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Tata Steel’s job cuts, a tale of 2 press releases

23 November 2012

Today brings bad news that Tata Steel is to cut 900 jobs in the UK (at plants in South Wales, North Yorkshire, Teesside and the West Midlands). This is catastrophic news for a government that has announced its intention to rebalance the economy away from financial and professional services in the south-east (and therefore get an hearing electoral hearing in Britain’s former industrial heartlands); but that is only one aspect of the politics at play here. Tata’s statement says:

‘Today’s proposals are part of a strategy to transform ourselves into an all-weather steel producer, capable of succeeding in difficult economic conditions. These restructuring proposals will help make our business more successful and sustainable.’

In light of that statement, the Global Warming Policy Foundation argues that Tata has been forced to make this decision because the weight of carbon tariffs have made Britain uncompetitive; therefore, skilled manufacturing jobs in a ‘clean’ western economy are exported to ‘dirtier’ developing economies. There is considerable evidence, as I have written before, that the Foundation is not exaggerating the effects of Green policy as currently constituted. That’s not to say that the government should not have a Green policy; but it is to say that the present policy is counter-productive.

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The trade unions, when working for the interests of their members, have made precisely this point before, as I have reported here and here. Therefore, it is surprising that Unite, Britain’s largest union, neglects this argument in its statement about the Tata job losses. Instead, we get a partisan spiel from Len McCluskey:

‘Today’s news at Tata rounds off a dark seven days for the UK economy. Tens of thousands of people will be facing a Christmas of uncertainty thanks to the jobs carnage wrought by this government’s bungling handling of the economy.’ 

Unite claims that this latest announcement means that 20,000 jobs have been put at risk in the last week, with employers from Premier Foods (Hovis) to Standard Life announcing job cuts. Many of Unite’s estimated job loss figures fall in the food sector, which is experiencing volatility thanks in part to rising food prices and poor crop harvests. All job losses are deeply regrettable and ought to give government the occasion to review its industrial strategies and tax regimes; but it is odd to blame this government entirely for acts of God. Tata Steel’s decision, however, is not owing to an act of God. Indeed, it is something of which relevant trade unions, which weren’t so keen to pursue antediluvian partisan interests, might make more; because, as the Institute of Directors points out today, the government’s new Energy Bill entrenches many of the mistakes inherent in its existing energy policy. There are likely to be more bad days like this; and if my job was in manufacturing, I’d be utterly livid with Unite’s trivial statement.

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Show comments
  • eeore

    I wonder how much the energy costs are a smoke screen for a company that has received large subsidies (from the Labour government for reasons some might call gerrymandering) and having asset stripped, moved on.

    It would also be interesting, given Peter Mandelson’s role in the original deal, if this was discussed at the Bilderberg meeting in Chantilly, Virginia last June.

  • Daniel Maris

    The question is: why aren’t green energy policies affecting German performance in the same way?

    Tata Osborne – Excuse-Finder General.

    • Noa

      Good question. German steel production is down but energy costs are not highlighted. despite the massive power station expansion programme recently launched.

      Perhaps its because the German steel industry is still German owned and controls its own destiny….

    • Dimoto

      German industrial energy costs are heavily subsidised, to the growing discontent of the hoi polloi.
      But as an “expert”, I’m sure you knew that.

      • Daniel Maris

        It’s a v. sensible policy to pursue.

      • Aled Lumley

        I was under the impression that steel mills were effectively subsidised in energy terms anyway? I’m sure I read once that the Tata Cardiff branch had a 70% discount on their electricity because they could be turned off at any time if the network peaked and there was a requirement to reduce usage. (could be wrong..)

  • Forester126

    “Many of Unite’s estimated job loss figures fall in the food sector, which is experiencing volatility thanks in part to rising food prices and poor crop harvests”

    As I have said before, harvests were not really that bad worldwide, yes some countries had poorer crops but many other didn’t.

    It’s the diversion of crops into fuel usage that is causing the shortage and higher prices, so back again to the the Green agenda. Things are going to get much worse until Governments finally get the message.

    • HooksLaw

      it is a good point to mention the stupidity of growing food for fuel.

  • lgrundy

    And I’m sure the BBC will be highlighting the link between high green tariffs in Britain and jobs in manufacturing being moved overseas when they report the job losses on the six o’clock news tonight.

    • Forester126

      And they say irony is dead, Igrundy

  • In2minds

    ” because the weight of carbon tariffs have made Britain uncompetitive” – What ever happened to the ‘benefits’ of the green economy Mr Cameron?

