Tata plant closures trigger warning from UK Steel on manufacturing

Britain risks losing its ability to build nuclear submarines and offshore drilling platforms following the mothballing of Tata Steel’s Dalziell plant in Scotland.

UK Steel issued this stark warning in reaction to Tata Steel’s wider announcement that it is likely to close plants in Lincolnshire and Scotland with the loss of 1,200 jobs.

Europe’s second largest steel producer said that production of steel plate will lead to around 900 job losses in Scunthorpe and 270 in Scotland, as well as a small number at other Long Products Europe sites. Plate mills in Scunthorpe, Dalzell and Clydebridge would be mothballed while one of the two coke ovens at the Scunthorpe steelworks would be closed.

Factors contributing to Tata Steel’s announcement – which follows Caparo Industries’ move into administration – include a shift in market conditions caused by a flood of cheap imports, particularly from China, a strong pound and high electricity costs.

Karl Koehler, Chief Executive of Tata Steel’s European operations, said: “The UK steel industry is struggling for survival in the face of extremely challenging market conditions.

“This industry has a crucial role to play in rebalancing the UK economy, but we need a fairer system to encourage growth.

“The European Commission needs to do much more to deal with unfairly traded imports – inaction threatens the future of the entire European steel industry.”

According to Tata Steel, imports of steel plate into Europe have doubled over the past two years and imports from China have quadrupled, causing a steep drop in steel prices. Simultaneously, a stronger pound has undermined the competitiveness of the business’s Europe-bound exports, and encouraged more imports.

Consequently, Tata Steel is concentrating on higher-value markets with a focus on developing stronger and lighter products.

Commenting on today’s announcement Gareth Stace, director of UK Steel, said: “If we are to stem this tide then the Business Secretary must now deliver as a matter of urgency the commitments he made at last week’s summit, on energy costs, Business Rates costs and tackling unfair trade. In addition, we must also see a commitment from all parts of government at the highest level to ensure the sector’s survival in the UK.

“The Prime Minister can demonstrate that he is prepared to lead this commitment by stepping in this week and pressing the Chinese Premier about the dumping of under-priced steel which is one of the major factors killing our industry.”

According to UK Steel, the Dalziell plant in Scotland is the only plant in Britain that is capable of rolling and processing the steel used in Trident submarines and the MoD special Armour plate.

If the plant is lost the UK faces the prospect of building the next Trident fleet using imported steel. UK Steel, which issued a safety warning about the use of Chinese steel in March, add that it is also the only UK facility with the capability to supply the exotic specifications demanded by the offshore oil and gas industry for drilling platforms and oil and gas pipelines.