The continued collapse of the global steel industry has thus far seen emergency meetings of parliament called, world leaders gather in Europe and over 15,000 jobs inside the UK come under serious threat. Here in the UK, discourse has primarily centred on the Indian owned company Tata Steel, which last month announced its intention to sell off its loss-making UK operations.
Last week, it was announced that the companies Scunthorpe operations would be purchased by the investment group Greybull Capital. That group specialises in so-called ‘rescue deals’, and put forward a now-accepted 3% pay cut for the presently employed staff at the operations in return for keeping their jobs. In total, that deal has secured the safety of 4,400 jobs in the North of England.
However, Tata’s Port Talbot operations remain at serious risk of closure as the company court buyers for the troubled enterprise that currently loses around £1m per day. Nevertheless, there are buyers interested in the plant, perhaps most notably the current boss at the plant, Stuart Wilkie. Reports have emerged which suggest that the chief is planning to launch a management buyout of the troubled Welsh operations.
Mr Wilkie was one of the main figures behind the rejected survival plan put to Tata’s board in India before the company was put up for sale, and is now being backed by Community, the steel union who said it would welcome “prompt discussions with Stuart Wilkie and any management buyout option”.
However, it seems that as with any potential buyer for Tata, the management buyout would require significant financial support from the UK government. So far, the Conservative government have been reluctant to offer any such promises, but hope did come recently when they announced “clear action” would be taken to help the industry by “cutting energy costs, taking action on imports, government procurement and EU emissions regulations, meeting key steel industry asks." Further to that, the Business Secretary Sajid Javid told the Commons that the possibility of a partial public takeover was possible, after floating the chance of "the possibility of co-investing with a buyer on commercial terms" in the near future.
BBC Wales business correspondent said that “It's believed though that any management buyout would involve retaining the blast furnaces and making steel from scratch as opposed to the proposal by Liberty to turn it into a recycling facility”.
This is a significantly different plan to the Liberty plan, and though it would continue to utilize the expertise of much of the staff, it would result in some redundancies in order to bring the plant back to profitability. Nevertheless, any plan to take over the business will face an almost impossible test considering the current lack of demand for steel across the globe and China’s huge overproduction of the commodity.