Government talk of economic recovery was undermined on Friday when the country's largest steel maker announced plans to cut 1,500 jobs in Lincolnshire and Teesside.
Tata Steel, which bought the Corus business in 2007, blamed a continued slump in demand from the construction sector but also new climate change legislation for its decision.
"We are aware that our employees and their families will experience a very unsettling few months as a result of this announcement. We will do everything we can to provide them with support and assistance," said Karl-Ulrich K�hler, chief executive of Tata Steel's European operations.
"The continuing weakness in market conditions is one of the main reasons why we are setting out on this difficult course of action. Another is the regulatory outlook. EU carbon legislation threatens to impose huge additional costs on the steel industry. Besides, there remains a great deal of uncertainty about the level of further unilateral carbon cost rises that the UK government is planning," he added.
The Indian firm said it was proposing to close or mothball part of its Scunthorpe plant, putting at risk 1,200 jobs, as well as cutting 300 jobs at its sites on Teesside. But it also said it would invest �400m in its "Long Products" business over the next five years and hoped to bring a turnaround to the hard-pressed side of the business that it had achieved inside the speciality steel division.
The news from the steel industry follows a roll call of redundancies from a swath of other industrial and retail employers with mobile phone company Nokia cutting 700 UK jobs, pharma group Novartis unveiling 550 redundancies and Mothercare closing 110 stores. There has also been bad news from drugs maker Pfizer with 2,400 jobs under threat in Kent and Focus DIY, which went into administration this month.
But the steel industry has been doing better with a Thai company, SSI, announcing plans late last year to restart operations at a mothballed plant at Redcar.
Unions said the latest cuts amounted to 8% of Tata's UK workforce and were a "devastating blow" to the regions affected as the steel industry played a major role there.
"Today's announcement highlights just how fragile our economy is and the coalition Government should not be so quick to start talking about growth and recovery," said Unite's national officer, Paul Reuter.
"Union representatives are currently working with Tata to mitigate the impact of the cuts. Unite has already demanded that there should be no compulsory redundancies and we believe that this should be possible to achieve.
Business secretary Vince Cable admitted he was "very disappointed" at the Tata move adding: "This will be a worrying time for workers at Scunthorpe in particular, and also in Teesside."
Source: http://www.guardian.co.uk/business/2011/may/20/tata-steel-job-losses-yorkshire-teesside
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