  • Chris lancashire

    What an absolutely crass article demonstrating deep ignorance of manufacturing.
    It is unsurprising that any high energy consuming industry is still located in Europe, let alone UK. Are there any aluminium smelters left here? No, they are all in the Far East and Canada.
    The overwhelming majority of UK industry is not highly energy intensive but a lot is still labour intensive. And that is where the difference between UK/European labour costs and the Far East really hurts. It is, very, very slowly correcting itself as Far East living standards (and wages) rise but, at present rates, would take decades to equalise.
    I’m afraid that manufacturing employment will continue to steadily erode regardless of government policy. High energy costs certainly don’t help but they are a very small part of the story.
    Oh, by the way, let’s keep a sense of proportion. the loss of 900 Tata jobs is certainly bad news; but it’s not “catastrophic”.

    • Archimedes

      Oh yes, the “it’s only a tiny disadvantage, so it doesn’t matter” argument. This is how big disadvantages mount, through a complex web of thousands of similar pressures that all compound to create a thoroughly uncompetitive environment. If we’re going to have any chance of competing with the east, then we are going to have to get used to making lots of changes that each yield a fractional improvement.

      People seem to take the same position towards spending cuts – “it’s only £500 million, so it’s not worth doing”.

      • Chris lancashire

        I didn’t say it was a tiny disadvantage so it doesn’t matter. I said that, in much of manufacturing, energy costs were small in relation to labour costs. In my own business energy costs are less than 3% of combined energy and labour.

        Where you are correct is that cost improvement is a series of small changes each yielding a small improvement.

        And my original comment cannot be in any way compared to the attitude you describe towards public spending.
        i take it you make things for a living.

        • Archimedes

          Energy prices affect wage bargaining as consumer energy bills increase – which take up a large portion of an individuals income, so they also have an effect on your labour costs.

          • HooksLaw

            Supply and demand affect labour costs. Labour costs are being held down following on from the recession.

            It is quite right to point out that aluminium manufacturing for instance is highly energy dependent, which is why Norway with lots of hydro power are leading aluminium manufacturers.

          • Chris lancashire

            No, thought not.

    • itdoesntaddup

      You really do talk the most amazing nonsense. Labour costs are a very small element in steel making or aluminium smelting. This really is all about energy costs and highest global rates of carbon taxation – and the real stupidity is it will lead to substantial increases in global GHG emissions as production moves to China and India.

  • foxoles

    Well done Labour (Climate Change Act 2008) and the loopy LibDems (starring Windy-Miller-in-chief Ed Davey)!
    Greenies succeed in driving industry and jobs away, in obedience to their green goddess Gaia and her apocalyptic predictions!
    Still, I expect the smug moral glow of self-righteousness will keep them warm.
    Pity about the rest of us, though.

    • telemachus

      This comes hard on the heels of Jobcuts at Tata Corby

      Remember that the Corby workers had a message on this

      Cameron who was in town ahead of the byelection caused by Mensch’s decision to quit mistakenly visited & the Tata Steel workers rearranged their clocking-in
      board, added a little picture of Cameron, and said loud and clear—“Cameron

      Blame not Labour or LibDems these jobcuts are the Osborne triggered recession

      It is unfortunate that many of the areas served by Tata are high immigrant areas

      The House of Commons library figures show that rising unemployment has hit ethnic minorities harder than the population in general.

      Some 8 percent of workers in Britain are jobless. But among Asians the rate is 12 percent—and among African-Caribbeans it is 18 percent.

      Youth unemployment shows a similar pattern. Among 16-24 year olds in general the unemployment rate is 21 percent. Among Asians it is 31 percent and among
      African-Caribbean it is 45 percent.

      This impact on ethnic minorities comes at a time when austerity measures are forcing up unemployment levels.

      We need to focus on manufacturing jobs and we need to focus proactively to get
      ethnic minorities back in work.

      • HooksLaw

        No attempt to address the point of the article which is that dumb ‘green’ policies are driving jobs abroad.
        A recession in europe is however going to reduce demand for steel.

        • telemachus

          The green point is an irrelevant red herring
          The coalition are screwing manufacturing jobs because they do not provide the nourishing environment
          This, as noted above, predominantly affects minorities
          But hey what do Tory WASP’s care?

      • Noa

        Yep, walking down the road in Redcar I’m always being knocked into the gutter by innumerabemuscular miners of Pakistani origin coming off late shift at ‘mill.

      • Eric45

        There was high relative unemployment among foreigners/ethnic minorities during the new labour debt induced boom years – in fact for some of the groups the number is static – e.g. unemployment among Pakistani men and women – which points to “cultural” reasons.

        Anyway, we should be looking after our own first and foremost, the foreigner s/ethnic minorities can exercise the option of returning to their homelands.

    • Noa

      Yes, it puts greenie Davey’s smirking self-satisfied crowings to Euan Davis on Today in their correct perspective.

    • HellforLeather

      Ed Miliband was appointed Secretary of State for the newly-created Department of Energy and Climate Change on October 3, 2008, notes Wikipedia.

      “On 16 October, Miliband announced that the British government would legislate to oblige itself to cut greenhouse emissions by 80% by 2050, rather than the 60% cut in carbon dioxide emissions previously announced,” It notes.

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