Thousands of Corus jobs under threat in Teesside

May 8 2009 by Karen Dent

TWO THOUSAND Corus steelworkers today look certain to lose their jobs after their largest customers pulled out of a deal to supply North East's biggest steel plant for the next five years.

Steelmaker Corus said it was pursuing a "number of legal options" after three members of the consortium that signed a 10-year deal with Teeside Cast Products (TCP) in Redcar in 2004 walked out on the agreement.

It emerged today that the company had been locked in a bitter legal dispute since the beginning of April, but it had failed to get a notice of termination overturned.

Jon Bolton, Teesside Cast Products managing director, voiced his anger at the actions of a consortium, which included the companies expected to buy the Redcar plant, minutes before delivering the shocking news to his workers.

"The stark reality is that we do not have any orders. It will mean mass redundances. They will be coming in to the worst possible news", he said.

The company had also been half-way through negotiations to sell the plant to two of the consortium members for around £328m - but that now looked "dead in the wate"’, Mr Bolton added. "We are now going to mothball the plant."

TCP relied on the consortium - made up of Marcegaglia, Dongkuk, Duferco, Ternium and Corus itself - for 100% of its throughput. After four of the customers withdrew on April 7, it was left with the rump of its order book made up with just 22% of Corus work.

With the Indian owned-company itself in a battle for survival and through-put at other Corus plants severely depressed, even that was not sustainable, said Mr Bolton. "There is not a lot of scope. It will keep everybody employed for a short time - at least for as long as the 90-day consultation period."

Mr Bolton said Corus bosses had been shocked and angered by the consortium’s decision.

"This has been irresponsible behaviour," he said. "They had no right to terminate the supply agreement. It was meant to last 10 years and we have only had 45% of that.

"They have had extremely good value from this relationship, but as a result of the economic downturn they wanted to exit. Our view is that they have not done that legally."

Since last autumn, when steel orders the world over took a nosedive, workers at the plant have got behind the firm to cut costs and increase efficiencies, pushing the blast furnace to its limits. At one point, it looked as though the plant could emerge from the recession as a niche product supplier.