Tata Steel to close Welsh site amid A&M restructuring

Tata Steel has enlisted Alvarez & Marsal to help with a restructuring programme for its UK wing. Part of the move will see Tata close a factory in South Wales, with over 300 jobs at risk as a result.

The UK wing of Tata Steel has endured a difficult period in the last decade. During the 2010s, a combination of reduced demand for steel in Europe and high company indebtedness saw the Tata Group begin a sale process for the long products division of Tata Steel Europe to the Klesch Group. This followed the sale of a large pension scheme – one of the biggest in the UK – which Tata moved on to apparently avoid its British wing becoming insolvent.

Now, as Europe’s steel sector continues to contend with an influx of cheap imports, Tata Steel has drafted in consultants Alvarez & Marsal (A&M) to help with a restructuring programme. Roger Bayly, a board member of A&M, subsequently joined the executive board of Tata Steel in Europe as of mid-July, taking on the mantle of Transformation Director. Tata stated at the time that Bayly has many years of experience “with complex transformations and making large industrial companies like ours financially healthy.”

Now, over a month on, it has emerged that part of this restructuring will see Tata Steel close a factory in South Wales, something which could see some 380 jobs lost in the process, and hitting UK’s manufacturing sector hard ahead of Brexit. According to Tata, the company will shut the Orb steelworks in Newport, whose history dates back more than 120 years, having failed to find a buyer for the site.

Henrik Adam, Chief Executive of Tata Steel Europe, said, “Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. We saw no prospects of returning the Orb business to profitability in the coming years.”

Tata Steel employs 6,000 people in Wales, about two-thirds of which are based at its Port Talbot plant, the UK’s largest steelworks. The news of the lost jobs comes with UK manufacturing activity having contracted in August for the fourth consecutive month, hitting its lowest level since 2012, as Brexit uncertainty mounted and fears of a recession deepened. Tata also confirmed that a further 26 jobs are at risk in England, meanwhile, as no buyer was found for an engineering service centre in Wolverhampton.