Wales

Tata: Hundreds of steel jobs could go at Newport Orb plant

Cogent in Newport
Image caption Up to 380 jobs could be lost at the plant

Hundreds of jobs could go with the closure of a Tata steel plant in Newport.

There has been a factory at the site since 1898 but Orb Electrical Steels has not been in profit for four years.

Up to 380 jobs could go although Tata hope to offer jobs elsewhere in Wales.

The factory, which makes electrical steel used in power transmission, was put up for sale in May 2018, with Tata wanting to concentrate on its core steel business.

Tata Steel's European operations head Henrik Adam said: "I recognise how difficult this news will be for all those affected and we will work very hard to support them."

Unions said Tata - which employs nearly 6,000 workers in Wales - was breaking its commitments over job guarantees.

Orb Electrical Steels is part of Tata's Cogent division, part of which is being sold to the Japanese steel company JFE Shoji Trade Corporation.

Tata is also closing its Wolverhampton Engineering Steels service centre, with up to 26 jobs at risk.

Image caption Tata said it would have cost £50m to upgrade the Orb site to make it competitive

The Orb site makes electrical steel used in generators, transformers, motors and magnetic products, including for the car industry.

But the sector has been suffering from over-capacity over the last 10 years, and struggling to compete in particular with big volume producers in China.

"This business is the smallest volume electrical steel manufacturer in the world - and we've only been able to make a profit in two of the last 10 years and no profit in the last four years," Tor Farquhar, Tata Steel Europe's HR director, told BBC Wales.

Meanwhile, converting the Orb plant would have cost Tata more than £50m.

Mr Adam added: "Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges."

But he said workers would be offered alternative employment at other Tata sites in Wales where possible and consultations with staff and unions would start shortly.

Image caption Paul Horton, a Community union official at the plant, said there had been an agreement for no compulsory job losses until 2021

WORKERS' REACTION

One of the plant's union officials Paul Horton, who has nearly 37 years experience, said it would mean a loss of well-paid jobs in the area, with workers earning up to £40,000, with overtime on top.

"We weren't expecting anything this severe, this quickly," he said. "We understand the business has been struggling but there has been no inkling of this happening over the last few weeks."

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Media captionJason Sims, Matthew Grande and Paul Spencer have 55 years experience at Orb behind them

Jason Sims, who has worked at the plant for 13 years, said: "It's sad news. Everyone's in a bit of shock at the moment, trying to take it in."

He said there was a lot of uncertainty whether there would be offers of work in Port Talbot or Llanwern.

Matthew Grande said news had been leaking out since Sunday and they had to work with a "massive cloud hanging over our heads. We're gutted and devastated to be honest with you".

He said it was like a family firm, with everyone knowing each other and "more or less growing up together".

Paul Spencer, with 22 years at the plant behind him, said he hoped there would be jobs at the end of it. "There have been rumours for about 12 months on and off, but when go to the meeting this morning, it's real, your stomach sinks."

Image caption Orb was privatised from British Steel 30 years ago

UNION REACTION

Unite's Tata official Tony Brady said Orb's closure would be a "body blow" for the economy of Wales.

"Unite will be fighting for every job and holding Tata Steel's feet to the fire over assurances that workers affected by today's announcement will be redeployed."

He said the union would not sit back and allow "decent well-paid jobs and irreplaceable skills to go to the wall".

Roy Rickhuss of the Community steelworkers' union called it "shocking" news which "makes a mockery of the understanding we reached with Tata around the jobs guarantee".

"There has been no consultation about this proposal either at UK or European level and company management should hang their heads in shame in the way this has come about," he said.

"This is of course extremely devastating news for workers at the Orb, but all Tata Steel workers should be concerned by the way Tata is breaking its commitments."

He called for government intervention.

Image copyright Reg Speller/Getty Images
Image caption The Newport transporter bridge was opened in 1906 to help workers reach the plant

A LONG HISTORY

There has been steelmaking on the Newport site since 1898, when the old Lysaght company moved from Wolverhampton.

The famous city landmark, the transporter bridge, was built a few years later to carry workers across to the works.

It eventually became part of British Steel and then European Electrical Steels in 1991.

Cogent took over in 2001.

Analysis by Brian Meechan, BBC Wales business correspondent

There have been concerns for the future of Tata's Cogent operation for a few months, ever since it was put up for sale.

Cogent had been put up for sale by Tata in May last year after the Indian owners had decided to concentrate on its core steel production business, as it planned to merge with the German company Thyssenkrupp.

Given Cogent's specialism, it was hoped that a buyer could be found, but unions said at the time they were not persuaded by the case for a sale.

They had privately been growing increasingly concerned about the future of the plant. This decision could set Tata and the unions on an even bigger collision course.

As part of the unions' agreement to support less generous pensions, they believe Tata committed to no compulsory redundancies until 2026.

Tata has always maintained that it committed to try to avoid compulsory redundancies.

Unions could see this as breaching a commitment to its entire Welsh workforce, and industrial action could be possible, they say.

THE POLITICAL RESPONSE

Economy Minister Ken Skates said he stressed the importance in talks with the company of avoiding compulsory redundancies.

"The Welsh Government will now do everything it can to support individuals, the community and the supply chain affected by this announcement," he added.

"Today's news clearly demonstrates the fragility of the global steel market and the UK government must now step up and broaden its approach to supporting the industry, including its supply chain, across the whole of the UK."

The UK government said it was in regular contact with the company, unions and other partners and was taking "wide-ranging action to support the industry".

A spokesman said: "We have a long and proud history of steelmaking excellence and the UK government is committed to supporting a modern and vibrant steel sector."

Newport East MP Jessica Morden said job losses would be "devastating news" for workers and families. 

"What is particularly tragic is that this, the only UK plant with the potential to produce electric steels for motors and with investment, vision and government backing this could be the key part of the supply chain for electric vehicles," she said.

Plaid Cymru's economy spokesman Rhun ap Iorwerth AM said the closure was "devastating" and he wanted the Welsh and UK governments to investigate all possible interventions.

"I've repeatedly called for a major summit on Wales' economic future," he said.

"This is further evidence of why it's more important than ever to have the clearest possible focus on the threats facing us, and the opportunities that need to be sought out at this time of unprecedented uncertainty."

Conservative business minister Russell George AM, called the news "incredibly disappointing" and "a terrible blow to the region and its supply links".

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