Months after Tata Steel sold its loss-making Long Products Division based in east England, its new owners have unveiled plans to reverse the pay cuts imposed on staff and forecast a return to profits. British Steel began operating the Scunthorpe plant after Tata Steel had sold the unit to investment group Greybull Capital for a token 1 pound in June last year.
The new operators revealed that the plant had returned to profit in the first few months of its financial year, leading to a pledge to reverse a 3 per cent salary cut agreed with 4,400 employees to help save the steelworks, the ‘Guardian’ reports.
“I’m pleased to report that after our first seven months of trading, we are building on our promising start to life as British Steel,” said British Steel executive chairman Roland Junck.
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The company has put the improvement down to cost cuts and “significant” contracts, including a 2-million-pound agreement to supply the steel for the new Hinkley Point C nuclear power plant in Somerset.
According to the newspaper, the Scunthorpe plant is believed to have lost 80 million pounds in the final year of the Tata Group’s ownership, but is on course to make enough to cover 39 million pounds of investment and turn a profit.
Greybull reportedly believes it can reach an underlying profit of more than 100 million pounds by its third year of ownership.
Paul McBean, the British Steel multi-union chairman, said: “We’ve shown we’re fighters, we’ve shown we’re survivors and now we’ve got to show that we can become industry and national champions.”
Greybull had celebrated the takeover from Tata Steel by restoring the name British Steel, which was dissolved in 1999 as a result of a Dutch merger to become Corus.
Corus was later bought by Tata Steel, which announced major reconstruction plans in March last year and exit from its UK steel operations.
Since then, the sacking of Tata chairman Cyrus Mistry and Ratan Tata’s return to the helm has led to speculation in the UK that Tata Steel may be considering holding on to its remaining major UK steel plant – Port Talbot in Wales.
Meanwhile, the Brexit referendum in June 2016 changed the economics for Tata Steel.
Britain’s vote to leave the EU, and the accompanying crash in the Pound Sterling, transformed the competitiveness of its UK operation.
About 40 per cent of the output from British plants is exported and a cheaper pound has meant some reversal of the loss-making trend.
Earlier this month, the company had struck a deal with the workers at the Welsh unit over the British Steel Pension Scheme, which is likely to pave the way for a merger of its European steel business with German steel giant ThyssenKrupp.