Tata's plans to close blast furnaces at Port Talbot 'pretty much' done deal says boss

Stephen Crabb and other Welsh MPs have been questioning Tata’s Global Chief Executive TV. Narendran. Credit: Parliament TV

Tata Steel's plan to cut blast furnaces and jobs at its Port Talbot site is pretty much a 'done deal', its CEO has told a committee of MPs.

Stephen Crabb and other Welsh MPs have been questioning Tata’s Global Chief Executive TV. Narendran over the company's decision to move towards a more environmentally friendly production of steel, which would involve the loss of 2,800 jobs in Wales. 

The company says it is losing more than £1 million a day, adding the switch to greener production will save thousands of other jobs.

Chief executive TV Narendran told the Welsh Affairs Committee that Tata had invested billions of pounds into Port Talbot over the past 15 years, but had reached the stage where decisions about the future had to be made.

Committee chairman Stephen Crabb (Conservative, Preseli), asked Mr Narendran bluntly "At what point does Tata’s plan become a “done deal?”.

He replied: “Given our financial situation and the quality of assets, we are pretty much there. We need to work with the unions to see how best to deal with the transition.”

TV. Narendran said there are "multiple things" at play which have led to the steel giant choosing to press ahead with the strategy.

Firstly, he said the "financial situation" was a key issue, describing how the listed company is 67% owned by traditional investors and pension funds and that Tata Steel is "answerable to shareholders and everyone".

Secondly, he described how the blast furnaces at Port Talbot were coming to "the end of their life", he added that "would put the site at even greater risk, if we didn't act now".

And thirdly, he said, "There is a conversation about reducing the carbon footprint, a greener route and a sustainable plant." Mr Narendran said the company felt "this was the best way to secure the future of steelmaking in Port Talbot. There is an option to get support and invest in a new greener route."

Stephen Crabb said the company had faced difficult decisions in the past. He was a minister in government in 2016 when Tata Steel asked for support in particular trying to offload the British Steel Pension scheme with the rationale at the time that "it would be the thing that would safeguard blast furnaces, jobs and the steel industry".

He said: "So we have a plan now which doesn't save blast furnaces, doesn't save jobs and you have managed to get the UK government to give £500m for it. I mean that must be the deal of the century for you?"

Mr Narendan responded, saying: "I think firstly when we have looked at protecting the pension funds, it was making sure the pension funds are secure and is not impacted by the financial situation of the company and I think, we are happy to say that has been done. The pension funds are secure.

He added: "The second part, over fifteen years we have tried multiple ways forward and it has not worked, right? While we have not been able to save all the jobs in Port Talbot, we have been able to save 5,000 jobs in Tata Steel UK, because of the proposal and even that was at risk. I think that is where we were.

"Even in the last five years, the steel industry has changed very significantly, you know we are a global industry, we are open to global forces, we are even in the last three years been impacted by high gas prices, high energy costs, shipments from China.

He continued: "So, It is a very dynamic industry - so what is valid five years from now, ten years from now in the past may not be valid today. But we do believe if we invest in this process route we will change the cost structure in the UK."

Steelworkers travelled from Port Talbot to stage protests outside Parliament as well as attending the committee hearing. Officials from Community, the GMB and Unite trade unions have also given evidence they told the Welsh Affairs Committee that the job losses would be devastating for the local and national economy.

Charlotte Brumpton-Childs from the GMB said the scale of job losses cannot be over-estimated.

"The 2,800 job losses proposed are just the tip of the iceberg because of the knock-on effect on people who work in the logistic supply chain, nearby cafes where workers buy their bacon butties, and even dance schools attended by steelworkers’ children,” she said.

“We have one member who signed a mortgage agreement two weeks before this announcement was made, and a senior union rep in his late 20s who wants a job for the next 50 or 60 years.

“This is not a dying industry – it is vibrant and could be providing jobs for the next 100 years.”

Alasdair McDiarmid, assistant general secretary of Community, said that under a union plan, 600 jobs would be affected but other work could be created and any redundancies would be voluntary.

He said, "Tata’s plan is based on price rather than what is best for the industry and workers". He added, no other steelmaker in Europe is following Tata’s proposals, making the UK an “outlier” as the only company giving up blast furnaces.

Nick Kardahji of Unite, which has put forward its own plan for Port Talbot, said he believes Tata could be more ambitious without the need for any job losses.

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