Crisis at Corus

THE future of steelmaking on Teesside and the fate of thousands of workers looked grim last night after an international consortium tore up a crucial supply contract.

The boss of Corus accused foreign companies of throwing 3,000 North-East workers to the “wolves” after they walked away from a deal to buy steel from the Teesside Cast Products (TCP) plant, in Redcar.

Chief executive Kirby Adams promised to do what he could to save the livelihoods of 2,000 staff and 1,000 contractors who work at the plant.

A furious Lord Mandelson urged Corus – which is owned by the Indian group Tata Steel – to take legal action against the four companies that unilaterally scrapped a ten-year sales agreement worth millions of pounds.

The Business Secretary said: “It is unacceptable that such a development should threaten jobs on such a scale, with such a potentially devastating impact on the area.

“The Government stands ready to do what it can to support the company. We are not prepared to reconcile ourselves to inevitable closure of this plant.”

Prime Minister Gordon Brown said: “We are doing everything in our power to ensure that the contract is upheld.”

Yesterday, workers at the plant were put on a 90-day consultation as Corus bosses admitted it was difficult to see a way in which it could continue to operate and announced plans to “mothball” the site.

The crisis was provoked after the consortium of four foreign steel slab buyers pulled out halfway through a ten-year agreement to take nearly 78 per cent of the plant’s output.

Mr Adams said it was “deplorable” but conceded there was little he could do to change their minds.

TCP managing director Jon Bolton admitted there was only a “slim” hope of finding a buyer or securing suitable contracts to replace the consortium’s orders.

To add insult to injury, two members of the consortium – Marcegaglia, of Italy, and Korea’s Dongkuk Steel – had been expected to buy a majority stake in the plant in a deal that now has little chance.

But last night Mr Bolton had not given up hope that a way of saving the operation could be found.

He said: “I don’t accept it is the end of steelmaking on Teesside.

“There are still very good businesses operating for Corus on Teesside, so I think there is still a future.”

Corus bosses were told three weeks ago that the consortium planned to end the supply agreement. Negotiations and the threat of legal action failed to change their minds.

Mr Bolton said the legal process was continuing but could take “months or even years” to be completed.

Because of the confidential nature of the discussions with the consortium, Corus was unable to tell its workers what was happening until yesterday.

Mr Bolton said: “The workforce are not to blame, they have done everything they can to secure the future of this operation and I feel for them.”

Mr Bolton said he was at a loss to explain why the steel consortium had pulled out at a time when two members were looking at buying the plant.

He said: “This does seem strange and I am still none the wiser as to what was happening.

“They were continuing this process in a situation where the economy had reduced. It has not altered considerably in the space of a month.”

As of Thursday night, the plant stopped producing steel for the consortium, but had a small amount of other work to keep it going for the time being.

Geoff Waterfield, multiunion chairman for the Teesside works, said: “We are not standing here giving up.”

Redcar MP Vera Baird said she was “absolutely furious” with the consortium, and Ashok Kumar, MP for Middlesbrough South and East Cleveland, said it was a “stab in the back” for staff.

Alan Clarke, the chief executive of regional development agency One North East, will lead a response group, made up of employment experts, business leaders, the local authority and senior Corus officials, to try to secure the plant’s future.

No members of the consortium could be reached for comment last night.