Caparo’s hammer blow for UK steel
ANOTHER 1,700 jobs in the steel industry were under threat last night after Caparo Industries, founded by Labour peer Lord Paul, f ell i nto administration.
The crisis facing the steel industry has worsened rapidly in recent weeks. Tumbling prices, a surge in cheap Chinese imports, the strong pound and large green tax bills have crippled the sector. Up to 5,000 jobs have either been lost or are in danger this month – 15pc of the sector’s 30,000 strong workforce.
Caparo, which operates from around 20 sites across the UK as well as in India and the US, filed for administration in a Birmingham court. Accountant PwC, which is acting as administrator, is trying to find a buyer for 16 businesses based in the Midlands as well as in Manchester, Hartlepool, Bristol and Wales.
Caparo Industries Plc made a £5.3m loss in 2014, following a loss of £3.4m the year before. Turnover fell 1.3pc last year to £368.1m and it has bank debts of £54m due to be repaid next June.
It follows the liquidation of Thaiowned SSI’s Redcar plant in the North-East with the loss of around 2,000 jobs earlier this month.
Indian- owned Tata Steel is expected to announce up to 1,200 redundancies in Scunthorpe and Scotland today.
Caparo’s operations include steel tube and pipe making as well as companies involved in engineering and technology.
The Caparo empire was founded in 1968 by Indian-born Lord Paul, who is now chairman. He is one of Britain’s wealthiest people with a fortune of more than £2bn. Many of the group’s global subsidiaries are unaffected by the administration including those in hotels, media and financial services.
Matt Hammond, partner at PwC, said: ‘Steel prices and exchange rates have had an impact on some parts of the Caparo Industries group. Our focus is on briefing staff across the group and working closely with their management teams to ensure that every opportunity for these businesses is considered. We will be working with all parties to ensure the best outcome for all creditors of each business.’
The news of Caparo’s troubles emerged as the steel industry called on Prime Minister David Cameron to tackle steel-dumping by China when he meets the country’s President Xi Jinping this week.
Britain’s steelmakers are blaming their woes on China, accusing the country of flooding world markets with cheap steel. Many of China’s steel manufacturers have received heavy subsidies at home and have continued to produce even as demand has fallen, which has led to a glut on world markets.
According to UK Steel, the price of Chinese steel has been consistently below market rates with an excess capacity last year of 340m tonnes, more than double the EU’s annual steel demand of 155m tonnes. WorldSteel predicts global steel demand is forecast to record a 2pc year on year fall.
Gareth Stace, a director at UK Steel, said: ‘As well as reinforcing the need for the EU to tackle unfair dumping of steel across Europe, Cameron’s intervention would send a powerful signal to Beijing that he is prepared to stand up for British steelmakers.’
The Government last week held a Steel Summit in Rotherham. Business secretary Sajid Javid set up working groups chaired by ministers to address the issues facing the sector. However, Angela Eagle, shadow business secretary, said: ‘This Government seems content to let the industry fail.’
Roy Rickhuss, general secretary of steelworkers’ union Community, said: ‘This news is another devastating blow to Britain’s steel industry. Crippling energy costs and the dumping of cheap Chinese steel is threatening the very future of the UK’s steel sector.’