Thamesteel

Tom Blenkinsop Excerpts

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.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Does my hon. Friend agree that the contrast between the behaviour of the current Secretary of State for Business, Innovation and Skills and that of the previous Secretary of State for Business, Innovation and Skills, Lord Mandelson, is not to be believed, given that Lord Mandelson worked very hard when the steelworks in my constituency was under pressure and about to go under, and he worked really hard to ensure that it had a future?

[Tom Blenkinsop]

I support my hon. Friend’s comments and will return to them, as she makes an important point. It is all about how we define industrial activism and whether we have an industrially active policy, where Ministers are willing to roll up their sleeves and get their hands dirty.

On 17 February 2012, the Community union Sheerness works branch met and voted to lobby Parliament. On 21 February 2012, the all-party group on the steel and metal-related industry, which I chair, met and heard representations from two Thamesteel workers, Pat Wiggins and Tom Butler. On 22 February 2012, the second meeting of the Kent county council taskforce took place. On 24 February 2012, the redundancy payments office received a third tranche of RP1 forms. From 27 February 2012, 240 RP1 submissions were paid to Thamesteel workers in a week.

On 8 March 2012, Community union Thamesteel workers held a lobby of Parliament. On 13 March 2012, Michael Leahy, the general secretary of the Community union, wrote a further letter to the Secretary of State for Business, Innovation and Skills, asking for assistance and a meeting with workers. On 16 March 2012, the deadline that Mazars had proposed as a cut-off date for bidders was passed. On 21 March 2012—today—a Westminster Hall debate to raise the concerns of the Thamesteel workers is being held. On 28 March 2012, creditors of Thamesteel will meet at Priestfield stadium in Gillingham.

Throughout this time, it is safe to say that the presence of the Government has been fairly non-existent and those of us who are here today, and the workforce, would like to know why. Why has the Department for Business, Innovation and Skills ignored requests to meet the democratically elected representatives of the workplace that is affected? Why have the Government so far waited for an invisible hand, instead of lending their helping hand? Why has the Secretary of State ignored a trade union that he knows can deliver results in saving steelworks, as was seen at Redcar’s Teesside Cast Products?

If the Secretary of State or the Minister agreed to meet the union, they could have heard directly from men such as Ian Crosby, Paul Davies, Michael John Terry, Aby Abraham, Gary Lewis and Barry Coulthard, who are all workers at Thamesteel who have written down accounts of their plight. Unfortunately, I do not have enough time to read out all their accounts, but if you will indulge me, Mr Davies, I will read out two of them.

Ian Crosby writes:

“I am a 29 year old man that has worked for Thamesteel for the last six years. I applied for the job when my then fiancée fell pregnant with our first child. The salary at Thamesteel was quite a jump from the job I had previously been in, as well-paid jobs to enable supporting a family are few and far between on the island. We are now married and have three sons, aged five, three and five months old. My wife is currently on maternity leave from her part-time job, so it is now more crucial than ever that I can support my family.

When the steel mill went into administration in January, it was absolutely devastating for my family. The fact that we were also not paid for our last month of service was awful for us. I literally had £6 left in my bank on the 25th of January. As you can imagine, with three young children and a house to maintain it is very rare to ever have any money left at the end of the paid month, but with it being the month after Christmas we were even more desperate for payday to come. My wife and I were questioning how we were going to afford nappies or milk for our youngest children, which is something that you should never have to question. My wife was very down about the whole situation and after just having a new baby it hit her even harder. It took almost four weeks before any money was made available to our family. As I had been in employment since I was 16, I am only entitled to contributions-based jobseekers allowance for the time being. This means my children are not entitled to school meals or milk tokens and I am not entitled to free prescriptions, dental care, etc. I find this unbelievable as I have never claimed benefits before and paid my taxes for over a decade, yet it appears you get penalised for that.

I have been applying for every job I can, and my wife has had to return to her part-time job months before her maternity leave was due to end. This is really affecting her as she is missing out on those crucial months with her new son that she was able to have with the other two. She is questioning herself and her parental qualities, but she really has no choice. There are no available jobs on the island and I have been unsuccessful with every application I have made.

I loved my job, and am finding it very hard to try and imagine what I am going to do now. The island has lost its main employer for men, and this is affecting many other areas of business. My only hope now is that a buyer is found to start producing steel in Sheerness once more. I think if this does not happen, then the situation will hit me a lot harder as I am still clinging on to that hope.”

Similarly, Gary Lewis writes:

“First of all, a thank you to all who are doing what they can to try and salvage what was Thamesteel. My story...

I was lucky enough to secure a position there in the autumn of 2006, lucky in that with a well-paid job, my now wife and I could plan our family together. Jen, my wife, has two children from her previous marriage and we also wanted our own. Jen was able to give up work and over the next few years we had two beautiful children, coincidentally both born on 25th June, in the same delivery room at Medway hospital, but three years apart. As people always do, we lived to our means, and managed to stay credit-free. We were able to meet all our outgoings and not build up any arrears. We were never well off, but we were not broke. The occasional night out was still possible, as was the odd short holiday.

