Eleventh-hour bid to rescue Redcar steelworks from collapse
Published: 01 Oct 2015
A North East company will today make an eleventh hour bid to rescue Redcar steelworks from collapse, The Northern Echo can reveal.
A plan will be put before the government that would keep the fires burning at the troubled SSI plant and protect hundreds of workers from redundancy.
It comes amid growing fears that SSI’s Teesside site is about to enter administration, leaving workers and suppliers owed millions and the stricken works shut down.
"I fear the plant will keel over and die if we don't do something in the next few days," said Redcar MP Anna Turley.
She is part of a delegation which includes business leaders, MP Tom Blenkinsop, and unions, who are meeting steel minister Anna Soubry in Redcar this morning. They believe securing Government support for the plan is crucial to its success.
Redcar MP Anna Turley speaks at a Save Our Steel rally in Redcar last week
The company behind the proposal, which does not wish to be named at this stage, has been working on it with financial advisors for a number of weeks as the details of SSI’s desperate plight began to emerge. It would see them take control of Redcar Coke Ovens, the bulk terminal port and other assets, to keep the works ticking over until a buyer can be found to restart iron and steelmaking when market conditions pick-up.
The proposal would not protect the jobs of 1,700 steelworkers who are being made redundant following SSI’s decision on Monday to mothball the Redcar blast furnace. But it would ensure hundreds of people continue to earn a living on the site, keeping the coke ovens alight and maintaining assets.
Coke, coal and other materials will be moved through the bulk terminal to safeguard fuel supplies and bring cash into the business.
SSI’s announcement this week to mothball the furnace was aimed at cutting its losses and running a slimmed down operation with up to 500 workers. But unions fear the company does not have the cash to replenish coal stocks, which will run out in about a week, or make redundancy and pensions payments to workers who will be forced to claim a statutory pay-off – at significantly reduced terms - from the state.
Plant workers have also voiced concerns that the blast furnace will be damaged unless the site is wound down in a controlled way. If SSI is declared insolvent or enters administration it could leave future owners or taxpayers to pick up the bill.
Ms Turley believes that today’s plan could be the only viable option to keep steelmaking on Teesside.
“The fact this comes from a British company - from the local area – who have a very good grasp of the situation, should give people confidence that it is a serious offer made by people who understand the industry and care about the future of steelmaking on Teesside,” said Ms Turley, who has been in talks with the potential rescue team for several weeks.
Details of it have only been made public now because campaigners wanted to exhaust all possible options with Thailand-based SSI and the Government first. SSI’s failure to control its debt mountain, and Prime Minister David Cameron’s insistence that his Government was hamstrung by EU competition rules, has seen the options rapidly run out for Redcar in recent days.
“We did not want to talk about Plan B because it meant that we had given up on Plan A, which was to prevent mothballing and let SSI sort things out themselves,” added Ms Turley.
As she arrived on Teesside last night, steel minister Ms Soubry, said: “I wanted to come to Redcar to continue my discussions with the company, unions and local leaders. It is important we all come together to do whatever we can to support the workforce, they are the priority and that’s why the local task force that I asked to be set up will have a vital role.
Steel minister Anna Soubry
“This is a hugely difficult time for the community and I will continue to put all my efforts into making sure the government provides support where we can.”
Ms Soubry has been praised by Labour for the way she has tackled the steel crisis. She supported efforts last week that saw the Treasury release a tax rebate that ensured SSI paid staff their monthly wages and insurance.
As part of today's proposals she will be asked to offer the loss-making steelworks tax breaks.
In the meantime, unions have branded remarks made by a Tory MP who suggested that keeping the Redcar steelworks open would be "bad economics," as "callous and uncaring".
Unite assistant general secretary for manufacturing Tony Burke was scathing about remarks by Nadhim Zahawi, Stratford-on-Avon MP calling them "an absolute disgrace".
Mr Burke said they "coldly ignore the plight of the workers, their families and the local community. Their livelihoods should not be sacrificed on the altar of international capitalism," adding: "What is clear is that the government has no manufacturing strategy and we are slipping back into a reliance on the City and the service sector. So much for the much-vaunted march of the makers.
“The Northern Powerhouse will continue to be a mirage in the mind of chancellor George Osborne unless there is a strong manufacturing base across the whole of the north of England."