UPDATE: UK's Thamesteel Enters Administration - Community Union
25 Gennaio 2012 - 10:07PM
Dow Jones News
U.K. steel producer Thamesteel Ltd., which is owned by
Saudi-based Al-Tuwairqi Group, has entered into administration
after failing to secure an investor to rescue it from financial
difficulties, members of the Community Union said Wednesday.
This marks the second steelmaker to make an announcement
Wednesday that could result in job losses. Tata Steel Ltd.
(500470.BY), Europe's second-largest steelmaker, also announced
plans to overhaul its European tube steel business amid weak demand
for its products. It said the move could result in 200 job
losses.
Thamesteel, based in Sheerness, southeast England, employs about
400 workers, according to Factiva, and has a production capacity of
840,000 metric tons of billet and 600,000 tons of bar rod.
Michael Leahy, general secretary of Community, said that
Thamesteel had informed the union's local representatives that the
accountancy firm Mazars has been appointed as administrators for
Thamesteel after a deal with a Swiss group to secure the plant's
future fell apart at the last minute.
Thamesteel representatives weren't immediately available to
comment on the administration proceedings.
"This is devastating news for everybody who works at Thamesteel
and for the wider community in Sheerness," said Leahy. "Community
believes that Sheerness steelmaking can have a future and we will
be doing all we can to save our steel in the coming weeks and
months," he added.
A union spokesman said that there were reports that Thamesteel
had been in talks with Trafigura to secure a deal that would have
resolved Thamesteel's financial difficulties.
A spokesman for Trafigura said he declined to comment on
speculation.
The European steel industry is struggling to cope with
protracted weak demand in certain corners of the steel market,
particularly in the construction sector. The European sovereign
debt crisis has made the situation worse by denting consumer
confidence as fears grow that Europe is set to lackluster economic
growth prospects this year.
The International Monetary Fund warned this week that Europe was
likely to experience at least a mild recession this year while
official U.K. data Wednesday showed that the U.K. economy shrank in
the fourth quarter of 2011, leaving Britain on the brink of
recession.
European steelmakers have been restructuring their operations in
light of weaker steel demand. Aside from Tata Steel and Thamesteel,
ArcelorMittal (MT), Europe's largest steelmaker, began idling
furnaces this past fall as part of an optimization plan aimed at
shifting more of its production to low-cost facilities while idling
more costly facilities. This week ArcelorMittal announced further
plans to indefinitely shut an electric arc furnace in Madrid due to
weak demand. The move will affect around 270 jobs. ArcelorMittal is
also considering cutting 630 jobs at its Czech plant in order to
boost competitiveness.
Leahy said "we are seriously concerned about what the
[U.K.]government is doing about manufacturing generally" and the
steel industry in particular. He noted that there has been a lot of
noise from government to help the manufacturing industry but little
actual help.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com
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