Thousands of Corus jobs under threat in Teesside

May 8 2009 by Karen Dent

"The biggest disappointment for me is a lot of people on Teesside have put a lot of hard work into making this consortium agreement work", said Mr Bolton.

"We have produced niche products and demonstrated our flexibility by taking the volume down at the consortium’s request and demonstrated value to the point that two of them wre interested in buying into the business. One and a half months later to be served this termination.... I really feel for everybody here on the plant. It’s an irresponsible way to go about running a business.

"This has gone all the way to the top of Corus. The reaction has been stronger than I can every remember and they won't let it drop."

North East minister Nick Brown said: "This is devastating news. The loss of one contract has taken away 70% of the work for the Redcar plant. I am in urgent discussions with the department for business and regional office to see what we can do. I have already discussed the matter with the Prime Minister."

Corus announced the Marcegaglia deal three months ago when it also revealed plans to axe 3,500 jobs worldwide.TCP has been run as a separate business since a Corus restructuring operation in 2005.

The closure of the plant is likely to cost many more jobs in the supply chain and will mean less work for Teesport, which has already delayed plans for a massive expansion because of falling demand at its parent company Babcock.

A statement from Corus said: "Corus regrets to announce that it has been forced to open consultations that might result in a decision to mothball its Teesside Cast Products (TCP) plant in northeast England.

"This development has become unavoidable because of a failure by four international slab buyers to fulfil their obligations under an Offtake Framework Agreement (OFA). The OFA was signed with Corus in 2004 and committed the consortium to buy just under 78% of the plant’s production for ten years."

The company has today begun discussions with employees and their representatives about what can be done to mitigate the impact of mothballing the plant on the 1,920 TCP employees and what future action may be needed. Any decision to mothball is likely to lead to a very significant number of redundancies.

The signatories to the OFA, which include Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd1 and Alvory SA2, agreed to buy their share of TCP’s output at cash cost.

Over the duration of the contract so far the consortium members have benefited tremendously. Despite this, last month the consortium unilaterally and unreasonably initiated moves to terminate the contract, thereby making the TCP operation unviable.

Corus is using all legal means to ensure that the terms of the 10-year OFA are fully enforced and that the four consortium members live up to their contractual obligations. Alongside these actions Corus will explore alternative options that might secure a viable future for TCP and its employees.

"I am extremely disappointed that the consortium members have seen fit to take this irresponsible action," said Corus CEO Kirby Adams. "Their unilateral termination of a legally binding 10-year contract could bring to an end a fine heritage of steelmaking at Teesside. We regret the distress their action will cause TCP’s dedicated employees, who have worked steadfastly in the interests of the consortium."