With Tata Steel’s troubled British operations up for sale, Dutch workers at its only other European site for primary steelmaking are in defensive mood, and yet the plant may have a bright future.
‘We won’t let them wreck our plant’ is their motto, directed at top managers of the Indian-owned group; some of the 9,000 staff at the IJmuiden plant on the Dutch North Sea coast even wear it to work on their safety helmets.
The slogan dates from contract talks last year but shows their defiant spirit during uncertain times for a European steel industry beset by overcapacity and cheap Chinese competition.
More than 11,000 jobs are at risk at Tata's British plants but in the Netherlands, IJmuiden has several advantages, not least that it is excluded from the British sale process and, industrial sources say, it makes a profit.
Tata reported an overall loss for its European steelmaking operations of $90 million for the financial year 2015-16, which analysts said equated to $15 per tonne.
The company won't break down the figures but the British operations — including the country's biggest steelworks in the South Wales town of Port Talbot — are estimated to have lost more than a million pounds ($1.5 million) a day.
By contrast, the industrial sources put Ijmuiden’s profit margins at about three per cent, albeit down from around 30 per cent in 2007 at the peak of the steel boom that has since turned into a bust.
Dutch trade union leaders say returns would have been higher if Tata’s leaders hadn’t diverted investment to Britain, in the hope of correcting a history of poor performance and underinvestment in the steel industry there.
“We’re very sorry for the English, but they should have invested here,” said Peter Kos, a 65-year-old union official who has been a steelworker at IJmuiden since he was 16.
Tata will not disclose all figures, but a spokesman said it has invested 1.5 billion pounds on upgrading the British plants since it bought the Anglo-Dutch steelmaker Corus in 2007 and “broadly the same across the main European operations”.
Another Dutch union official said the bulk should have gone to the Netherlands. “If they had invested the money in IJmuiden, we would have been top of the world,” said Aad in ’t Veld from the FNV federation.
Notwithstanding such intra-plant rivalries, both Dutch and British workers say Tata has been a good boss, but at least for Britain the investment came too late.
London financial elite
Problems in the British steel industry long predate Tata's involvement. As state-owned British Steel, it was often starved of investment to modernise plants. Then after privatisation in 1988 it came under different pressures.
According to Peter Joustra, a former managing director at the IJmuiden plant, the British operations fell victim to short-term investment decisions aimed at pleasing shareholders.
By contrast, he says the European model of business helped to protect the Dutch plant, founded in 1918 by the Koninklijke Hoogovens firm, and to ensure a long-term investment strategy focused on innovation.
British Steel and Hoogovens merged in 1999 to create Corus, the firm Tata bought eight years later after a bidding war that pushed the price up to $12.9 billion.
At the time, China’s demand for foreign-made steel seemed almost insatiable but with the economy there now slowing sharply, the flow has turned. Chinese plants are flooding the world market with steel they cannot sell at home.
Today Tata has four European sites for primary steelmaking: Port Talbot, Scunthorpe and Rotherham — among the British plants it wants to sell — and IJmuiden, which lies at the entrance of the North Sea Canal leading to Amsterdam and the European inland waterway system.
On top of that, Tata has secondary plants across Europe that turn the crude steel into products for use in everything from transport and construction to motor manufacturing.
At IJmuiden city hall, alderman Ronald Vennik has no doubt where Tata should always have concentrated its efforts. “Maybe it's because I live here, but I think it took too long for the management of Tata to make a rational decision. The rational decision is to stop in Britain,” he said. —Reuters
Published - June 01, 2016 12:00 am IST
