Welsh Tata Steel jobs 'in no immediate danger' after business value drops
- 14 May 2013
- From the section Wales
There is no immediate danger to Tata Steel's 7,000 Welsh workforce from the write down of around £1bn in the value of the business.
But it is a reflection of how tough things are for the industry in Europe, and it does beg the question how long can Tata can continue to suffer losses like these?
Tata Steel's annual financial results are out next week and as part of the accounting rules governing these reports, the company has downgraded the value of the company to reflect the fall in sales.
We know its European operations are suffering heavy losses. In a statement the company said demand was down 8% in Europe over the past year, and down 30% since the start of the financial crisis.
And perhaps more worrying for the staff is that Tata expects these conditions to continue over the near and medium term.
A write-down of £1bn is a huge amount even by the standards of an Indian steel giant like Tata, which built up its European business by buying the Anglo-Dutch steel maker Corus for around £6bn in 2008.
Wales accounts for a huge part of the business. Port Talbot is its second largest plant in Europe. It is already in the process of shedding 500 jobs while at the same time it has just begun production at a new £185m blast furnace which was the biggest investment at the site in decades.
Having spoken to workers and union officials in recent months, the big hope is that kind of investment will help secure the future of the operation under Tata.
Peter Brennan, an assistant editor at Platts, a news organisation which covers the steel industry, said: "I was in India a couple of weeks ago and there was a lot of debate and speculation that Tata is already talking to banks trying to find a buyer for its European operations because it is doing so poorly financially as you can see with this write down.
"But in Europe itself I've heard none of that and if you look at the levels of investment at Port Talbot there's nothing to suggest that Tata steel is looking to part with its European operations as of yet."
Tata Steel is not alone in facing problems in Europe. ArcelorMittal, the world's biggest steel producer, wrote down about £2.6bn from its European operations at the end of last year.