Thamesteel

Debate between David Simpson and Tom Blenkinsop

Wednesday 21st March 2012 Westminster Hall

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I thank you, Mr Davies, for the opportunity to begin this important and timely debate on Thamesteel and the future of UK steel production. I am grateful to hon. Members for attending the debate. Their presence illustrates not only the high importance with which hon. Members regard our country’s steel industry, but the sympathy that we all share for the 400 steelworkers at Thamesteel who are undergoing the most difficult circumstances. Unfortunately, those circumstances, which all steelworkers, if not all workers, are experiencing now, have not been seen since the 1980s.

I and many parliamentary colleagues wanted to secure this debate to highlight the dire way in which steelworkers at Thamesteel have been treated. Any steel site that is lost is a loss not just to the immediate area, but to British steel production and UK manufacturing.

Many steelworkers have been here before; it is a familiar tale for those in the steel industry. Thamesteel, which is based in Sheerness, employed about 400 workers and had a production capacity of 840,000 metric tonnes of billet and 600,000 tonnes of bar rod. The site itself began operations in January 1972, and production started at the UK’s first mini integrated works on the site of the historic Sheerness naval hospital. The site uses recycled steel to produce steel for the construction industry. Surviving the turmoil of MacGregor in the ’80s and a number of trade union derecognition plots by the management in the ’90s, this community and its men and women have seen it all.

In July 2002, when the site was owned by Allied Steel and Wire, ASW went into receivership and the employees lost their accrued pensions, but Community trade union fought a five-and-a-half-year campaign to secure a £12 billion financial assistance scheme, which secured the pensions of 90% of the affected workers, via a European Court of Justice ruling. In my former life, I was a Community trade union officer and lay official branch secretary and knew some of the people who were involved, and they stood by the Teesside Cast Products site and its steelworkers in their hour of need.

Securing this debate for the Sheerness steelworkers is the very least I can do to ensure that their case is heard at the highest possible level. UK steel producer Thamesteel, which was, until recently, owned by Saudi-based Al-Tuwairqi Group, went into administration after failing to secure an investor to rescue it from financial difficulties. That information was made public not by the company, but by Community trade union. Thamesteel became the second steelmaker that day to make an announcement that could result in job losses. Tata Steel Ltd, Europe’s second-largest steelmaker, also announced plans to overhaul its European tube steel business amid weak demand for its products. It said that the move could result in 200 job losses, predominantly at Corby.

Michael Leahy, the general secretary of Community, said that Thamesteel had informed the union’s local representatives that the accountancy firm Mazars had been appointed as administrators after a deal with a Swiss group to secure the plant’s future fell apart at the last minute. Michael Leahy said at the time that it was devastating news for everyone who worked at Thamesteel and for the wider community in Sheerness. Importantly for me, for MPs present today and for the work force, Michael said:

“Sheerness steelmaking can have a future and we will be doing all we can to save our steel in the coming weeks and months.”

It is of primary importance that that is reiterated, and that the site is not talked about in the past tense.

At the time, there were reports that Thamesteel had been in talks with Trafigura to secure a deal for the long-term future of the plant that would have resolved Thamesteel’s financial difficulties. However, Trafigura has so far declined to comment on speculation. We are all aware that the backdrop is one of a European steel industry struggling to cope with protracted weak demand in certain corners of the steel market, particularly in the long product construction sector. We are also all aware that the European sovereign debt crisis has made the situation worse by denting consumer confidence, as fears grow that Europe is set for lacklustre economic growth prospects this year.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. Although some 40% of the steel from the United Kingdom is exported to the continent, competitiveness has always been an issue. Last year, the Government gave something like £250 million to the steel industry to help towards rising energy costs. Does he agree that for all industry—not just the steel industry—to continue, we need to see some more benefit coming from the Budget today, to help the future of business in the United Kingdom?

[Tom Blenkinsop]

I agree with the hon. Gentleman, who makes a valid point. The steel industry and other energy-intensive industries are worried about their future. The Government, I think, are willing to listen. We hope that the Budget will take more steps to help and assist industry. We need to consider other measures, but I will come on to them later in my speech.

Across Europe, steelmakers have been restructuring their operations in the light of weaker steel demand. Aside from Tata Steel and Thamesteel, ArcelorMittal—Europe’s largest steelmaker—began mothballing furnaces in recent months as part of an optimisation plan aimed at shifting more of its production to low-cost facilities. Recently, it also announced plans to shut indefinitely an electric arc furnace in Madrid due to weak demand. The move will affect around 270 jobs. It is also considering cutting 630 jobs at its Czech plant, to boost competitiveness.

