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SSI steel firm liquidation blow for Redcar plant workers

Published 02/10/2015

SSI Steelworks in Redcar
SSI Steelworks in Redcar

Workers at a giant steelworks have had more "devastating" news after the owner went into liquidation, dealing a fresh blow to hopes of saving thousands of jobs.

Thai firm SSI, owner of the Redcar plant on Teesside, applied at the High Court in Manchester to go into liquidation, days after it announced it was mothballing the site.

The Official Receiver has been appointed liquidator and will now assess the assets and determine how many workers will be retained.

Around 1,700 jobs are now set to be lost, with thousands more in the supply chain.

Plunging steel prices have been blamed for the decision, with steel's trade body saying the industry is now in crisis.

Unions reacted with anger and dismay, warning that the heart of the community on Teesside was being "ripped out".

The move followed a Government announcement of an £80 million package to support workers losing their jobs, including funding for workers to train at local further education colleges and help for anyone wanting to start up their own business.

Business Secretary Sajid Javid, who attended a meeting of a local taskforce in Redcar today, said: "This is an extremely difficult time for the workforce at SSI and the local community. The package we are announcing today will provide important support to workers and the local economy. Across government we will continue to focus on providing assistance where we can."

The Government also confirmed that the company made a "last-minute and unrealistic" request for the taxpayer to make an "open-ended" funding commitment to maintain the coke ovens in Redcar.

A statement by the Business Department said: "The Government cannot accept the request. On the basis of the limited business case it was given, the Government has no confidence that this is a realistic proposal for taxpayers to support.

"In addition, it would be illegal and in breach of state aid rules. The company has never made a profit and the board's proposal would do nothing to address the huge debts outstanding to local suppliers and other parties."

The Community union said it will set up its own taskforce help workers.

General secretary Roy Rickhuss said: "This is yet further devastating news for the workforce, their families and the community. We will be taking steps to ensure our members' interests are represented through this process and putting claims forward for what they are owed.

"We repeat our call for Government intervention that we have been making for the past few weeks and which I impressed upon the minister again at our meeting yesterday. Government must ensure that the industrial assets are protected and skills are retained to give steelmaking a chance of a future.

"We believe there are parties who could ensure that the industrial assets are mothballed safely, with reduced environmental impact, and we would encourage the liquidators to look favourably on this option as offering the best opportunity to secure a return to creditors. A community on Teesside is looking to the Government to take further action."

Unite national officer Harish Patel said: "Government ministers need to go further than the support package they have announced and intervene to keep the coke ovens alight. Once those ovens go cold then the hopes of finding another buyer will fade and the light on a proud tradition of steelmaking will be snuffed out.

"This is a tremendously distressing time for our members who have bills and mortgages to pay and the Redcar community which wants to retain high-skilled decent jobs.

"The support package on offer is a drop in the ocean. It simply doesn't go far enough in giving redundant SSI workers the financial security they need, nor will it fill the void left in the local economy or sufficiently deal with the knock on effect in the supply chain.

"The heart of a community in a region with high unemployment is being ripped out. If the Government wants to make its 'Northern Powerhouse' a reality and rebalance the economy then it needs to follow the lead of its French, Italian and German counterparts and support steelmaking in the UK by keeping the light burning at Redcar."

Steve Readman, site convenor for the GMB union, said: " This is an extremely worrying time for our members and their families and the wider community and we will be doing all we can to support them.

"We will want the Government and the liquidator to involve all interested parties who may wish to acquire the site and speak to them to save as much of the site as possible."

Shadow business secretary Angela Eagle said: "This is devastating news for the local community. It is shocking that the Government has chosen to turn its back on steelmaking on Teesside.

"The Government must explain why, when the industry has been in trouble for so long, they have allowed the situation to disintegrate into catastrophe.

"Whilst it is right the Government will provide some support for steelworkers and their families, their refusal to assist with mothballing the assets threatens to end the possibility of steelmaking in the future.

Gareth Stace, director of trade group UK Steel, said: "It may be too late for SSI but the situation in Redcar brings the problems facing the UK steel sector into sharp relief.

"The Government must now spearhead efforts to support the steel industry and the supply chains it feeds.

"The steel site in Redcar remains a viable and efficient plant and the Government-led steel summit taking place in two weeks will be a make-or-break event for the entire industry."

A steel summit will be held on October 16, involving steel companies, MPs, unions and governments to discuss the future of the industry.

David Hulse, national officer of the GMB, said: "We have been advised that the official receiver is appointing PricewaterhouseCoopers (PwC) as special advisers to deal with the liquidation.

"We are hoping to meet PwC either later today or first thing on Monday morning as it is in everybody's interest that we meet as soon as possible."

John McDonnell, Shadow Chancellor, said: "It's not good enough for George Osborne to stand aside and do nothing to preserve steelmaking on Teesside.

"The least the Government can do is provide the receiver with the resources to mothball the plant to secure its future potential."

Redcar's Labour MP Anna Turley said the Government had "thrown in the towel and turned its back on steelmaking in Teesside".

She added: "We do not accept their view that a hard closure is the only option and I am deeply disappointed they have rejected all of the options presented to them so far."

She said efforts will now be made with the official receiver to establish how debts, salaries and pensions will be paid, and how the future of the site can be secured.

She added: "The fight goes on."

The £80 million support package was welcome but she feared it would not go "far enough or fast enough".

A spokesman for the Community union said later: " The way this loyal workforce has been treated - particularly today but also over recent weeks - has been absolutely shocking.

"The Thai owners of SSI UK should hang their heads in shame. They have chosen to take the cowards' way out by refusing to come forward and face up to their responsibilities to their workforce and to Teesside.

"Since it was first suggested that SSI UK was in serious financial difficulty, the company has continually failed to properly consult with the workforce and their trade union representatives. They have also failed to provide the information necessary to enable meaningful consultation to take place.

"Furthermore, we anticipate that SSI UK has failed to comply with its obligations under the UK information and consultation regulations and we will be taking legal advice on this matter.

"We will be seeking an urgent meeting with PWC and making the case to them to work with all parties including the Government to protect the assets in the best interests of creditors and the future of steel making on Teesside."

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