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Thursday, 11 July, 2002, 14:50 GMT 15:50 UK
Euro 'could have saved steel firm'
Allied Steel and Wire at Tremorfa, Cardiff
The plant in Cardiff makes steel products
Collapsed steel manufacturer Allied Steel and Wire could have stayed afloat if the UK had signed up to the euro currency, a Labour minister has told the Welsh Assembly.

Receivers called in to Cardiff-based ASW on Wednesday have revealed they hoped to sell at least some of the business to new owners.

The future of 1,300 jobs at the UK's second-largest steel company depends on the debt-laden firm's survival.

Prime Minister Tony Blair
Prime Minister Tony Blair regrets the collapse of ASW
Economic Development Minister Andrew Davies told the Welsh Assembly: "Clearly, if we were signed up to the euro, ASW and other manufacturers would not have been subject to the adverse exchange rate.

"We would prefer to be within the euro because that would give us a much more stable exchange rate and also much improved trading conditions."

Mr Davies vowed to fight to save threatened jobs as receivers KPMG continued discussions to find a buyer for the company in its entirety - the preferred option - or as a series of splintered assets.

But he said European Union rules prevented him from bailing out the firm because the "primary aim" of the assembly and the Department for Trade and Industry was to maintain steel production in Cardiff.

Absorbing blows

"Everyone here knows that no government can ever prevent distressing announcements regarding companies going into receivership," he added.

"What we can do is continue to focus on establishing a more innovative, entrepreneurial and thriving economy which will make us much better able to absorb such blows."

Allied Steel and Wire
Cardiff: 1,000
Sheerness: 300
Belfast: 30
CEO Graham Mackenzie
Receivers: KPMG
KPMG's Richard Hill hinted several parties had already shown an interest.

ASW employs 1,000 in the Welsh capital, 300 at Sheerness in Kent and 30 at Belfast.

In view of the assembly, its nearby plants in the bay make high-quality, specialist steel products, for the construction sector in particular.

Its share price ended at 2.5p on Tuesday evening, valuing the business at 5m. At their peak, shares were worth 100 times as much.

ASW had been unable to secure continued financial support from its banks Lloyds-TSB and Natwest-RBS after enduring a rough economic ride in the wake of US steel export tariffs.

After their refusal on Tuesday, the company instructed them to call put the company into receivership and ASW's share price collapsed to an all-time low.

High pound

Chief executive Graham Mackenzie said staff would continue to be employed while receivers KPMG sort out the future of the business.

He has been a regular exponent of the single European currency and has frequently criticised the UK Government's policy toward the high-valued pound.

In the House of Commons on Wednesday, Prime Minister Tony Blair told MPs that ministers "very much regret" the news.

"There have been meetings with ministers and the company to avoid the situation," he revealed.

"We will do everything we can to help those employed by the company in these circumstances."

First Minister Rhodri Morgan
First Minister Rhodri Morgan : talks
He was responding to Labour MP Derek Wyatt's claim that heavy US steel import tariffs had been the "last straw" for ASW.

Mr Mackenzie has been a staunch critic of the government's policy toward the highly-valued pound and of President Bush's measures, which punish US companies for buying in foreign steel from companies like ASW.

Mr Blair told the Commons he hoped a current World Trade Organisation investigation would declare the White House moves illegal, while Europe and Japan are considering retaliatory measures.

ASW posted big second-quarter losses, in the wake of Mr Bush's announcement.

The company announced that, although demand for reinforcing steel is buoyant, sales in Germany in particular are down on the same period last year.

Receiver KPMG's Richard Hill said ASW was the "victim" of the US tariffs and of the UK's high pound had contributed to ASW's decline.

But he said there has already been interest from "a number of interested parties" in buying company assets with sale discussions going on as quickly as possible.

BBC Wales' Miles Fletcher
"People fear the worst for ASW"

Q&A: Allied Steel, Wire
What caused collapse of steel manufacturer?

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See also:

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