Everyone here, whether MPs or people in the Gallery, is seriously concerned about what the UK Government are doing about UK manufacturing generally, and UK metal process industries in particular. What are the Government doing in Corby, Scunthorpe and Rio Tinto Alcan, to name but a few? There has been a lot of noise from the Government about the manufacturing sector, but little actual help. With 300 companies involved in the local manufacturing supply chain in north Kent, this issue is crucial. The sequence of events that led to the need for this debate on Thamesteel and the wider UK steel industry illustrate that clearly. I have taken some notes from my former Community union officer colleague, Ryan Slaughter, who has been dealing with the Thamesteel situation alongside local reps at Sheerness.

In late 2002, Saudi Arabia-based Al-Tuwairqi Group bought the Sheerness steel mill and formed Thamesteel Ltd. Al-Tuwairqi aimed to invest in the works and produce grade steel bar and billet for the middle east market. Much of the steel bar and billet produced by Thamesteel workers was used in large-scale construction projects across the middle east.

In April 2009, Thamesteel and Van Merksteijn acquired an equal controlling interest in Kierbeck Ltd—a reinforcing steel fabrication business—of 51%, which was held through the holding company TVM Ltd. In May 2010, Mazars administrators were appointed as joint liquidators of Kierbeck Ltd and the business and assets were sold to Kierbeck Thames Ltd, a sister company to Thamesteel, on 2 June 2010.

In the summer of 2010, a working capital agreement was reached with Stemcor UK Ltd, taking out a charge on various companies within the Thamesteel Holdings Group. In September 2011, Thamesteel stock holding was reduced to clear the balance with Stemcor until the full balance was cleared. Production at the rolling mill was also stopped temporarily, owing to a lack of working capital.

In November 2011, the melt shop stopped production. On 15 December, senior management sent an e-mail to management staff indicating that payment of salaries would be delayed—that was on the day when staff were supposed to be paid. On 17 December, HAT Holdings BSC—an Al-Tuwairqi Group company—agreed to invest £170,000 in Thamesteel after installing a debenture to secure future investment.

On 23 December 2011, employees received their last pay to date. On 24 January 2012, HSBC placed a freeze on all company bank accounts. On 25 January, Rod Weston and Guy Hollander from Mazars were appointed as administrators. Union officials were the first production employees to be informed that the company was in administration.

At 11 am on 26 January, Rod Weston addressed all employees at a mass general meeting, announcing 394 potential redundancies. Mazars told employees that, if they did not receive a call by the end of the day, they were redundant. Community union officials addressed employees and began the Save Our Steel campaign. On 28 and 29 January, 341 redundant employees received notices and RPl forms.

On 30 January, my hon. Friend the Member for Harrow West (Mr Thomas) submitted early-day motion 2663 on the Thamesteel redundancies. On 31 January, Community union jointly organised with Mazars a workers’ support day. The majority of workers received help filling in RPl forms and advice from local colleges, Citizens Advice, Jobcentre Plus, Communitas, the Community trade union information advice and guidance training arm and Her Majesty’s Revenue and Customs.

On 1 February, Michael Leahy wrote to the Secretary of State for Business, Innovation and Skills asking him to meet Community union Thamesteel workers. On 7 February 2012, the first meeting of the Kent county council taskforce was attended by Ryan Slaughter, from the Community union; Ken Pugh, a county councillor; Kevin Lynes, the chair of the meeting and another county councillor; John Burke, who is the constituency manager for the hon. Member for Sittingbourne and Sheppey (Gordon Henderson); Jobcentre Plus; MidKent college; a representative of the Department for Business, Innovation and Skills; Peel Ports; and Citizens Advice. The aim of the taskforce was to provide immediate support and to plan a long-term economic strategy for Sheerness.

Also on 7 February 2012, Michael Leahy, the general secretary of the Community union, Roy Rickhuss and two Thamesteel workers, Pat Wiggins and Tom Butler, met the shadow Minister for Business, Innovation and Skills, my hon. Friend the Member for Hartlepool (Mr Wright). On 13 February 2012, the Secretary of State for Business, Innovation and Skills wrote to Michael Leahy and declined to meet Thamesteel workers who are Community union members.

On 10 February 2012, the first Thamesteel RP1 forms were received by the local redundancy payments office and a further nine employees made redundant. On 14 and 15 February 2012, a second tranche of RP1 forms were received by the redundancy payments office.