Tata Steel to mothball Wales plant as tough markets persist

27 August 2015

Tata Steel, Britain's largest steelmaker, said on Wednesday it will mothball a plant in south Wales as tough markets persist, forcing the company to focus on higher-value products.

Europe's second-largest steelmaker after Arcelor Mittal said it will redeploy employees at the plant in Llanwern, Newport, which makes strip products used in autos, construction, domestic goods and packaging, although British press reports said the company will cut 250 jobs.

The move comes only a month after Tata said it may cut up to 720 British jobs, mainly at Rotherham in northern England, in a revamp of its speciality and bar business, which has been hit by cheap imports and high energy costs.

"In the past year, we have also been making positive improvements to our manufacturing capability," Stuart Wilkie, director of Tata Steel's Strip Products UK business, said in a statement on Wednesday.

"But surging, and often unfairly traded, imports have combined with a strong pound to create a very challenging business environment," Wilkie added.

Tata Steel has been forced to slash costs and jobs since 2007 when it bought Anglo Dutch producer Corus for $13 billion. It employs around 17,000 people versus some 25,000 in 2008.

The UK steel sector has shrunk dramatically in recent years amid challenges like poor post-financial crisis demand growth, over-capacity, high labour and energy costs and more recently, rising imports and a strengthening currency.