Wales politics

Steel crisis: Tata Port Talbot cuts announcement feared

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Media captionAberavon MP Stephen Kinnock said the industry needs to restructure in order to weather this storm

Hundreds of steel jobs are set to be lost in Wales in the latest blow to the UK industry.

An announcement is expected and could come as early as next week, sources have told the BBC's Sunday Politics Wales programme.

It is understood to involve the Tata plant at Port Talbot, as part of moves to safeguard the future of the site, which currently employs 4,000 workers.

The company said it had "no announcement to make at present".

Thousands of jobs were lost in 2015 with cutbacks and the closure of steelworks in England and Scotland involving Tata and other companies.

Steel unions and local politicians have called for urgent action from the UK government to prevent further job losses, saying the industry is in crisis due to high energy costs, collapsing prices and cheap Chinese imports.

Tata Steel employs more than 6,000 people at plants across Wales, putting £200m a year into the economy in wages.

Pressing for help

Economy Minister Edwina Hart said: "If we have an announcement from the company, the government will respond appropriately.

"Steel has been in crisis for a long time - this is not just a new thing.

"We and the First Minister in particular have been pressing the UK government on energy costs.

"We are now dealing with energy costs and Europe is dealing with that, but that's almost too late for firms like Tata."

Rob Edwards, lead organiser of the Community trade union, said: "The problem is there's cheap steel imports from China, all the business rates are wrong, the environmental taxes are wrong.

"It is a very difficult situation and I think people underestimate how important the steel industry is to Wales."

Tata Steel Europe, which employs 17,000 in the UK, is in the throes of a wide-scale reorganisation of its business.

In October, the firm announced nearly 1,200 roles were to be axed in Scunthorpe and Lanarkshire.

A spokesman for the company said: "We have no announcement to make at present.

"If we have significant news we would always tell employees first."

Analysis by Sarah Dickins, BBC Wales economics correspondent

The harsh reality is that Tata is hoping that by cutting hundreds of jobs they can save the steelworks - a plant which has more impact on the Welsh economy than purely the number of people working there.

It is understood to be losing £1m a day and has been for months.

The workforce have known since Christmas that a survival plan was being developed and it is this plan that we understand will be announced at the start of next week.

There are few signs that the market Port Talbot operates in will get stronger any time soon.

Chinese imports are still coming into Wales in considerable volume and prices for electricity - of which Port Talbot uses huge amounts - are still higher than competitors are being charged.

The European steel association Eurofer reports that the amount of Chinese steel entering Europe doubled in 2014 and much of that is coming into the UK, including Newport docks.

While hundreds of job losses are always painful, particularly for the families involved, looking at the bigger picture for the plant, this could be the best case scenario.

The restructuring plan, as the company will call it, still has to be approved by the board of Tata in Mumbai. If it decided that the plan does not make business sense, the fear is that the whole plant could be mothballed.

No steel would be made there, for the short term at least, ending generations of steel making at the site.

But Port Talbot steelworks has been though this before and survived.

In the early 1980s, 12,500 worked there. British Steel brought in restructuring called Slimline and 5,000 people lost their jobs there. By 1986, steel was making a profit again.

Tata UK will be hoping that by cutting jobs now the works will be able to ride out poor economic forces and have a brighter future ahead.

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