Uncertainty over Port Talbot’s future ‘causing supply chain job losses’ | Steel industry

Uncertainty over the future of Tata Steel in south Wales is already causing job losses in the broader industry, the Welsh secretary has warned, as the government scrambles to reduce the toll of redundancies in Port Talbot.

Speaking on Wednesday ahead of announcing the first £13.5m tranche of funding to support laid-off workers, the secretary of state for Wales, Jo Stevens, criticised the former Conservative government for what she said was a failure to prepare for the possibility of thousands of jobs losses at Port Talbot.

Tata Steel last September announced the replacement of the two blast furnaces at Port Talbot with an electric arc furnace. That will dramatically cut the carbon emissions produced at the plant – equivalent to nearly 2% of all UK emissions – but has also put 2,800 workers at sites in south Wales at risk of redundancy.

Tata received a pledge of £500m in subsidies from the Conservative government to make the switch, but the incoming Labour government is negotiating over further support in return for the Indian conglomerate retaining more jobs.

The talks are being led by the business secretary, Jonathan Reynolds, and are expected to be concluded well before the budget on 30 October. However, Stevens said the government needed to “address the immediate uncertainty” for workers and firms, with hundreds of jobs already thought to have been lost.

The government set up a “transition board” that included ministers and Tata Steel’s top executives, and pledged £100m to help affected workers in September 2023. However, none of that money has so far been spent, after eight meetings of the board starting in October last year.

Stevens criticised “the lackadaisical approach of the last government” in not disbursing the promised funding.

At a visit on Thursday to Rototherm, a Port Talbot supplier of pressure gauges, Stevens will announce the immediate disbursement of £13.5m to local councils. The cash will be used to support businesses in Tata’s supply chain, and to help workers to find new jobs, training and qualifications.

“We’ve seen jobs lost in the supply chain already,” said Stevens. “This is to put in place a safety net immediately because we know that business confidence has been hit.”

Alun Davies, national officer for steel at Community, a union representing many of the workers, welcomed the prospect of funding, and particularly the support for contractors and the supply chain. However, he said the union “will continue to oppose the company’s damaging proposals, and we will fight to protect jobs”.

Tata has already closed a blast furnace and other parts of the works such as ovens that make coke for the steelmaking process. However, no workers will be made redundant until September. The second blast furnace will be closed at the end of next month, when the bulk of 1,900 redundancies at Port Talbot are expected.

Negotiations include discussions on potential investments in a new mill to make wide plates suitable for wind turbine towers or a plant to produce high-value galvanised steel for cars and construction. Asked about the plate mill option, Stevens said it would fit with proposals to develop floating wind turbines from the port next door to the steelworks.

Stevens said: “It certainly should be considered at Port Talbot because it’s very important for the future of offshore wind.”

The cabinet minister said she was drawing on her experience growing up near Shotton, north Wales, where 6,500 people at the steelworks were made redundant in a single day in 1980 under the Conservative government of Margaret Thatcher. It took years for the area to recover from the shock of those job losses.

Port Talbot is dominated by the steelworks economically and culturally, and the works are visible from almost every street in the town.

“We want to make sure there are as many jobs protected as possible,” said Stevens. “We don’t want to see compulsory redundancies.”

Tata Steel UK’s chief executive, Rajesh Nair, said the transition board has an important role in “helping to mitigate the impacts those changes may have on our people, our supply chain and our communities”.