmental impact, and we would encourage the liquidators to look favourably on this option as offering the best opportunity to secure a return to creditors.

"A community on Teesside is looking to the government to take further action."

He said SSI had shown a "lack of respect" to the workforce and the company "should do the right thing and get out of the way so others can give steel a chance of a future on Teesside."

The GMB union said it was seeking to establish what liquidation would mean for workers.

Image copyright Getty Images
Image caption The Redcar plant was mothballed by its previous owners before SSI took over in 2012

Gareth Stace, director of trade group UK Steel, said: "It may be too late for SSI but the situation in Redcar brings the problems facing the UK steel sector into sharp relief.

"The government must now spearhead efforts to support the steel industry and the supply chains it feeds.

"The steel site in Redcar remains a viable and efficient plant and the government-led steel summit taking place in two weeks will be a make-or-break event for the entire industry."

Media playback is unsupported on your device
Media captionGareth Stace, director of UK Steel: ''The European Commission needs to take action quickly"

Earlier, the government revealed its aid package but it was swiftly followed by Business Secretary Sajid Javid warning of "more bad news to come" .

He said the package would include retraining and help for those setting up small businesses but ruled out government intervention to save the steelworks.

"With the global price in steel collapsing by more than a half because of huge over-capacity in just a year alone, and this plant making steel at a cost which is above the world price, I don't think anyone realistically has looked at this and thought that there's a way to keep this going as a viable business," Mr Javid said.

"Notwithstanding the EU state aid rules that would make it illegal. So that's why our focus has rightly been around making sure that the workers get the support that they need - and that's what this package is about."

Image caption David Cameron said he believed the government had done all it could to help

In an interview with BBC Look North political correspondent Mark Denten, David Cameron said the government had done "everything we can to help".

He said: "We have supported this industry but this business has never turned a profit, has always been in loss.

"Steel prices have collapsed the world over and the judgement we make is that it is best now to put this £80m into helping people to get the skills, to get the work, to get new jobs and we will do everything we can to help the area."

Media playback is unsupported on your device
Media captionShadow Chancellor John McDonnell: ''The government will have to intervene''

Asked if the Northern Powerhouse had failed at its first big test, the prime minister said he did not accept that.

He said: "The concept of a Northern Powerhouse is not that you step in and subsidise an industry when I'm afraid it hasn't been able to do anything but make losses."

'Forget Thai company'

Business Minister Anna Soubry said: "I'm extremely hacked off, truthfully. Because if we'd had all these meetings we had yesterday nine months ago, who knows where we'd be today?

"It wasn't us (the government), our problem, and this is a long, sorry story. (We) have not been kept in the full picture as to what's been happening at SSI.

"It's not lost on anybody the importance of keeping the coke ovens going, we know that if you don't have the coking ovens working they will collapse.

"All the people that need to be aware of the importance of keeping the coke ovens alight know that, they know the need to act quickly.

"Forget the Thai parent company, forget them completely. They've got their own problems of debt so bad they have gone into this rehabilitation order. The three people in charge are the three Thai banks.

"The most important thing is what happens now with the £80m support package.

"Some of it will go on redundancies but the majority is to get people into the training and the skills they need for alternative work."

Image copyright Ian Forsyth
Image caption A rally in support of the steelworkers was held last week

But Redcar Labour MP Anna Turley said: "The government has today thrown in the towel and turned its back on steelmaking in Teesside.

"We do not accept their view that a hard closure is the only option and I am deeply disappointed they have rejected all of the options presented to them so far.

"We will continue to fight to ensure there is a future for steelmaking at the site but realise now we will get no help from government. Our attentions now turn to working with the official receiver to establish how debts, salaries and pensions will be paid and, crucially, how the site will be secured for the future."

She said she welcomed the £80m government support package but said her fear was that it would not go far enough and said she wanted answers on how the money would be spent.

Related Topics

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites