Indian giant Tata Steel today pledged to stay in Britain with a 10-year commitment to a one-billion-pound investment plan as part of crucial talks with steelworkers’ unions to save thousands of jobs in the UK.
The Indian steel giant offered a number of guarantees to its staff at Port Talbot steelworks in south Wales, the UK’s largest steel plant, including a minimum five-year guarantee to keep both furnaces operational at the site.
Tata will next week start a consultation with its employees on a proposal to close the British Steel Pension Scheme, which has liabilities of over 15 billion pound, and offer employees a “competitive defined contribution scheme” in its place.
The future of its UK business will remain contingent on a solution being achieved to the pension scheme.
“Tata Steel UK has developed a long-term investment plan to make the business more competitive in the future. The delivery of the transformation plan in the next couple of years, combined with a structural solution for the British Steel Pension Scheme fund, is essential to provide the affordability and financial self-sufficiency for future investments and also service its financial obligation to its stakeholders,” said Koushik Chatterjee, Group Executive Director Tata Steel and Executive Director for Tata Steel’s European business.
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The company said the agreement between Tata Steel UK and the unions marks an important step forward in the journey to develop a “sustainable future for our UK steel business”.
Stressing that these are “unprecedented times for the steel industry globally” and therefore much more work remains to be done to make Tata Steel UK more “financially sustainable”, he added: “The proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability. We are also working separately on a necessary structural solution for the British Steel Pension Scheme fund.
“The trade unions and the company have worked hard to reach today’s agreement and I would like to thank them for their efforts and seek their continued support in the future.
“We look to other stakeholders such as the UK Government to play their part in addressing the UK’s manufacturing competitiveness position especially with relation to energy prices.”
Unions said they have been offered a number of guarantees, including a minimum five-year guarantee to keep both furnaces operational at the site, to safeguard jobs.
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Steel workers will be balloted on the latest rescue deal struck by union representatives in the New Year.
Details of the deal include a guaranteed, minimum five-year commitment to two blast furnaces, a 10-year 1-billion-pound investment plan to support steel making at Port Talbot, and a consultation on replacing the current British Steel Pension Scheme with a “defined contribution scheme” with maximum contributions of 10 per cent from the company and 6 per cent from employees.
Tata Steel said both sides had agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration at Port Talbot until 2021.
Further, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, Tata Steel will continue to invest across the UK sites to enhance the competitive position of Tata Steel UK in the European steel industry.
The company has also offered an employment pact until 2021, which supports employees through future changes by investing in their skills to support further plant upgrades, automation and other digital initiatives.
Speaking after meeting with union representatives, Roy Rickhuss of Community Union said: “The past year has been incredibly difficult for steelworkers and their families. When Tata announced in March that they planned to sell the steelworks, no one knew if they would have a job by Christmas.
“This proposal would secure jobs for years to come and bring serious investment not just to Port Talbot but to steelworks across the UK.”
“Reaching this stage of the process is a credit to the hard work of our members who never gave up the fight to ‘Save Our Steel’ – it was their jobs on the line and it has been their campaign that has brought Tata to this position.”
Unions had been fighting for maintaining Port Talbot’s two blast furnaces in talks with Tata management.
The Tata Group employs more than 4,000 at Port Talbot alone, and hundreds more at other sites across the UK at Trostre and Shotton, Corby, Hartlepool and at sites in the West Midlands.
Workers at the Port Talbot plant were today given the opportunity to approve a rescue plan which is likely to have an effect on other major sites as well.
“The commitments made today by our reps must now be followed by a commitment from the government that they will hold Tata to their word and ensure jobs are protected,” said Unite’s national officer Tony Brady.
Central to the rescue plan is the retention of both of Port Talbot’s blast furnaces, which turn iron ore and coke into molten iron.
One was due to stop production in 2018 but unions had been fighting to keep it open.
Earlier this year, Tata Steel announced all of its plants across the UK would be put for sale. But in July the sale came to a halt.
Last month the firm signed a “letter of intent” with UK-based Liberty House Group to enter into exclusive negotiations for the potential sale of its Speciality Steels business for an enterprise value of 100 million pounds.
Tata Steel is the UK’s largest steel manufacturer.
It supplies almost 50 per cent of UK carmakers’ steel requirements, including body panels and chassis, and a range of advanced steels for the UK construction industry which help to reduce buildings’ energy use.
