Some 1,700 Teesside steel workers were told today that they will lose their jobs in the New Year after the steelmaker Corus decided to mothball a factory in Redcar.
Union leaders said that the closure - which came after an international consortium walked away from a long-term deal to buy the plant’s products - would also leave up to 3,000 contractors out of work and have devastating knock-on effects in the local economy.
About 2,000 people work at the Teesside Cast Products factory, which Corus warned that it might have to close as far back as April.
Europe’s second biggest steelmaker, which is owned by the Tata Group of India, still employs a further 2,000 people in the area but the glory days when steel from Teesside was used to build landmarks like the Sydney Harbour Bridge are now long gone.
Four international buyers had signed a contract in 2004 to buy 80 per cent of the plant’s production for ten years but terminated that contract earlier this year.
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Corus said that the four - Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd and Alvory SA - had made an estimated $800 million from the deal over the past five years and acted illegally in breaking the contract.
Kirby Adams, the chief executive of Corus, said that the four companies should “hang their heads in shame”.
“We are acutely aware that this will be devastating news for our employees, our contractors, their families and the local community,” he said. “This is the last thing we wanted and we feel deeply about what is happening. Sadly, it has become unavoidable, through no fault of our people on Teesside.”
The closure means the company will have shed 6,700 jobs in a year. The company has cut already 5,000 jobs at sites in various parts of its business around the UK so far this year.
Workers leaving the Teesside plant this afternoon could barely hide their anger at the news of its closure.
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One man, wearing sunglasses against the winter glare, wound down his window to speak to reporters: “Merry Christmas. Thanks, Mr Adams.” Another pulled up to say: “If we were as poor at making steel as they are at managing, we would have closed long ago.”
A man in a Ford Focus said: “The bankers get bailed out, but we get nothing on Teesside.”
The Business Secretary Lord Mandelson expressed his disappointment at the news and the fact that Corus had not been able to find a new long-term partner for the plant. “The Government worked hard with all parties following the cancellation of the main supply contract in May to continue the agreement but a commercial solution could not be found,” he said.
“Corus management has kept the plant open up to now through securing short term orders, despite the very difficult market conditions, but have no orders secured beyond the end of this month.”
Corus said the withdrawal of the consortium had already cost it £130 million. “Operating a three million tonnes a year merchant slab plant is not sustainable without a long-term strategic partner,” the company said.
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Leaving a meeting at the plant, Vera Baird, Redcar’s Labour MP, vowed that the fight for work would continue. She said: “These guys are going to fight for orders so the plant could be de-mothballed. The fight really does go on.”
Ms Baird complained that Corus could have put more money into the plant to support it until orders picked up.
“This could not have come at a worse time. It is awful just before Christmas,” she said.
Jimmy Skivington, an organiser with the GMB union, said after meeting workers that they were devastated.
“The main feeling is one of disappointment,” he said. “This will not just affect 1,700 Corus workers, but between 2,500 and 3,000 contractors as well. That’s not counting the knock-on effect it will have in the town for people whose jobs rely on them.”
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Derek Simpson, joint general secretary of Unite, Britain’s biggest union, called it a “dark day for British manufacturing”.
“The Government must now act to save Teesside as decisively as it acted to save the banks last year,” he said.
“The plant needs urgent financial support to secure a future for the workers and prevent its closure.”