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Steel crisis grows as Caparo cuts 452 jobs

Government attempts to contain the mounting UK steel crisis have been dealt a further blow after Caparo Industries announced 452 job losses. Caparo entered administration on 19 October and the cost-cutting measures announced on Friday include the immediate closure of five sites as the steel products company fights for survival.

The biggest job losses were at a factory in Darlaston, West Midlands, where 122 workers were made redundant, with the remaining redundancies at sites across England and Wales. The cutbacks at Caparo capped a grim month for the British steel industry, with thousands of jobs lost or put at risk due to the plunging price of steel, high energy costs and the strong pound making exports expensive.

Anna Soubry, the minister for enterprise and industry, said: “This will be a very upsetting time for the hundreds of Caparo workers and their families affected by today’s announcement.”

PwC had said its aim was to stabilise Caparo and look for opportunities to save the business, but it concluded that certain parts of the company were no longer viable. It said Caparo, founded by the Labour peer Lord Paul in 1969, still employs more than 1,200 people, who are working as usual while the administrator examines the available options.

Matt Hammond, Caparo’s lead administrator, said: “It is with regret that we have made these decisions today, but the commercial prospects of the affected businesses render them unviable.”

The steel industry, unions and Labour MPs have accused the government of inaction following the closure of the Redcar steel plant on Teesside with the loss of 2,200 jobs, Caparo’s administration, and the mothballing of Tata steel mills in Scunthorpe and Scotland that led to 1,200 redundancies. The three events threaten the jobs of more than one in six workers in Britain’s already depleted steel industry.

Sajid Javid, the business secretary, said last week there was little the government could do about the price of steel, the strength of sterling or EU rules on state aid for industries. But under heavy pressure as job losses and closures have mounted, the government has engaged in a flurry of activity this week.

On Wednesday, Javid visited Brussels to press the case for European Union action to support the steel industry, including against the alleged dumping of cheap steel by China. The prime minister also promised to pay backdated compensation for high energy costs to struggling steel producers.

The government published new procurement guidelines on Friday for government departments to encourage the use of British steel on big projects such as the HS2 high-speed rail link and Network Rail upgrades. George Osborne, the chancellor, also launched a new infrastructure commission to coordinate spending on large public projects.

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Gareth Stace, director of the UK Steel lobby group, said his response when the government announced the procurement standards was: “That was great, but why didn’t it happen three years ago?”

Stace said the government’s actions helped demonstrate a change of thinking that would give steel companies more long-term confidence but that on energy prices, business rates and unfair trade, “there could be actions in the short term where we see results in the short term”.

The Unite union said the closure of Caparo’s Darlaston factory near Wolverhampton was the second blow to manufacturing in the area afterGoodyear announced the closure of its tyre-making plant in June with the loss of 300 jobs.

Other Caparo factories to close were in Hartlepool, with 79 job losses; in Dudley, West Midlands, where 64 will be made redundant; Fairbright Wire in nearby West Bromwich, where 59 people will lose their jobs; and a tubes facility in Tredegar, south Wales, which employed 17 people. At Oldbury, in the West Midlands, where Caparo is based, 68 employees will lose their jobs, with further cuts in Wrexham and at other locations.

Workers were paid until the end of Friday and will get support in claiming redundancy and notice payments, PwC said. Anna Soubry, who pledged last week to create a “level playing field” for the UK steel industry to compete against foreign rivals, said help would be offered to redundant Caparo workers.

Tony Burke, assistant general secretary of the Unite union, said: “The failure of the government to intervene to support the steel industry and develop an active industrial strategy is leaving the industry on the brink. If we are to avoid more grim news like today’s, then George Osborne needs to keep his promise about jobs, growth and making Britain fit for the future the central mission of the infrastructure commission.”

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