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Steelworkers facing low pay woe following Tata job cuts

By South Wales Evening Post  |  Posted: November 26, 2012

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NEW jobs are out there for hundreds of outgoing Tata staff but salaries are likely to be markedly lower, a Swansea University economics professor has warned.

David Blackaby was responding to Friday's grim cuts at the steel giant, which are resulting in 500 mainly white collar jobs being axed at Port Talbot.

Finding replacement jobs would not be easy, said labour market expert Professor Blackaby, although he said there were more general vacancies in the system.

And there was another issue.

"A fairly recent study found that people usually took a 39 per cent cut in salary (at their new job) — and that was across the board," he said.

"We know that traditional steelworkers are paid relatively high wages for their skills base, although these are mostly admin jobs.

"It's going to be hard to find replacement jobs."

Professor Blackaby said that every month in the UK, around 400,000 people found or lost a job — what he described as "the churn" in the labour market.

A report by the Economist into the UK steel industry this month highlighted the difficulties facing Tata bosses.

It said demand for high quality steel for cars and white goods in rich countries — combined with a depressed construction market — had hit steel production.

In addition, the cost of the materials needed to make steel have been kept high by booming steel production in countries like China.

"Tata's European operation has been making losses," said the Economist. "Weak local demand bears down on the price of finished steel, while China's growing hunger for ores and energy keeps raw material costs high."

It added: "(Steel) Production in Britain this year is likely to be a round a third below its 2007 level. If so, it would a new low point in what appears to be a long-term decline."

Tata until recently employed around 19,000 staff in the UK, including 3,500 people in Port Talbot and around 750 people at Trostre.

Tata Steel Group's profit after tax was £27,586,196 for the first half of the current financial year, compared to a whopping £657,235,950 the company made after taxation the year before.

The Economist pointed to grounds for optimism though, citing Tata's £185million blast furnace, which is due to be completed next month, and the presence of some 380million tonnes of coking coal that lies beneath the plant, which Tata is investigating with a view to possible extraction.

Professor Blackaby said that steel production was an energy-intensive process, meaning that locating to a low cost energy area had advantages.

He said the steel sector had seen "massive redundancies" in decades gone by but, while feeling great sympathy for the Tata staff affected by the job cuts, he said the blast furnace investment was a positive sign.

The challenges were still coming thick and fast, though — a downgrading of the UK growth forecast by the Bank of England and continuing problems in the Eurozone.

"While it's tragic for individuals, Tata operates in competition and they have to be cost efficient," he said.

"The fact that Tata invested shows that they saw a future for Welsh plants. The fact that they invested in something that's going to last 10, even more years is a positive thing."

Tata Steel's European operations chief Karl Kohler said: "The restarting of the Port Talbot furnace will improve our competitiveness and allow us to enjoy the benefits of a modern, state-of-the-art furnace, which, combined with the planned downstream investments, will also enable us to improve customer service."

He added: "But the job losses are regrettable and I know this will be a difficult and unsettling time for the employees and their families affected."

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  • avondale  |  November 28 2012, 11:07AM

    All good things come to an end.

  • DubaiTaff  |  November 27 2012, 1:56PM

    'The long hall'?' Are you talking about the mill itself or do you mean long haul?

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  • Neathboy234  |  November 27 2012, 1:24PM

    A typical blast furnace has a 15 year life time, Tata have shown they are in this for the long-hall. To be fair to Tata they have invested more at Port Talbot since 2007 than Corus/BSC ever did. Not only the new blast but other investments in the mill's,and the gas collection/energy from steam at the BOS plant. Sadly falling demand has hit the works hard due to the banking problems, but lets not be to downhearted and congratulate Tata in the faith that they have shown the workforce.

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  • abertawejack  |  November 27 2012, 10:46AM

    I think South West Wales, is now regarded as a retirement area, with part time Government jobs, £ shops, along with certain charity shops to prop up pensions. Look around our Cities and Towns at the many shored up shops. Why haven't the annual rates been lowered whilst while we are still in a recession! thus assist firms; quality Jobs are moving out of SW Wales faster than other parts of the UK, no doubt because of the added transportation taxation on our two Severn bridges? obviously this will not assist any form of future investment here. Time for our AM's to take stock of this situation, all very well to pump money into firms, but it's about time some form of reprisals were put in place, should firms intentionally default as has happened in the past: I'm sorry to say Tata, are obviously looking to remove our steel industry to their country in due course, along with both Governments £M investments in modernization, of this plant: SW Wales corridor must surely now be a record benefits contributor, throughout the UK, if not by 2013.

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  • geoboy01  |  November 26 2012, 7:00PM

    I seen this coming when they took over,typical of this Indian company-they gonna take them all back on 12 hour shifts and pay them what they pay their countrymen im off tata!!!!!

  • Neathboy234  |  November 26 2012, 5:37PM

    That's coming out of the casting machine, before that it was in a liquid form in a ladle. From there it will go over the hot mill to be rolled into sheets, and then onto the cold mill to be finished. If you look close you can see that the slab is still quite close to being liquid in the middle.

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  • Eric_Pode  |  November 26 2012, 5:31PM

    Neathboy234 Looks like steel rolling to me - What's the difference?

  • Neathboy234  |  November 26 2012, 3:41PM

    Nice picture of the casting machine.

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