Morgan was joined by Welsh secretary Paul Murphy and trade secretary Stephen Byers at 10 Downing Street, where talks continued with Blair on a possible rescue plan to save the Corus’ Welsh steel carbon plant.
The closure would force 3,000 workers out of their jobs and would form part of large-scale restructuring plans at Corus to cut massive losses in its steel carbon division.
But reports in today’s press suggest Corus is already in advanced talks with its bankers, ABN Amro and Dresdner Bank, to renegotiate its Pounds 1.7bn debt. The move could make funds available to the steel manufacturer to pay off 7,000 workers at its British operations.
Corus’ merger with Dutch steelmaker Hoogovens created a complex debt structure and renegotiating its debt would increase its financial flexibility.
In addition, a Corus spokesperson told AccountancyAge.com: ‘We are currently reviewing all our operations in the UK, and closures and job reductions are still likely to take place.?’
The steel industry has plunged into crisis due to a shrinking UK carbon steel manufacturing industry, the euro/sterling exchange rate and the increasing number of imported steel products.
As a result Corus recorded a loss of Pounds 226m in its steel carbon division for the first six months of 2000, despite its stainless steel and aluminium operations making healthy profits. For the nine months to 1 July 2000, the Group made a combined operating loss of Pounds 96m.
Last week, AccountancyAge.com reported that the proposed climate change levy would further cripple the competitiveness of the UK’s steel industry, with Corus having to pay the lion’s share of an annual Pounds 10m tax.
In addition it would have to fund a Pounds 40m upgrade of its operations to meet DTI environmental requirements. Over the next five years, environmental upgrades and taxes could cost Corus as much as Pounds 80m.
Since then, things have gone from bad to worse for the beleaguered conglomerate as unions prepare to mobilise support for a strike and the government demands Corus pay a £800m for an environmental clean-up.
A report in this weekend’s Sunday Business said the Iron & Steel Trades Confederation, which represents most of the workers at Llanwern and Redcar, a plant on Teeside, was planning a mass meeting this week to discuss strike action at a number of plants. Redcar has been earmarked for large-scale job cuts.
An announcement on restructuring plans is expected by Corus Group chairman Sir Brian Moffat in the next few weeks with analysts remaining divided at the prospects for Corus after its restructuring
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