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Workers in Tata's carmaking arm warn firm against 'fire sale' of steel business

Published 05/04/2016

The UK's largest steelworks is in Port Talbot
The UK's largest steelworks is in Port Talbot

Workers in the carmaking arm of Indian conglomerate Tata have urged the company to allow enough time to sell its UK steel business as efforts to save thousands of jobs were stepped up.

Members of the Unite union at Jaguar Land Rover (JLR) wrote to Cyrus Mistry, chairman of the Tata Group, warning against a "fire sale" of the loss-making UK assets.

Business Secretary Sajid Javid was tonight flying to Mumbai to meet Mr Mistry to discuss the sales process, exactly a week after the firm took the shock decision to sell up.

The minister held a flurry of talks today with union and steel industry leaders and other ministers, including Carwyn Jones, First Minister of Wales.

The head of a group which could rescue steel plants and save thousands of jobs said he is aiming to avoid any redundancies if a deal is agreed.

Sanjeev Gupta, the head of the Liberty Group, made it clear it was "early days" in the sale process but raised hopes that jobs could be saved, especially at the huge plant in Port Talbot, South Wales.

He told the BBC Radio 4 Today programme that the business could be turned around.

Asked if redundancies could be avoided, he said: "That would definitely be my objective."

Mr Gupta said production could be expanded but with different methods.

Liberty has not even started due diligence as it was not expecting Tata to make its announcement so quickly, he said.

"This is my first day back in the UK. I am still to engage fully. We will see how the week unfolds."

He added it would take years to make the transition on production changes.

Mr Gupta said pension liabilities were an issue but the most pressing need was to ensure the viability of plants.

Mr Javid was in Australia on a business trip when the announcement was made, leading to union claims that he had "taken his eye off the ball".

Mr Jones said: " If a buyer comes forward then the time scale of negotiations will be extended.

"Tata have a good reputation worldwide, they will not want to lose that, and they will ensure that as a responsible seller.

"We don't have all the time in the world, that's true, but we will now work quickly to ensure that any potential deal is done.

"My message to the Prime Minister was simple: These plants cannot close."

Mr Javid said the meeting with the First Minister of Wales was "very constructive", adding: "What it shows is that you've got the UK government and the Welsh government working together on this really important issue and that's the way to continue.

"I think that it gives confidence to any potential buyers out there.

"It's great that Liberty, and there are others that have shown interest, it's great that this interest is out there.

"I've met Liberty before and I'm very happy to meet them again today. But it's right that there is a role here for the UK government and I've set out how we can help. There's a lot of detail there to work out and of course it depends on who the buyer is.

"But the important thing is where the buyers are coming forward we're ready to work with them."

In their letter to Mr Mistry, Unite officials at JLR said: "We are mindful of the assurances that you gave to the UK steel unions that the company would behave in a responsible manner and would sell to a responsible buyer if it had to.

"We are alarmed to read comments in the press that the company is looking to dispose of its UK steel operations within a short period of time.

"This is not something that a responsible employer would seek to do, given any sale and the necessary arrangements and due diligence will take some considerable time.

"Therefore we would ask you to confirm that Tata will act in a responsible manner in the UK, will allow sufficient time and resources to secure the business through a new buyer, that the whole of the Tata business in the UK is sold as a whole and that you make it clear this is the course of action you will follow."

The Rail, Maritime and Transport union (RMT) called on the Government and Network Rail (NR) to bring forward rail renewals work to help ease the pressure on the UK steel industry.

Research for the union showed that the spend by NR with Tata was in decline.

In the financial year 2014-15, Tata Steel UK Ltd supplied NR with £98,022,077 worth of goods, accounting for 1.3% of NR's spend.

This has fallen by 14.6%, from £114,865,267 or 2.1% of spend, in the previous year, it was claimed.

RMT general secretary Mick Cash said: "Britain's rail infrastructure is under massive pressure and is creaking under passenger demand and it would be a win-double for the British taxpayer to see the bringing forward of rail renewals work benefiting UK steel at this pivotal time for the industry.

"There is no excuse for the Government dragging its heels as they control the publicly-owned Network Rail and could intervene right now to make a decisive move that would have huge long-term benefits for the twin industries of rail and steel."

Mr Gupta said he had a "positive" meeting with Mr Javid.

He said: "UK Government appears highly supportive and is proactively engaged in finding a long-term solution. We have also actively engaged with Welsh Government and again we are encouraged by their approach.

"The next step is for Tata to define the formal sales process and request indications of interest from potential buyers. We await further details on this and then will assess our own next step.

"Liberty has already proven its ability to build value from UK steel assets with our acquisition of our Newport Steel plant, Midlands engineering operations and most recently in Scotland where we acquired mills from Tata. Everyone is very motivated to find a solution."

Leaders of Community, Unite and the GMB spent an hour with Mr Javid before he left for Mumbai, stressing they wanted the Tata business sold together rather than firms "cherry-picking" different parts.

Unite leader Len McCluskey said it was a "good first step", adding that unions would work with the Government and any prospective buyers.

"At the moment we are on the same page. The Government needs to put a protective arm around the industry to show they are serious. Talk is cheap - we now need to see a practical application."

Community's General Secretary Roy Rickhuss said unions wanted Mr Javid to stress the need for Tata to act responsibly as a search for a buyer continues.

Shadow business secretary Angela Eagle said: "Labour has warned for months of the escalating crisis facing steel. Yet Sajid Javid ignored the warnings of the collapse of the industry - and the 40,000 jobs on the line - until he realised his own job was at risk too.

"The Tory Government has not done enough to address the unfair dumping of Chinese steel that is at the root of this crisis."

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