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15 October 2014, 12:26
6,500 jobs are at risk, following Tata Steel's decision to sell its European businesses which make steel girders, rods and tubes - including at its site on Teesside
The steel giant said it had signed a Memorandum of Understanding with the Klesch Group, an industrial company which operates across Europe.
The planned sale covers several UK-based sites including Tata Steel's Lackenby mill in Redcar, Scunthorpe steelworks, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.
About 6,500 people are employed at Long Products Europe and its distribution facilities, supplying products for industries including construction and excavation.
Unions said they were disappointed with the way the announcement had been handled and were seeking talks to discuss any impact on jobs.
Karl Koehler, chief executive of Tata Steel's European operations, said:
"We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.
We are making huge strides on our strategic journey to become a premium, customer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees.
We've improved the competitiveness of Tata Steel's European operations, including Long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.
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.''
Roy Rickhuss, general secretary of the steelworkers' union Community, said:
"We're extremely disappointed with the way that Tata Steel have handled this announcement, which does not reflect well on Tata's values.
However, I am pleased that Tata Steel chairman Cyrus Mistry has now agreed to meet the unions and I hope this can take place soon so that we can start to address the understandable worries and concerns of our members, their families and communities.''
Business Secretary Vince Cable 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.
I met the global head of Tata in India this week and he has personally re-affirmed to me his company's commitment to the British steel industry and to investing substantially in Port Talbot and strip steel.
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.''