TATA company in UK threatens 2,000 jobs
Publication:
Friday, 8 May, 2009 - 00:00
chiefofficersnet
Two days ago, the British government told TATA that it would not underwrite loan guarantees without conditions (story). TATA didn't like that - and said the UK Government was putting jobs at risk. Today, TATA owned CORUS, the rump of what was British Steel, says it is mothballing its Teesside plant at a cost of 2,000 jobs.
It is difficult to believe in coincidences. And it is even more difficult to believe in them when the parties have been squaring up for a fight for some time.
Teesside is the former heartland of UK Heavy Industry PLC (not a real company, of course). With mining of coal and iron, shipbuilding and oil rig construction to say nothing of most of the world's iconic steel bridges plus a healthy (well, that's debatable actually) chemicals business now all in its history, Teesside has been reduced to surviving on sporadic tourism, a few "northernised" government jobs and a small steel plant.
When TATA bought CORUS in 2007, it did so with the benefit of a contract that an Anglo-Dutch consortium would buy more than three quarters of the output from the Redcar, Teesside plant for ten years. But that contract has run into difficulties as the demand for steel plate has collapsed. Now the consortium is simply not ordering more plate.
But it is the timing of CORUS's decision to close the Teesside plant - which local MP Vera Baird says was profitable - that raises a question.
Peter Mandelson, now an unelected minister, was for some years Labour Member of Parliament for Hartlepool - just a few kilometres north of Redcar along the same coast. And Mandelson's best friend, Tony Blair, was for several terms MP for Sedgefield - a small village thirty kilometres or so inland from Redcar - and close to Hartlepool.
Threatening jobs on their doorstep - in the Labour Party heartland - is a power-blow by TATA in its arguments that the Labour Party, as the party in power, should use UK taxpayer's money to shore up Jaguar Land Rover.
And if the government steps in to aid the Teesside workers, then TATA will have established the principle that providing aid to a foreign company is not impossible.
It's a devious move, if it was deliberate.
And there is at least an indication that it might be. For it is not the first plant closure announced by CORUS in a Labour dominated area: just as TATA was asking Mandelson for money, and not getting it, CORUS closed a plant in South Wales.When it did so, in November last year, it said the Lanwern plant would be mothballed for six months. With less than three weeks to go until that six months is up, the 500 employees there are still waiting to hear if the plant will re-open.
Is a pattern emerging?