Unions and politicians welcomed Tata Steel’s accord with unions which entails the steel giant derisking its pension liabilities and committing to secure jobs at its Port Talbot plant in Wales, at least until 2021.
The deal also includes plans to invest for a further five years.
Questions over the precise future shape of the plant and its 4,000 employees had hung over the firm since earlier in the year when Tata Steel stalled plans to sell the facility and began potential merger discussions with German steel producer ThyssenKrupp over its existing European assets.
“This is good news that secures the future of steel-making at Port Talbot for at least 10 years,” Carwyn Jones, the First Minister of Wales, said on Thursday. “Earlier this year, I was very pessimistic about what the future might hold for steel-making. This agreement was achieved by a lot of hard work by everyone involved.”
“This proposal would secure jobs for years to come and brings serious investment not just to Port Talbot but to steel works across the U.K.,” Roy Rickhuss, general secretary of the Community Union, said following the announcement of the deal on Wednesday evening.
The union said that it was a “significant shift” from Tata Steel’s opening offer, which didn’t include any commitments regarding jobs and Port Talbot’s two blast furnaces.
5-year commitment
Under the agreement reached, Tata Steel has agreed to keep both blast furnaces at the site open for at least five years, and will invest 1 billion pounds over a 10-year period to support steel-making, and it will avoid making compulsory redundancies for the next five years, similar to the one reached with workers in the Netherlands.
Crucially, the company has launched a consultation on replacing its defined benefit British Steel Pension Scheme with a defined contribution scheme, with maximum contributions from the company of 10 per cent and employees of 6 per cent. That shift had been considered previously but did not take place after unions and the company agreed on changes to the terms of the existing scheme last year. Union members are due to be balloted on the latest proposals regarding the scheme in the New Year. “This is not the end of the process and it will be for all our members to now vote on this proposal,” said Rickhuss.
Tony Brady of the Unite Union welcomed the “step in the right direction” but called for more steps from the government, specifically an industrial strategy, and a pledge that they would “hold Tata to their word.”
Koushik Chatterjee, Group Executive Director of Tata Steel and Executive Director for European business, said the changes would create a “sustainable” future for British steel in unprecedented times for the industry, while the changes to the pension arrangements would help de-risk the company and help achieve long-term sustainability.
“The delivery of Tata Steel U.K.’s transformation plan and generation of free cash flows will be the key enabler for the future sustainability of the business and we are very encouraged by early signs of the delivery of the plan,” he said.
