The furnace at the SSI-operated steel plant in Redcar will be mothballed

1 700 jobs lost as Redcar steel plant mothballed

Steel manufacturing in the SSI-operated Teesside plant in Redcar will be suspended, with 1,700 workers to be made redundant.

The decision follows earlier revelations that the plant failed to repay its debts as it kept struggling with low steel prices.

"SSI UK regret to announce that after a further evaluation and assessment of the situation facing the business, it has concluded that they are faced with no other option but to mothball its iron and steel-making facilities on Teesside,” SSI said in a statement. “The Redcar Coke Ovens and the Power Station will continue to operate.”

The firm said it took into account that trading conditions in the sector are not likely to change in near future, but said it keeps options open about restarting the plant in the longer term.

It added it would soon start consultations with trade unions and employee representatives.

"Despite the significant progress we made in the financial performance of the business during 2014, market conditions this year have been extremely challenging and unfortunately this has led to the decision we are announcing today,” said Cornelius Louwrens, SSI’s UK business director and chief operating officer.

"I would like to pay tribute to and thank everyone connected with SSI UK for their great support. My wish is that this facility can once again restart operations and fulfil the potential of the plant and its loyal workforce."

Unions reacted to the announcement with disappointment, blaming the government for not providing enough support to the struggling sector.

"This is absolutely devastating news for the workers, their families and the community,” said David Hulse, GMB national officer. “All that will be left operating will be the coke ovens unless the UK government steps in even at this stage. It is not too late for them to do so while the furnaces are still burning.”

Other unions also urged the government to step in and save the 1,700 jobs that are to be culled. They pointed to the importance of the steel-making sector for the wider industry and the entire economy.

"Steel-making on Teesside must have a future and our fight to save our steel will continue,” said Roy Rickhuss, general secretary of the Community union.

"These vital industrial skills have been passed down through the generations and must not be lost. That blast furnace must not become a monument to 170 years of history and it must be mothballed properly to preserve its integrity and give it the chance of a future.”

Speaking on behalf of the government, Business Minister Anna Soubry said that while the government can’t change the conditions in the steel market, it will summon an industry summit to see what can be done to help the sector.

"I hope that SSI's announcement that they are mothballing the furnace gives some hope that steel-making could be restarted on Teesside in the future,” she said.

Chief executive of the manufacturers’ organisation EEF Terry Scuoler said any loss of the steel-making capacity will most likely have negative repercussions across the manufacturing supply chain.

"In the short-term we need a clear indication from government - as a matter of urgency - that it will honour its commitment to compensate steel and other energy-intensive industries from the cripplingly high cost of energy,” Scuoler said.

"Failure to do so would mark a tipping point for this vital industry which is the foundation of the success of so many other manufacturing sectors.

Redcar’s Labour MP Anna Turley also voiced her disappointment with the lack of the government’s involvement in the situation, claiming it could have done more to prevent the plant’s closure.

"SSI have played fast and loose with us for weeks and months and the government has got to get control,” Turley said. “They cannot be allowed to run the asset into the ground. I don't believe this is a sustainable mothballing, I want to see the government step in and take control of the asset so we have got a future for steelmaking on Teesside and in the UK."

She also accused SSI of not treating workforce and the local supply chain fairly.

Earlier this month, Turley presented findings of research she conducted together with UK Steel, which found that UK steel makers are less competitive than their EU counterparts due to business rates, air-pollution targets, high energy costs as well as the strong pound.

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