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Research shows ‘devastating’ impact of closing Port Talbot’s blast furnaces

26 Jun 2024 5 minute read
Town of Steel. Image: BBC

The closure of the blast furnaces at the Tata steel-works in Port Talbot could cost the town’s local economy more than £200m a year in lost wages. That’s the stark conclusion of new research for BBC Wales.

The analysis was carried out for BBC Wales Investigates by economics Professor Calvin Jones of Cardiff University, who has followed the fortunes of the steel industry in Wales for decades.

He looked at the impact of job cuts at Tata sites across Wales, but it was in the town of Port Talbot where he found the most alarming results.

He said: “ We are talking about jobs that are paid 50% more than the Welsh average salary. When that knocks through into the shops and the hotels and the pubs and the taxis and all the other parts, you know, of the Port Talbot and other economies. The impact is bigger”.

What happens instead?

Professor Jones’s modelling of the loss of direct TATA steel jobs alone would see a 10% drop in the town’s gross earnings of £133 million, and if just half of the supply companies are based locally he estimates a 15% drop in gross wages.

“That’s 200 million pounds a year gone from a local economy until those people find new jobs or other employment comes in,” Professor Jones told the programme ” But you have to remember that Port Talbot is typically the second or third best paid local authority in Wales. That won’t be the case when those 2,000 jobs go. So, I guess the question will be what happens instead? In the same way as the miners’ strike, and thereafter, was the end of the era for the valleys, this is the end of an era for industrial south Wales.”

“A job for life”

One of those facing redundancy is 23-year-old Owen Midwinter. Like many others Owen hoped Tata could offer him a job for life. He is the third generation of his family to work at Port Talbot but, perhaps, now the last.

He said: “I’m training to become an operator on Number 4 furnace. When my two years is up there, I’ll be on a full-time role. Obviously, with all this news, I am not sure what, what’s going to happen then.”

Owen lives with his girlfriend Cori and between their joint salaries they can afford a mortgage. But news of the job cuts means the future is now very uncertain.

Cori shared: “Obviously if Owen loses his job it puts everything at risk, like the house . I mean we want to start a family soon, but everything is at risk until we know.”

And the wider community is expecting to feel the impact from the loss of the job cuts too. Mandie Pugh runs a breakfast café just a stone’s throw from the steelworks.  She says two thirds of her customers come from the steelworks: ”What people don’t realise is, from the veg man, window cleaner – people are not going to be able to afford it and things are not sustainable anymore.

People don’t realise the devastation that’s coming. It’s going to be like a ghost town here.”

Tata steel says it’s having to make the changes to stem years of heavy losses, and to ensure the steelworks has a future.

“Haemorrhaging cash”

Rajesh Nair is the Chief Executive of Tata Steel UK. He said: “We are haemorrhaging cash, and it’s not because of the lack of efforts of the people or the amount of money that we have been spending. It’s simply because we are.

“We have a set of assets which are end of life. We got to act now in order to make sure that you have a business in the near future.”

Tata  are committed to investing hundreds of millions to build a new “green” electric arc furnace which can make steel with much lower carbon missions.

The current Conservative Government has promised £500 million towards this project,  while Labour says it would offer a better deal, without giving details.

The Liberal Democrats want a long-term vision for the steel industry while the Reform party say there is a risk the steel works would be a casualty of the ‘net zero vanity projects’.

Plaid Cymru argues that TATA’s site at Port Talbot ought to be nationalised to support a ‘just transition’ to ‘green steel’, while The Green Party has called for a green industrial strategy to create sustainable, green jobs.

Failing to plan

BBC Wales Investigates heard from experts and steelworkers who accused successive administrations of failing to plan for change.

Jess Ralston of the Energy and Climate Intelligence Unit has recently carried out research comparing how different countries are supporting their steel businesses to modernise. She thinks the UK is falling behind.

“We’ve got just one or two green steel projects in the pipeline. Europe has around 40. And it’s not just Europe – China, the US, the rest of the world is also looking at the future of steel, and the UK can’t really afford to stand still.

“The rest of the world is moving and unless we move with it, unfortunately we might see more job losses.”

BBC Wales Investigates: Town of Steel screens at 9pm on Thursday 27 June BBC One Wales and is available now on BBC iPlayer.


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Simon Hughes
Simon Hughes
18 days ago

There is more than the 2,000 job losses going on here. In total the knock on effect will be in the region of 20,000 jobs and businesses being lost. The impact locally will be similar to those experienced under the 1980’s mine closures. Another but no more significant negative effect of this policy will be a hit to our National Security. We will by closing this plant be at the behest or mercy of steel markets. This is because we will have lost the ability to make virgin steel. We will no longer have the capability to make still from… Read more »

Rhys Jones j
Rhys Jones j
17 days ago
Reply to  Simon Hughes

We lose the ability to make virgin steel from steel ore which we have to import from the rest of the world anyway.

Do you think the government should take on a buisness that currently makes loses of £365 MILLION a year? And then do you trust the government to turn that around and not make even further loses like Cardiff Airport?

No to 20mph
No to 20mph
17 days ago
Reply to  Simon Hughes

The Tories are still ‘penny pinching’ after Labours last big spend.
Welsh Labour (and soon UK Labour) actively want it gone because it doesn’t align with their ideals for a greener future.

Correct, we need a strong government, with a backbone that’ll stand up for working people again, but the main party’s have failed, who could possibly be up to the job?

Gareth
Gareth
18 days ago

The people of this area put their trust in UKIP and Brexit, where are they today, nowhere to be seen, is their illegitimate child “Reform” at the front of the fight, I think not. Lessons to be learned here, beware of what you wish for, while voting for a snake oil salesman.

No to 20mph
No to 20mph
17 days ago
Reply to  Gareth

And how would Reform be able to help exactly? They have never held any kind of power, you can disagree with their policies but they bare zero responsibility for the fate of TATA. As for Brexit, a democratic vote was held, Boris should hang his head in shame, he promised the best of both worlds but delivered the worst of both, it’s happened now time to move on and deal instead of victim blaming. Welsh Labour never put a penny towards helping the workers but their environmental policies did a good job hurrying the closure. The problems facing Port Talbot… Read more »

James
James
17 days ago
Reply to  Gareth

You are mental if you think brexit has anything to do with this. This has everything to do with the massive cost to tata for carbon tax. Speak with anyone who works there. The steel in port talbot is already more expensive than its competitors before its even made! This is totally down to carbon tax and bad policy making by tory and Welsh Labour government. You ask where are the brexit guys, well they are reform! Which want to scrap carbon zero and make our steel competitive. Its simple economics. Omg, you people live a in a different world,… Read more »

Last edited 17 days ago by James
Steve A Duggan
Steve A Duggan
18 days ago

This is part of the ongoing process of the last 40years – destroy Welsh industry and leave the area decimated and poor. The only way we are going to stop this carnage and reverse the poverty is through independence. Rejuvenation needs to be put into Welsh hands, not uncaring politicians 200miles away.

No to 20mph
No to 20mph
17 days ago

One of many sectors that have suffered under Welsh Labours climate policies. I’m not against a greener economy but I am against killing the economy and jobs in pursuit of ‘greeness’ (importing Chinese and Indian steel releases more carbon for a more expensive inferior product). I hardly expected them to buy it outright but they could have at least had a plan for the workers or supported a gentler transition to green energy. The writings been on the wall for years, the Tories bailed them out to the tune of a Billion pounds over the last 12 months alone. It… Read more »

James
James
17 days ago
Reply to  No to 20mph

Well said.

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