We live in a modest three-bed semi in Queenborough, and feel we are part of the local community. My stepdaughter, who lives with us, was tutored at the Isle of Sheppey academy, our daughter Ruby attends Queenborough First School, as will Peter when he is old enough. My wife and I were married locally in January 2009 at the local Methodist church, where my wife’s uncle is a Methodist minister. He…travelled to conduct our ceremony. In the last six months, it’s been clear to all that something was going very wrong at Thamesteel. Bar mill production ceased in August last year, and melt shop production was sporadic to say the least. The message from the senior management was always positive, right up until 23rd January 2012, when it first became apparent that we might not get our pay in two days’ time. With the best will in the world, nobody could ever plan for that. In the build-up to Christmas, all we got was positive vibes, and spent up for Christmas as you always do. Everyone wants the best for their kids, so let them have it, our ‘jobs are safe’.

For the very first time in my life, I found myself on the phone to claim jobseeker’s allowance on 26th January 2012. I spent three whole days on the phone explaining to all my creditors—mortgage, energy, etc.—what was happening. The world was falling in and I couldn’t think straight. I tried to be strong for my family, and did the best I could, but the pressure was—and still is—immense. It’s made a hell of a difference to my life. I’ve applied for loads of jobs in my field of knowledge, in all parts of Kent. So far, I’ve had two replies, both of which have been negative. My JSA is now being paid, £210 a fortnight to cover all my bills. I’ve applied for help with the mortgage, but that only starts after 13 weeks. I’ve made an arrangement to pay reduced amounts for gas and water, and have applied to the Energy Trust for help with arrears on my electric bill. I still have to insure my property, keep a car on the road, and put food on the table. AND IT’S ALL GETTING HARDER BY THE DAY.

We have been lucky, in that the freezer was full when all this happened. We’ve been lucky enough to collect three food parcels from the Seashells centre in Sheerness, a scheme set up to help the steelworkers. I can’t thank those involved enough, as these have been a godsend. It’s a shame that I can only claim one more, but we’ll have to make do.

So what now with the works? Everyone waits with bated breath to see what offers have been made. Even if the mill starts up again, there’s no guarantee we’ll get our old jobs back. And there’s no other viable employer on the island. Nothing. Not for a skilled man with a family to support. Sheerness needs this steel mill, and why aren’t the government helping? Peacocks retail have been helped. Why not us? If there’s a continuation of no investment, either by the government or by the private sector, then Sheerness will be dead in its tracks. A town needs a large employer to survive. 350 of my mates are in the same boat. Then there’s the supply chain. I dread to think how many of us there are. Just a thought, has anyone been to Corby recently?

I can’t see us staying unless there’s a major change. All joking aside, we’re considering properties in Slovakia, northern Germany and northern Scotland. Please, help us.

Gary & Jen Lewis, Sammie, Ruby, and Peter, three chickens, two hamsters and a rabbit.”

During the mothballing of Teesside Cast Products, amid much criticism from the Tories and Liberal Democrats, the previous Government did get involved. Alongside One North East, Ministers were active in brokering potential deals with many potential buyers in the summer of 2009: Marcegaglia; Dongkuk Steel; and obviously SSI. We knew but we could not publicly say that SSI wanted to buy TCP at that time. The previous Government gave £60 million in aid for retraining, specifically for the Teesside area, including for workers at risk in Dow Chemical. That money has since been cut by a third. However, the overarching point is that the previous Government were involved directly. They rolled up their sleeves and got their hands dirty in lobbying and negotiating. I know that to be the case, as I was there in the area and living through the process every day for more than two years. The departure of Kirby Adams paved the way for a sale. It was not a lack of Government intervention that was to blame; there was a deliberate policy by Mr Adams to undermine a Save Our Steel campaign on Teesside. Thankfully, we won, and I wonder whether the Prime Minister would be bold enough to consider Mr Adams such a close political ally now.

I say this again: this debate is timely. How could TCP’s future be saved and Thamesteel be allowed to founder? Why were unions embraced as an integral part of the former’s success, yet ignored, leading to negative outcomes, in the case of the latter? Saying that European markets are in the doldrums is not good enough, because both TCP and Thamesteel have a history of selling to non-European Union markets—Asia in TCP’s case, and the middle east Gulf states in Thamesteel’s. This debate is timely because of the imminent relighting of the now SSI-owned Teesside Cast Products blast furnace. I was part of the Save Our Steel campaign on Teesside, which was supported by our local community, trade unions, the media and the men and women of Thamesteel.

I have a few suggestions for the Minister. Could we use the regional growth fund to attract any potential buyers that he might be aware of to the site? Could we talk to HMRC about holding off a little longer, to allow other buyers to come forward? Can we please at least have the Secretary of State directly involved, meeting with the work force, who are desperate to talk to him?

I will close with the words of the late Geoff Waterfield, the Community union chair of Teesside’s multi-union committee, who led the campaign locally. Sadly, he died at the age of 43 in August 2011 from undiagnosed leukaemia. He said:

“When I see a blast furnace, I see a thing of beauty... I see something that has given thousands and thousands of people a way of life, a good, honest wage, the ability to pay their mortgages, go on holidays and bring up their families. That to me is fabulous, that is a beautiful thing. When you come to Middlesbrough and see that skyline... That blast furnace is the heart of Teesside. As long as it pumps, there is life in Teesside.”

That is not just a Teessider’s fairy tale; the men and women from Kent have the same view of their steelworks. It is a story for all steelworkers in Britain. There is a way to save the site, and UK steel, if the Government do something to facilitate the process and lend their support. So the question for the Minister is: “What are you going to do?”

[Several hon. Members]

rose—