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Tata steelworkers prepare to strike as gloom descends on Port Talbot again Tata steelworkers prepare to strike as gloom descends on Port Talbot again
(35 minutes later)
Plumes of dark smoke spiral from the chimney stacks sticking out of the grey dirt around Port Talbot docks. It is not a pretty sight, but this industrial mess of blast furnaces, warehouses and cooling towers has been at the centre of modern steelmaking in these parts since 1902.Plumes of dark smoke spiral from the chimney stacks sticking out of the grey dirt around Port Talbot docks. It is not a pretty sight, but this industrial mess of blast furnaces, warehouses and cooling towers has been at the centre of modern steelmaking in these parts since 1902.
This south Wales town, like the British steel industry, has seen better days. But things are about to take a new turn for the worse. On Monday 22 June, around 17,000 workers at Tata Steel plants across the country will bring Britain’s steel industry to a halt with the first national strike for 35 years.This south Wales town, like the British steel industry, has seen better days. But things are about to take a new turn for the worse. On Monday 22 June, around 17,000 workers at Tata Steel plants across the country will bring Britain’s steel industry to a halt with the first national strike for 35 years.
Related: Tata Steel UK workers to strike in dispute over pensionsRelated: Tata Steel UK workers to strike in dispute over pensions
The walkout is a response to Tata’s plan to close the British Steel pension scheme. Tata, an Indian conglomerate, has owned British Steel’s remaining operations since 2007 when it bought Corus, the Anglo-Dutch steelmaker, for £6.7bn in a debt-fuelled deal.The walkout is a response to Tata’s plan to close the British Steel pension scheme. Tata, an Indian conglomerate, has owned British Steel’s remaining operations since 2007 when it bought Corus, the Anglo-Dutch steelmaker, for £6.7bn in a debt-fuelled deal.
It now wants to shut the final salary scheme to existing members and scrap provisions that allow members to retire early at 60, which the steelmaker says is a huge financial burden. The move effectively raises the retirement age to 65. It now wants to end the final salary scheme for existing members and scrap provisions that allow members to retire early at 60, which the steelmaker says is a huge financial burden. The move effectively raises the retirement age to 65.
John Tetsill is the third generation of his family to work at the Port Talbot steelworks and is also a member of the Community union’s national executive committee. He said attacking workers’ pensions was a step too far and that the workforce felt betrayed. “Since 2008, the market conditions have been hard and everything we’ve been asked to do has been done,” Tetsill said.John Tetsill is the third generation of his family to work at the Port Talbot steelworks and is also a member of the Community union’s national executive committee. He said attacking workers’ pensions was a step too far and that the workforce felt betrayed. “Since 2008, the market conditions have been hard and everything we’ve been asked to do has been done,” Tetsill said.
Union leaders fear the pension changes could compromise safety and lead to an increase in serious accidents, or even fatalities. One Port Talbot steelworker, in his early 40s, warned: “Working 12-hour shifts at my age is hard, but at 65 it’s going to be dangerous.”Union leaders fear the pension changes could compromise safety and lead to an increase in serious accidents, or even fatalities. One Port Talbot steelworker, in his early 40s, warned: “Working 12-hour shifts at my age is hard, but at 65 it’s going to be dangerous.”
The steel giant must also be careful that its UK issues do not poison the rest of its European business. Union sources said that LNV, a large Dutch union, has already reassured British colleagues that its membership will refuse any work sent to plants in the Netherlands from Britain during the strike. The steel company must also be careful that its UK issues do not poison the rest of its European business. Union sources said that LNV, a large Dutch union, has already reassured British colleagues that its membership will refuse any work sent to plants in the Netherlands from Britain during the strike.
Tata Steel employs 17,000 around the UK, including 4,000 at Port Talbot, its largest site. The steelmaker’s Indian parent also owns Jaguar Land Rover and Tetley Tea. It formed Tata Steel Europe when it snapped up Corus.Tata Steel employs 17,000 around the UK, including 4,000 at Port Talbot, its largest site. The steelmaker’s Indian parent also owns Jaguar Land Rover and Tetley Tea. It formed Tata Steel Europe when it snapped up Corus.
Since then, the steelmaker has been hit by a toxic combination of high debts, falling demand and cut-throat Chinese competition. Last year, Tata Steel Europe racked up a loss of £402m ($615m), which followed a record loss of £1.2bn in the year to March 2013. Since then, the steelmaker has been hit by a toxic combination of high debts, falling demand and cut-throat Chinese competition. Last year, Tata Steel Europe racked up a loss of £402m, which followed a record loss of £1.2bn in the year to March 2013.
The ailing group has responded by axing thousands of British jobs, selling assets and writing down the value of its European business by $2.6bn (£1.7bn). It also closed the gold-plated pension scheme – one of the biggest in Britain with almost £14bn of assets – to new entrants last year. The ailing group has responded by axing thousands of British jobs, selling assets and writing down the value of its European business by £1.7bn. It also closed the gold-plated pension scheme – one of the biggest in Britain with almost £14bn in assets – to new entrants last year.
Related: Welsh town with steel at its heart casts a wary eye at the futureRelated: Welsh town with steel at its heart casts a wary eye at the future
New employees instead join a defined contribution pension scheme into which Tata pays 10% of salary – about the average contribution to these sorts of pension plans, but less than the more generous final salary scheme.New employees instead join a defined contribution pension scheme into which Tata pays 10% of salary – about the average contribution to these sorts of pension plans, but less than the more generous final salary scheme.
Despite this, Tata said more drastic measures were needed to address its spiralling pension liabilities. It estimates that the most recent triennial valuation, to March 2014, will show the pension deficit has ballooned to a whopping £2bn, up from £550m in 2011.Despite this, Tata said more drastic measures were needed to address its spiralling pension liabilities. It estimates that the most recent triennial valuation, to March 2014, will show the pension deficit has ballooned to a whopping £2bn, up from £550m in 2011.
