Sunday, 7 August 2016

Action on steel

Published in Llanelli Star on 13th June 2016

The decision of Tata steel to ‘pause’ its search for a new buyer for the Trostre works and its other plants is a worry.

To keep Port Talbot and the other plants running for more than a year or so will require a company with deep pockets - and the willingness to dip into them.

When I met the Chief Executive of Tata in the UK a few weeks ago he told me that he was not convinced that any of the bidders who had come forward had the ability to keep the plants open for more than a few years.  

Tata proudly see themselves as responsible owners (and to be fair they put essential investment into Trostre) and they want to make their sure they are seen as responsible sellers.  They don’t want to be seen in the same way as Sir Phillip Green who cut and run after selling BHS.

Tata clearly didn’t think any of the bidders were serious, and with companies finding it harder to find investment in the aftermath of the EU referendum they’ve decided to put a stop to the sale process..

But some sceptics think Tata had no intention of selling to a company that would be their rival in any event. The fear is that the announcement that they will instead explore a merger with the German steel-maker ThyssenKrupp will allow them to wind-down Port Talbot over the next couple of years as they intended all along.

A tie-up with ThyssenKrupp could lead to a consolidation of steel production at Tata’s Dutch plant at Ijmuiden, and once that is secure Port Talbot could be closed to take out excess production capacity from the system.

For some reason the Welsh Secretary Alun Cairns has welcomed this merger.

We need to look carefully to see if there’s anything that can be done to secure the future of the Welsh plants.

The Welsh Government has put money on the table with a clear offer of help. The UK Government have yet to make a concrete offer of support and they must now stop talking and start delivering

No comments: