Following the decision by India’s Tata Steel to sell all or part of its UK business, IPPR has looked at the potential job losses at the plants themselves and in the supply chain, in the event that no buyer can be found.
Tata Steel’s UK business employs 15,000 people, with a further 25,000 jobs in the supply chain estimated to depend on the steel plants. The largest plant is in Port Talbot, South Wales, where there are currently around 4,000 workers and a further 6,600 dependent jobs in the supply chain.
The supply chain job losses are likely to hit manufacturers and suppliers of iron, manufacturers of machinery, and processors and suppliers of coke and petroleum, some of which will be based outside of the UK.
Experts at IPPR say in reality the likely job losses related to the closure of Tata steel plants will be higher as these estimates do not capture the further impact of lost demand in the local economies from reduced spending power of workers and their families. This could lead to further business closures and job losses outside of the steel sector.
Alfie Stirling, IPPR Research Fellow, said:
“British steel is facing extremely difficult trading conditions with slowing demand for steel from China having knock on effects for the industry right across the world.
"In addition there is currently significant state investment in new steel facilities and plants from regions that are traditionally net importers of steel, such as North Africa and South East Asia. Combined with existing excess capacity in Europe, the US, Russia and China, this is widening the gap between the amount of steel the world can make and the amount it actually needs.
"The costs of sustaining all this excess capacity is biting heavily into the profit margins of steel producers around the world."
Figures for supply chain effects are based on IPPR analysis of ONS multipliers derived from 2010 ‘supply and use’ tables. Figures for employment are based on full-time equivalent jobs. Estimates of job losses down the supply chain are based on the assumption that output will fall as a result of job losses at the plant. As with all multipliers, these estimates will be subject to a margin of error. Further, these estimates do not take account of the fact that some people and suppliers will find business elsewhere, and that some affected suppliers will be located outside of the UK. They therefore represent estimates of gross job losses, not net.