It is thought this pensions black hole has continued to mushroom since that least valuation as a result of lower gilt yields. Tata said: “Everyone agrees that change is needed to resolve the challenges facing our pension scheme, which has a projected shortfall of more than £2bn.” It is thought this pensions black hole has continued to widen since that last valuation as a result of lower gilt yields. Tata said: “Everyone agrees that change is needed to resolve the challenges facing our pension scheme, which has a projected shortfall of more than £2bn.”
On Wednesday, Karl-Ulrich Kohler, chief executive of Tata Steel Europe, will attempt to calm heightening tensions when he meets with MPs from the all-party parliamentary group on steel. On Wednesday, Karl-Ulrich Köhler, chief executive of Tata Steel Europe, will try to calm rising tensions when he meets with MPs from the all-party parliamentary group on steel.
Tom Blenkinsop, chairman of the parliamentary group and MP for Middlesbrough South and East Cleveland, will ask Kohler why the steel giant has not funded the deficit. “They [the workers] could say, ‘I’ve paid 25 to 30 years of deferred income and now you are nicking it from me’,” Blenkinsop said. “For the workforce, they are willing to negotiate on everything but the pension.” Tom Blenkinsop, chairman of the parliamentary group and MP for Middlesbrough South and East Cleveland, will ask Köhler why the steel giant has not funded the deficit. “They [the workers] could say, ‘I’ve paid 25 to 30 years of deferred income and now you are nicking it from me’,” Blenkinsop said. “For the workforce, they are willing to negotiate on everything but the pension.”
This has been borne out by the staggeringly high turnout and vote for industrial action by members of Community, the largest trade union at Tata Steel. In total, 88% voted in favour of strike action; that figure rose to 96% in Port Talbot. The national turnout was 76% and in Port Talbot it was 84%.This has been borne out by the staggeringly high turnout and vote for industrial action by members of Community, the largest trade union at Tata Steel. In total, 88% voted in favour of strike action; that figure rose to 96% in Port Talbot. The national turnout was 76% and in Port Talbot it was 84%.
Tata pointed out that the total turnout, across all four big unions (GMB, Unite, Ucatt and Community), was around 59%.Tata pointed out that the total turnout, across all four big unions (GMB, Unite, Ucatt and Community), was around 59%.
Blenkinsop believes Tata has misjudged the strength of opposition among its workforce and said the ballot results “should be ringing in Tata’s ears”. He urged the company to return to negotiations, listen to workers’ concerns and thrash out a concession agreement. “It’s going to be painful for the workforce, but it won’t be more painful than losing the defined benefit pension scheme,” he said. Blenkinsop believes Tata has misjudged the strength of opposition among its workforce and said the ballot results “should be ringing in Tata’s ears”. He urged the company to return to negotiations, listen to workers’ concerns and thrash out a concession agreement. “It’s going to be painful for the workforce, but it won’t be more painful than losing the final salary pension scheme,” he said.
Sources suggested Kohler and his team are working on four “mitigation measures” that will be revealed within days. One of these is almost certain to address union leaders’ concerns about scrapping the rules on early retirement at 60. Sources suggested Köhler and his team are working on four “mitigation measures” that will be revealed within days. One of these is almost certain to address union leaders’ concerns about scrapping the rules on early retirement at 60.
Related: Why doesn't Britain make things any more?Related: Why doesn't Britain make things any more?
Ultimately, Tata cannot afford to continue to fund a pension that has many thousands more members drawing out cash than are putting in. The scheme has 135,000 members: around 86,000 are retired and already drawing their pension; a further 33,000 are deferred members; and there are just 16,000 current employees who continue to pay contributions.Ultimately, Tata cannot afford to continue to fund a pension that has many thousands more members drawing out cash than are putting in. The scheme has 135,000 members: around 86,000 are retired and already drawing their pension; a further 33,000 are deferred members; and there are just 16,000 current employees who continue to pay contributions.
John Ralfe, a pensions consultant, reckons Tata’s move to close it will not make too much difference to the deficit in the scheme. He said: “Closing the scheme to existing employees won’t reduce the overall deficit by much, as most of the members have left the company and are already drawing a pension or waiting to draw a pension. Tata will still have most of the £2bn deficit to deal with.” John Ralfe, a pensions consultant, reckons Tata’s move to close the scheme will not make too much difference to the deficit in the scheme. He said: “Closing the scheme to existing employees won’t reduce the overall deficit by much, as most of the members have left the company and are already drawing a pension or waiting to draw a pension. Tata will still have most of the £2bn deficit to deal with.”
Ralfe said the company and trustees of the pension scheme will be agreeing deficit contributions as part of the 2014 actuarial valuation. This will then have to be approved by the pensions regulator.Ralfe said the company and trustees of the pension scheme will be agreeing deficit contributions as part of the 2014 actuarial valuation. This will then have to be approved by the pensions regulator.
But all this may have come too late for older Tata Steel workers, many of whom face huge uncertainty about their retirement incomes.But all this may have come too late for older Tata Steel workers, many of whom face huge uncertainty about their retirement incomes.
“They are just seeing the finishing line and now that’s been taken away,” Tetsill said. “A lot of people have been left floundering at the moment. Unfortunately, there will be bad feelings about Tata because they are taking our pension away.” “They are just seeing the finishing line and now that’s been taken away,” Tetsill said.
“A lot of people have been left floundering at the moment. Unfortunately, there will be bad feelings about Tata because they are taking our pension away.”
History of British SteelHistory of British Steel