Tuesday, 3 January 2017

Deal or no Deal?

Column published in llanelli Herald on December 23rd

Next month we’ll know if steelworkers have signed up to the deal agreed between their unions and the management of Tata.

In exchange for a pledge to keep Port Talbot and Trostre going for at least 5 years the workers have been asked to agree to the closure of the British Steel Pension Scheme, and its replacement by a defined contribution scheme.

The management say it is still a generous package, although less generous than the current one. Without the deal to cut costs Tata have made it clear they’ll walk away from the plants which mean the pension scheme will have to be taken over by the Government’s Pension Protection Fund - which will cut is value to 10%.

This what’s known as a Hobson’s Choice - take it, or leave it.

In this year of unpredictable results there are plenty of people within Tata who fear the workers will vote against the deal as a protest. But if they do the senior management of the Indian steel giant have been quite clear - they’re off.

I met with the Chief Executive Officer of Tata Steel in the UK, Mr. Bimlendra Jha, in Cardiff this week. It’s the second time I’ve met him. He’s a formidable character.

Mr Jha has had to work hard to get Tata’s board in India to agree to invest £1 Billion in their UK plants as part of the deal, and he couldn’t understand why workers would ever consider voting against the deal.  I reminded him that just a few months ago Tata was prepared to sell the plants, and then rejected offers to take them over - including those of local management. That has shaken people’s faith in the company - including mine.

Tata are going through a process of merging their European operations with their rivals ThyssenKrupp and many are nervous that the Welsh plants will be cut loose as part of that process.

When the latest deal was announced in the Senedd - alongside £4 million of Welsh Government funding as a sweetener in the form of skills and training grants - I was alone in expressing my discomfort that we are, in effect, being held to ransom by the whims of a board in India.

Given the way things are we face little choice. And I hope the workers to back this deal because the alternative is a lot worse.

But we need to get out of the situation where we are so vulnerable. We need to develop local industries and businesses that are grounded in the area, and not so susceptible to the changing moods of foreign owners.  That is a key driver for the local economic strategy i’m developing with others


Anonymous said...

Mr Waters,
I work for Tata. I have worked shifts for 27 years. 7 shift in a row, 1 weekend off a month.When I joined the company, the pension that we were forced to join stated that you could retire at 55 years of age with a full pension. So at least after 40+ years in a physical job, in a heavy industrial environment you could at least enjoy some quality of life with decent renumeration.
Instead I will now have to work an extra 10yrs in the circumstances already mentioned and when I do eventually finish work the financial package will be massively reduced.Recent studies in the aircraft industry in USA have shown that if someone retires from shiftwork at 55 on average they live till 80yrs of age. Whereas those that retire at 65 on average only live till 67yrs of age. Startling figures. So forgive me if I don't share your enthusiasm. Perhaps you would feel different if you were the one being mugged at gunpoint.
Tata have shown themselves to be particularly treacherous. Having agreed a deal to alter the pension with workforce they then announce the sale of the company. Where is the integrity in that. As for the promise no job losses for 5 years...it is nonsense. The wording is actually " seek to avoid hard redundancies" which doesn't actually promise anything. In addition I am led to believe the £1BN promised investment is dependant upon Tata UK making £200M a year profit. So again not a hard guarantee at all. We are being railroaded and with Tata pension responsibilities dissolving into thin air, they are off the hook and I fear the steel industry may dissolve into thin air with it.

David Hatto said...

I'm sorry for people in a position of influence such as yourself when you make comments on situations you don't understand. The company only wants rid of their liability of the pension scheme and they are off. 1 billion absolute bull no pension goodbye Welsh steel. The pension can only go in the PPF if we go belly up. We are making a profit. We shouldn't even talk to the company until they repay the money owed to the scheme in full.