Tata decision to sell steel business will have major impact on UK economy

Logistics and manufacturing associations have warned that Tata’s decision to sell off its steel operation in the UK will have major repercussions on the wider economy unless a buyer is found.

The warning follows the news that Tata’s board yesterday (29 March) rejected a rescue plan of its UK steel business, voting instead to sell all its steel plants in the UK.

Ian Gallagher, FTA head of policy for Wales, said Tata’s decision was very bad news for FTA members. “This will not only impact on the local communities involved but will also have a much wider impact on the economy as a whole, including the logistics sector.”

He added: “Tata’s business generated around £200m a year which was spent in households in many ways and that provided work for the logistics sector, as well as providing work for those involved in the movement of steel and the delivery of supplies into these sites.

“It is too early to put figures on the cost of this as we are not sure what the future holds but based on today’s news there are a lot of worried people in the logistics sectors.”

RHA signalled its disappointment at Tata’s decision and the lack of government action at an earlier date.

RHA head of policy Jack Semple said: “When the last government asked us five years ago what RHA’s priority was for growth our board’s clear response was to ask that the government encourage investment in the UK particularly in manufacturing and the process industries. Five years later the fact that (Tata) no longer wants ownership of its steel business in the UK is very worrying news.”

Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers, said the move could result in around 14,000 job cuts and have a long term impact on UK manufacturing.

She warned that the closure of the UK’s steel industry could undermine the future of major projects including Crossrail 2 and HS2 as well as UK car production and called for government action.

She said: “At the heart of all these projects is the requirement for steel. The Institution encourages the government to think long and hard about how they can help the steel industry, making sure that it enables our manufacturing sector to have a sustainable future. To do this they must ensure that we do not become solely dependent on imports of all raw materials such as steel.”

She added: “If the government is committed to long-term strategic industrial and infrastructure plans it must take a holistic approach with a better understanding of how such closures could affect our domestic supply chains.

"We must ensure that the UK has the necessary skills and raw materials that we need to support these upgrades with suggestions of improved forms of financing and life-cycle costing to be part of the public procurement policies.”