Pressure ramps up on owner Greybull over British Steel's 'Brexit' crisis

By Scunthorpe Telegraph | Posted: 16 May 2019

Calls have been made to the owner of British Steel to ensure it “delivers on its responsibilities” to the workforce, with Greybull’s “limited risk” flagged up by both the key union and Scunthorpe’s MP.

The town-headquartered industrial giant has confirmed it is seeking urgent Government support to ensure it can continue operating, following reports which suggested it could go to the wall unless it received an emergency cash bailout.

In a shock development earlier this week British Steel was reported by Sky News to be trying to urgently borrow £75 million and ministers were said to be actively considering the move.

In a statement, the company blamed uncertainty over Brexit for current problems but insisted it was trying to “navigate through” the issues.

The Community union, which is the largest on the Scunthorpe site, is in “ongoing discussions” with management over the development and said a collapse of the firm, which employs 4,000 people in the town, would be “devastating for thousands of workers and their families”.

British Steel is owned by private equity firm Greybull Capital which took over the Scunthorpe works in 2016 from former owner Tata Steel - for a nominal £1. 

And Community said uncertainty over leaving the European Union was not the only factor contributing to current issues and urged all parties to work together to reach an agreement.  Prime Minister Theresa May also name-checked Greybull in the House of Commons after being questioned about the issue.

The Community statement said: “This is of course an extremely concerning time for our members at British Steel. Everyone needs to do everything possible to give the company the chance of a future.

“We would urge all parties to recognise the consequences of not taking the necessary steps to ensure British Steel can continue. Nobody wants to see another tragedy like SSI (the Teesside failure in he same industry).

“Community welcomed the recent announcement that the Government would lend British Steel £120 million to cover the costs of their 2018 carbon emissions.

“British Steel had not been awarded their carbon credit allocations as normal under the scheme due to Brexit. It is right that the Government compensates companies that are suffering due to the government’s failure to resolve Brexit.

“However, Brexit is not the only factor contributing to the situation at British Steel and it is not solely the Government’s responsibility to find a solution to keep the company trading. That’s why in recent days Community has been in dialogue with British Steel management, the Government, and the owner Greybull Capital, to impress on all parties the importance of reaching an agreement.”

As efforts continue in a bid to secure British Steel’s future, Community said the coming days would be a test of Greybull’s commitment to the industry.

The union’s statement said: “When in 2016 Greybull bought Tata Steel’s long products division and formed British Steel, Community welcomed their involvement and has worked constructively with the owner since that time. But we should be clear that through acquiring the business, Greybull also took on responsibility for nearly 5,000 jobs and for the communities and supply chains that depend on these steel plants.

“Greybull gave the business a way forward at a time when there were few options available. However since 2016, Greybull has taken on limited risk and the coming hours and days will be a true test of their commitment to the UK steel industry. Greybull must step up and deliver on their social and moral responsibilities to the workforce.

“It is vital an agreement is reached between the owners and the Government that keeps the business running and capable of delivering the capital investment plan.

“Furthermore, British Steel must not become a political football and we call on politicians from all parties to work together to find a solution that secures the jobs and the business going forward.

“There are no easy solutions to the challenges faced by British Steel and indeed other UK steel companies.”

The call from the Community union was echoed by Scunthorpe MP Nic Dakin, pictured left, almost word for word.

He said: “I am confident that the Government, British Steel and key stakeholders are working hard to get through the challenges facing the business caused by the uncertainties caused by the process of leaving the EU.

“When in 2016 Greybull bought Tata Steel’s long products division and formed British Steel it was good news for the business and the community. 

“By taking over the business, Greybull also took on responsibility for nearly 5,000 jobs and for the communities and supply chains that depend on these steel plants.  In meetings with local MPs and other stakeholders they were keen to impress on us their credentials as responsible employers.

“Greybull gave the business a way forward  The management team and the workforce responded to the challenges of the new ownership by building a strong business. 

“However, since 2016 Greybull has taken on limited risk itself.  The challenges now are a real test of their commitment to the UK steel industry. Greybull must step up and deliver on their social and moral responsibilities to the workforce, the industry and the community that they took on when they acquired this company.

“It’s important everyone continues to do all they can to get us through this period of uncertainty so this business can deliver as well in the future as it has in the past.  I will continue to do everything I can, remaining fully focused on this situation.”

No-one from Greybull was immediately available to respond. A case study on the corporate website reads: “Greybull bought Tata Steel’s European Long Products Division in June 2016, saving more than 4,400 jobs in the UK and 400 in France. The business was renamed British Steel. Greybull provided significant capital to the business and arranged a financing package of over £400 million.

“Working in partnership with the management team and employees, Greybull backed a turnaround of the business which transformed British Steel from being loss-making division in 2016 to a profitable standalone company in 2017. Since its relaunch, British Steel has hired over 1000 new employees and apprentices, completed its first acquisition by buying FN Steel in the Netherlands and spent over £75 million on capital expenditure.

“Employees share in the success of British Steel through the profit and share ownership schemes which Greybull has created.”

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