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

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.