THE shiny new face of Teesside steel is looking a little tarnished. After the celebration of the SSI deal and the confidence that brought back to the region, the harsh reality has returned with the news of the Tata job losses.
Steel isn’t stainless after all. It is a strong industry with the power to exert some influence on its own markets, but it’s as vulnerable as any other to the first lesson we all learned in secondary school economics: supply and demand.
The latest figures from the RICS reveals that firms were hit by falling workloads and higher build costs in the first three months of the year. Eleven per cent more surveyors in the region reported a decline rather than a rise in activity, with private industrial and public non-housing sectors suffering the most.
Material costs continue to rise, with 62% more surveyors reporting a rise than a fall in prices – up from 56% in the previous quarter.
RICS said the findings highlighted “an extremely negative picture” for construction firms in the North East. The timing is a damaging element of Tata’s announcement. A year or two further on and it would still have been awful news, but wouldn’t have had the spotlight of the ‘good guys’ at SSI turned on it to the same blinding extent.
Tata’s long products operations at Lackenby and Skinningrove have suffered from a massive downturn in infrastructure investment and construction activity.
They are still a major employer in the region, even after the sale of Teesside Cast Products earlier this year.
The Indian-owned firm currently employs more than 1,800 workers locally, although that could fall to around 1,400 if the 390 jobs are shed.
Tata has several key operations on Teesside including the beam mill at Lackenby which has changed the world’s skyline in a history spanning more than half a century. It has worked on some of the world’s most iconic structures and supplied thousands of tonnes of steel beams for the Olympic Stadium in London.
Tata has three mills in Hartlepool (20-inch, 42-inch and 84-inch) making steel pipes and tubes for a variety of sectors including the oil and gas exploration industry.
The special profiles site at Skinningrove and Darlington makes special-shaped steel products for the shipbuilding, mining and renewable energy sectors.
In 2006 it became the first Tata Steel business to win a Queen’s Award for Enterprise.
The Teesside Technology Centre at Grangetown carries out research into pioneering new products and technologies for the future. Last year, Tata and the Centre for Process Innovation announced they are to create a £5m national research facility at the centre to develop ways of turning waste products into high-grade fuels.
Following the TCP sale, Tata continues to run the Redcar bulk terminal iron ore and coal handling facility in partnership with SSI, employing around 90 people.
The people who set Teesside’s business agenda are determined not to be distracted from their confidence and the wave of optimism they have been carefully nurturing over the last few weeks.
Alastair Thomson, North East chairman of the Institute of Directors, said: “When you look at the history of economic recoveries there tends to be a trend of two steps forward and one back. Nothing ever goes in a straight line.
“The supply chain will be suffering but at least it has happened at a time when the market is generally looking up. There is the demand there. What that tells me is that international markets continue to be fairly buoyant. The Government spending cuts in this country won’t have that much of an effect on manufacturing, which is primarily an exporting industry.”
Tony Sarginson, EEF regional manager for the North East, said: “Our indications suggest that manufacturing is doing OK, with the low pound giving Teesside firms an edge.
“I’d like to hope that Tata’s announcement just a temporary blip. I think the future of Teesside manufacturing still looks incredibly good.”
Lib Dem MP Ian Swales has gone to considerable lengths to calm the situation and start the salvage operation – from a PR and an industry point of view.
He said: “The job market is intensely competitive at the moment so it is vital that those made redundant by Tata are given the support they need to get back into work.
“ The Government has recognised this and I am constantly pushing Teesside’s case to ministers so that the Government is fully aware of the area’s innate ability to manufacture and produce.
“The employment minister has once again made it clear that bringing jobs to the region is a key part of the Government's growth strategy. I am hopeful that this commitment – and the additional support promised by the Government – will help ease the blow.”
Planning for the future also means tapping into the next generation of workers – and the generation after that.
Tata Steel Special Profiles recently opened its doors to teachers and career advisers on Teesside, giving them an in-depth understanding of the business and its processes.
Works manager for Tata Steel Special Profiles, Steve Simms, said: “We are keen to develop our relationship with local education providers and career advisers as young people are the future of our business.
“The number of students choosing to study technology and engineering is falling and we are continually looking for ways to inspire and encourage them into a career in these fields.”
And Dave Nicol, Tata Steel works manager, said: “It’s about investing for the future. The focus is more on value rather than volume.”
There is no doubt the future of the plant is stronger for the announcement, however unpopular it is. Tata and every other business on Teesside has to plan for the future and has to have cast-iron foundations that can survive any market fluctuations.