During the initial stages of the economic recovery, Britain’s manufacturing industry flourished due to a combination of strong overseas demand and an increasingly stable domestic market. However, Eurozone issues and importing issues within key markets have seen growth stagnate in recent months, with firms such as Tata Steel now examining options to sell off assets as a means of stabilising the core business.
Tata Steel has announced it will now begin to seek a buyer for its Long Products division, with the preferred buyer named as the Klesch Group. The two firms have already signed a Memorandum of Understanding regarding the potential sale which, if successful, would see Long Products become the Klesch Group’s latest asset in its European-wide industrial operation.
Should the sale go ahead, there is some uncertainty as to the stability of UK jobs, which currently number into the thousands. The Klesch Group would take ownership of Long Products Europe sites such as the Scunthorpe steelworks, an engineering workshop in Workington, a rail consultancy department in York and several mills located in Dalzell, Clydebridge and Teesside in Scotland.
UK Business Secretary Vince Cable assured Long Products employees that the Government would work closely with both Tata Steel and the Klesch Group to ensure a good outcome for all concerned.
He said; “The next few months will be a time of uncertainty for the company and employees – the proposed sale shows the harsh reality of trading conditions in parts of the steel industry.”
“My officials and I will continue to work closely with Tata Steel and seek to meet the potential buyer, Klesch, to understand more about their plans.”
“We welcome Klesch’s stated intention to support the continuity of the business.”
Along with the various manufacturing sites mentioned above, the sale would include a number of distribution sites in the UK, France and Germany. Altogether, Long Products Europe employs around 6,500 workers – many of whom will be concerned about the implications of this sale upon their futures with the company.
Chief executive of European operations at Tata Steel, Karl Koehler, believes that the sale of Long Products would allow the executive board and employees to focus upon achieving the group’s wider strategic aims.
He says; “We are making huge strides on our strategic journey to become a premium, consumer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees.”
“Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise.”
“We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies – we want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that.”
Do you think this sale indicates that major manufacturers such as Tata Steel are losing confidence in the pace of recovery within the sector?
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