Javid to Meet Welsh Steel Workers as U.K. Seeks to Save Plant

  • Business secretary cuts short Australia trip due to crisis
  • About 6,500 jobs threatened in Wales with votes looming

An employee sits in a railway train cabin at the steel works operated by Tata Steel in Port Talbot.

Photographer: Chris Ratcliffe/Bloomberg

U.K. Business Secretary Sajid Javid plans to meet workers and managers of Tata Steel Ltd.’s Port Talbot plant as the government struggles to minimize the impact of the company’s decision to sell its British business.

Javid, who cut short a trip to Australia after Tata announced plans to sell the iconic Welsh steelworks, will also meet lawmakers, union leaders and members of the Welsh government on Friday as he reiterates the government’s intention to use all ministerial, official and diplomatic levers to secure a solution, according to his office.

Tata’s decision to dispose of its U.K. business has cast doubt over the future of Britain’s steel industry as competition from China erodes profits. Prime Minister David Cameron ruled out nationalizing the plant on Thursday. With 6,500 jobs at stake, the crisis comes at a sensitive time for the government, with Welsh Assembly elections a month away and deepening rifts in the ruling Conservative Party ahead of a June in-or-out referendum on European Union membership.

Javid will tells workers that "the government is on their side in working hard to achieve a long-term solution for them, for the region and for the wider U.K. steel industry," according to prepared remarks released by his office. “Whilst we can’t change the status of the global steel market, we can and are playing a positive role in securing a sustainable future.”

Sajid Javid. Photographer: Luke MacGregor/Bloomberg

Sajid Javid. Photographer: Luke MacGregor/Bloomberg

Javid will announce that once the formal Tata sales process is under way, independent advisers will also be appointed by the government.  Commercial Secretary to the Treasury Jim O’Neill, government troubleshooter Oliver Letwin and Welsh Secretary Alun Cairns will be among those working to secure a buyer for the plant.

“I don’t believe nationalization is the right answer,” Cameron said in televised comments from his Downing Street office in London after presiding over a meeting of ministers on Thursday to discuss the crisis. “What we want to do is secure a long-term future for Port Talbot and for other steelmaking plants in the United Kingdom.”

Tata’s decision late Tuesday to sell the plant followed several quarters of losses and 2 billion pounds ($2.8 billion) of writedowns that left the division with an asset value of almost zero. With steel prices at their lowest in a decade, higher U.K. wages and energy costs left the business exposed in the face of cheap Chinese imports.

Campaigners for a “Leave” vote, or “Brexit,” said the bloc’s control of trade policy has left Britain unable to protect its steel industry.

The EU imposed tariffs of as much as 26.2 percent last month on some steel products from China and Russia for allegedly selling the products at below cost price in the EU, a practice known as dumping. By comparison, the U.S. announced tariffs of 266 percent on some Chinese steel imports this month.

The EU is not to blame for the crisis, according to Len McCluskey, leader of Unite, Britain’s biggest labor union, which represents some steelworkers and backs a vote to remain in the bloc.

German Reality

“The reality is it’s not a problem for Germany or France; let’s not make it a problem for ourselves,” he told the BBC, when asked about the bloc’s role. “In the rest of Europe they protect their steel industry.”

Cameron said ministers had feared an outright closure of the plant, and will now do “everything we can” to encourage buyers to come forward.

“There’s no guarantee of success,” he said.