British Steel’s Sale To Chinese Conglomerate Could Cost 500 Jobs

A proposed sale of British Steel to China’s Jingye Group could mean the loss of up to 500 jobs in exchange for the protection of pay and employment terms as negotiated by unions representing U.K. steelworkers.

The British steelmaker currently employs about 4,000 people in Scunthorpe and Teesside, both in northeastern England.

“The sale to Jingye is now firmly in sight and we would encourage all stakeholders in the business to focus on reaching a positive conclusion,” three trade unions -- The Community, Unite and GMB -- said in a joint statement on Friday.

However, unions have warned that the takeover may lead to the redundancy of more than 10% of its workforce – up to 500 jobs. Still, unions back the deal in order to secure the company’s future.

" These discussions [with Jingye] have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive change is required," the unions said. "We have made the argument that the business needs to ensure the plant can be run efficiently and safely.”

Jingye had agreed to a provisional deal last November to purchase British Steel’s assets and business for about $66 million.

Jingye has since pledged to invest some $15.7 billion into British Steel over the next decade – a promise the unions praised.

“[The deal] will pave the way for significant investment in the company that will transform the business and allow it to succeed,” Jingye Group CEO Li Huiming said in a statement.

British Steel produces high-margin, long steel products which are used in construction and the rail sector.

When British Steel collapsed last June, control of its holding company transferred to the U.K. Insolvency Service, an agency of the government’s Department for Business, Energy and Industrial Strategy.

The British government has been providing an indemnity to fund the operation of British Steel, a business reportedly losing up to $1.3 million a day.

"Everyone wants to see British Steel survive and thrive," said Harish Patel at union Unite. "If employees are making sacrifices, then they need to see that this is done in return for investment that can make the business successful and secure jobs for the long term.”

Ross Murdoch, national officer for GMB union said: “In endorsing this package in principle, the trade unions believe they have struck the right balance between delivering cost savings and maintaining jobs with decent terms and conditions to drive the new business forward. It also includes a positive and innovative business plan for the future, which hopefully will secure employment for many years going forward.”

Alasdair McDiarmid, operations director for the Community union, said: “We used the opportunity to shape Jingye’s proposals in the best interests of our members. Faced with challenging circumstances we believe that the dialogue between Jingye and the unions has produced a better deal for employees than what was otherwise on the table. We look forward to working with everyone to securing the future of British Steel under Jingye’s ownership.”

The sale remains subject to regulatory approvals. The French government’s approval is also necessary for the sale of British Steel’s plant in Hayange in northeastern France.

Jingye expects to complete the takeover in the first quarter of this year.

However, if the sale does not go through, British Steel would likely be broken up and sold in parts.

The Guardian reported on Wednesday that the British government was holding discussions with another potential buyer -- Turkey’s Cengiz Holdings -- in the event the Jingye deal collapses.