Page last updated at 22:24 GMT, Friday, 4 December 2009

1,700 jobs to go as Corus mothballs plant

Corus worker: "Some of the billions that they're going to get in bonuses, put it into the steelworks, help us out"

Steelmaker Corus has confirmed it will curtail production at its Teesside Cast Products factory, putting 1,700 people out of work.

It had been announced in May that the 150-year-old Redcar plant was to be mothballed.

The plant had been at risk since a 10-year deal suddenly fell through.

Business Secretary Lord Mandelson expressed his disappointment, saying it would be a "very difficult time for the workforce".

The plant is due to be mothballed at the end of January.

The deal that had fallen through was signed by an international consortium, led by Italian steel specialists Marcegaglia, in 2004, and committed the consortium to buy just under 78% of the Redcar plant's production.

BBC North East business correspondent Ian Reeve said the factory would close by the end of January.

Mandelson on Corus job losses

Corus said that 1,700 jobs would go, which is about 600 fewer than had been previously thought. It says 2,300 people work at the facility.

"The steel industry overall has suffered an unprecedented fall in demand in the global recession," Lord Mandelson said.

"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."

'Devastating news'

Thousands took part in a march in July calling on the government to help the Corus steel plant, after workers were put on 90-day redundancy notice.

ANALYSIS
Nils Blythe
Nils Blythe, BBC business correspondent

The underlying cause of the problems at Corus has been a fall in demand for steel products, especially in Europe.

Construction and manufacturing companies are buying less. And, as so often before, the world's capacity to make steel greatly exceeds demand.

Manufacturing has suffered a sharp loss of jobs during the recession. And although manufacturing represents little more than one-eighth of the UK economy these days, it still generates almost half of our exports.

Much of the slab steel produced on Teesside was sold abroad. So the mothballing of the plant is another blow to any hope of narrowing Britain's persistent - and worrying - trade deficit.


Corus said it was partially mothballing the plant, shutting its blast furnace, its steel melt shop - which makes slab - and one of the two coke ovens.

It will be keeping open the wharf facility that handles imports and shipping, the other coke oven and some of the power generation capacity.

The company said operating a merchant slab plant with output of three million tonnes a year was "not sustainable" without a long-term partner.

"This is a dark day for British manufacturing," said Derek Simpson, joint general secretary of the Unite union.

"Unite will do everything possible to prevent this closure from going ahead. The government must now act to save Teesside as decisively as it acted to save the banks last year."

'Shame'

Kirby Adams - the Europe chief of Tata Steel, which owns Corus - confirmed the plant's closure to staff on Friday.

He said that Corus had funded the business since May, and at one point, it looked very likely that the plant would close in August.

Kirby Adams, chief executive, Tata Steel Europe: "This decision comes with massive human cost"

"Corus is not in a position where it can bankroll a loss-making business such as Teesside," Mr Adams said in a press conference. "We are acutely aware that this will be devastating news for our employees, our contractors, their families," he said.

"All four members of the consortium should look at this and hang their heads in shame."

Corus has made about 1,000 job cuts since January, and announced it was cutting almost 2,000 more jobs at its UK plants - including Teesside as well as Scunthorpe and Rotherham - in June.

"This is a gut-wrenching disappointment after all the effort and the hopes won by the sheer doggedness of our workers," said Redcar MP Vera Baird.

"I'm furious that, after our workers won months of export orders, Corus has not been able either to get a longer term contract or to clinch a deal for the sale of the plant."

Roger Manser, managing editor of Steel Business Briefing, told the BBC that new steel jobs would only be created in the North East when global demand for steel revived, which might not happen for between 12 and 18 months.

The Anglo-Dutch firm Corus was bought by India's Tata Steel in 2006.



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SEE ALSO
Corus: How did it come to this?
23 Nov 09 |  People and Places
Steel workers win bonuses battle
04 Nov 09 |  Tees
Unions reject Corus 'cost cuts'
19 Oct 09 |  Tees
Workers march to save steel plant
18 Jul 09 |  Tees
Corus cutting 2,000 UK steel jobs
25 Jun 09 |  Business

RELATED INTERNET LINKS
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FROM OTHER NEWS SITES
Guardian.co.uk 1,700 jobs go as steel plant closes - PA - 12 hrs ago
The Sun The axe falls on 1,700 steel jobs - 12 hrs ago
The News International Corus to cut 1,700 jobs in Britain - 14 hrs ago
The ScotsmanCorus axes 1,700 more jobs as lack of demand forces Teesside closure - 14 hrs ago
Economictimes Corus to shut UK unit parts - 16 hrs ago
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