The potential closure of a historic steel plant in Gateshead would come as a “major blow” to the town, its council leader says.
Martin Gannon has bemoaned the loss of “too many high-quality employers” from Gateshead, after it emerged last week that around 180 jobs at Union Electric Steel are under threat.
Bosses at the company confirmed last week that they have launched a consultation on closing its prominent plant next to the Gateshead Flyover, which has produced steel for more than 150 years and was formerly the Davy Roll Company before it was acquired in 1999.
Last Wednesday, the firm said its UK arm had been in a loss-making position for the past three years, which had become “unsustainable”.
Speaking to the Local Democracy Reporting Service on Monday, Coun Gannon said that a closure of the plant would be a significant hit to the Gateshead economy.
The Labour council leader said: “It is a major blow. 180 people are directly employed there and those are high-quality jobs, and it has been a major employer in Gateshead for a long time.
“I have not directly spoken to management, although I have spoken to our MP Mark Ferguson who has, and to our chief executive and we have people here speaking to the management about what support can be given. At the moment I understand it is a consultation, they are looking at all options and the decision has not been made. We will do everything we can to support the company going forward.”
Reasons behind the potential closure
High energy costs, a lack of demand for its UK-made products, recently-announced increases to employers’ national insurance contributions, and the effects of Brexit were all highlighted by the company as factors behind the potential closure.
Coun Gannon compared the potential loss of Union Electric Steel, whose Gateshead site is the only plant in the UK, to job cuts that accompanied the end of De La Rue’s banknote printing operations at the Team Valley.
The firm also previously produced UK passports, before a controversial decision from the Conservative Government in 2018 to award the contract to make the post-Brexit blue passports to a French company instead.
Coun Gannon said: “We are losing too many high-quality employers in Gateshead. All my life, De La Rue in the Team Valley was recognised as one of those employers which was really high-quality, very well-paid, a good employer. I went down and visited when they were producing the passport there, the nice burgundy passport. Boris and his friends, through Brexit, promised we could have a nice British blue passport that was contracted to a French company… as a consequence of losing that contract, though I’m sure there were many other factors around the decline in the use of money and all kinds of other things, that was the final thing that resulted in the closure and the loss of that facility in Gateshead.
“Again, I note that in the company’s [Union Electric Steel’s] statement Brexit is mentioned as one of the reasons why they are struggling.”
Will Garrett, managing director at Union Electric Steel UK Limited, said last week that it was an “incredibly difficult situation”
He added: “Our priority during this consultation period is to support our staff, provide guidance and fully investigate all other possible options. This proposal is at a very early stage, and depending on the outcome of these investigations, may not go ahead.
“We still have an order book for 2025, and we will continue to operate as usual throughout this consultation period. If the proposal is implemented, we consider it would not take effect before December 31, 2025. Union Electric Steel UK Limited remains focused on producing high-quality products, as we have done for over 150 years.”
CLICK HERE TO DONATE TO OUR CROWDFUNDER
HELP US BECOME STRONGER SO THAT WE CAN CONTINUE TO DELIVER POWERFUL CITIZEN JOURNALISM!
