Tata Steel has announced it will cut 400 jobs at its steelmaking plant in Port Talbot to “improve the competitiveness” of the business.
Tata Steel’s European chief executive Karl Koehler said the firm had invested more than £250m over the last two years in steelmaking technology in its Strip Products business and was making further investment in its Hot Strip Mill in Port Talbot as well as having upgraded its galvanising line in Llanwern to increase production of high-value automotive steels.
But he said steel demand and prices are likely to be under pressure “for some years”.
“Our business rates in the UK are much higher than other EU countries’ and our UK energy costs will remain uncompetitive until new mitigation measures come into effect.
“These proposed changes then are vital if we are to build a competitive future for our Strip Products business in the UK.
“We will, of course, engage fully with employees, trade unions and our political stakeholders during this restructuring process. And we will do everything we can to support our employees through this unsettling time.”
Tata Steel announced in October 2013 it would restructure its Scunthorpe-based Long Products business with the loss of around 500 jobs in the UK.
A “prolonged downturn in the UK market for construction steel” is behind the proposed restructure, Tata Steel said in a statement at the time.
The firm employs around 7,000 people across Wales of which around 3,800 work at Port Talbot.
Roy Rickhuss, chair of the UK trade unions’ steel committee which is made up of the Community, Unite and GMB unions, said: “We recognise the company has been dealing with a long-term downturn in European steel markets for more than five years.
“However we have also expressed our own concerns about possible undermanning within Strip Products and in Port Talbot in particular. Therefore, it is vital that this is not just an exercise to just reduce costs by cutting jobs but takes a considered and objective view as to the numbers required to run and maintain the plant to make steel safely and productively.”
Mr Rickhuss said “despite the government’s trumpeting of economic recovery, the steel sector remains under real pressure” and said the area should be a focus for the UK’s industrial policy.
A consultation process, which will take more than 45 days, will begin soon with affected employees and their representatives.
Tata Steel said its subsidiary UK Steel Enterprise would provide further support to the South Wales business community.
The BBC quoted business secretary Vince Cable as saying: “This is understandably a difficult time for the workforce at Tata Steel in south Wales as the company tries to weather challenging market conditions.
“I have been in close contact with the chief executive at Tata Steel and understand they will offer voluntary redundancy packages and cross match people to other parts of the business to try and avoid compulsory job losses.”