On Friday 20 May 2011, Tata Steel announced the loss of 1,200 jobs at its Scunthorpe, Lincolnshire Bloom and Billet Mill and associated steel caster locations. This would also entail the mothballing of the Queen Bess blast furnace - Scunthorpe's blast furnaces are given names, not numbers - and Tata Steel will further consider what's best for the future of the Billet Caster. Nearly 400 jobs are to go at the company's Teeside sites and the total number of job cuts will represent a loss of about eight per cent of the UK's workforce in this sector.
Dr Karl-Ulrich Köhler, Managing Director and Chief Executive Officer of Tata Steel's European operations told the media:
"We are proposing to take these actions only after going through an inclusive consultative process that involved very careful scrutiny of the Long Products business performance. We have used the experience we gained in turning around our Speciality Steels business in developing this strategy for the rest of the Long Products and we are convinced it represents the best chance of making this business successful and sustainable in the long term."
Long Products are made from blooms or billets of steel and are usually classed as semi-finished products. These products include bars, rods and wires, tubes, rails and structural shapes and are produced from a continuous caster or rolled at a blooming mill.
The decision to make these redundancies, starting after consultations with the workforce and unions, was taken after Tata Steel had sustained two years of multi-million pound losses in long products as a whole, despite significant cost savings in this part of the business made by the company over the same period.
The losses, Tata claims, are partly due to the effects of the global recession but for Scunthorpe in particular, the losses arise because of the severe downturn in the UK's construction sector. Tata has experienced a near 35 per cent downturn in the demand for the company's bloom or billet products since 2007 and expect no real improvement in the near to medium future; certainly unlikely before 2016.
This is all rather bad news for Scunthorpe, a town of some 72,000 in North Lincolnshire where nearly 4,500 are currently employed in the steel industry - it has the UK's major integrated steelworks - and the latest unemployment figure (April 2011) is 5.7 per cent. It is expected that the proposed measures by Dr Köhler will reduce the town's steel output from 3.5 million tons to 3.1 million tons per annum. The town has experienced severe downsizing of its main industry before and has found it difficult to attract new industry.
Not all the blame for the Long Products downturn should be placed upon the slump in Britain's construction sector however. BBC News on 20 May 2011 quoted Labour MP for Scunthorpe, Nick Dakin as saying that government policies had made it harder for Tata Steel: "The actions of the Government certainly haven't helped in taking investment out of construction in the local economy and raising the spectre of carbon taxes coming in earlier in the UK than in other parts of Europe."
The Times on 03 May 2011 quoted Dr Köhler criticising the Chancellor, George Osborne's Budget measures on carbon emissions: "European steel makers already face the prospect of deteriorating international competitiveness because of the proposed unilateral imposition by the European Commission of very significantly higher emission costs.
"The carbon floor proposal will impose additional unilateral emission costs, specifically on the UK steel industry. This is an exceptionally unhelpful and potentially damaging measure."
Unhelpful and damaging to the extent that Tata Steel will pull out of Britain altogether??
Dr Köhler is a most worthy person of the Government's ear.
Doctor Karl-Ulrich Köhler was appointed Managing Director and CEO of Tata Steel Europe Ltd on 1 October 2010 and brings a wealth of knowledge and experience to the post having started his career at Thyssen Stahl AG, Duisburg in 1980. He is still a Member of the Executive Board of ThyssenKrupp Automotive AG.
After gaining his doctorate in metallurgy from the Technische Univerität Clausthal in 1988, he was appointed head of steelmaking/hot flat products at Hoesch Stahl AG, Dortmund in 1990. Further very senior posts followed in the German steel industry including head of heavy plate, sheet/coated products and research and development at ThyssenKrupp Stahl AG in 1997.
Dr Köhler was for a period, President of Eurofer, the European steelmaking federation and in 2005 was awarded an honorary professorship in flat steel product technology from Technische Universität Bergakademie Freiberg, Saxony
Dr Köhler did have a silver lining in an otherwise dark cloud. The Scunthorpe Telegraph on Saturday 21 May 2011, reported an assurance given by the Doctor that the "vast majority" of a £400 million spending programme over the coming five years will be spent on "improving the reliability of plant in Scunthorpe, improving the quality of products and making the site more energy efficient" warning "If we don't use this as our strategy then we do not have a future".
The paper went on to quote Michael Leahy, the General Secretary of the Community union: "We recognise that this is part of a wider strategic review of the business aimed at securing the long-term viability and access to new markets.
"To that end we welcome the commitment to invest £400 million over the next few years."
The firm will also axe 300 workers at its Lackenby Long Products and Skinningrove Special Profiles plants near Redcar and a further 90 at its Steel Tubes site in Hartlepool.
The Guardian on 17 May 2011 reported: "Chris Huhne pledges to halve UK carbon emissions by 2025" compared to 1990 levels. Maybe by that time there will be no steel industry left to spoil Mr Huhne's target!.