Indian giant Tata Steel today pledged to stay in Britain with a 10-year commitment to a one-billion-pound (Rs 8500 crore) investment plan to support steelmaking at its UK plants, unions said Wednesday.
The investment plan is a part of crucial talks with steelworkers' unions to save thousands of jobs in the UK which will includes a proposal to close the pension scheme.
The Indian steel giant offered a number of guarantees to its staff at Port Talbot steelworks in south Wales, the UK's largest steel plant, including a minimum five-year guarantee to keep both furnaces operational at the site.
Tata said it has reached an agreement with the trade unions "to progress towards the closure" of its defined benefit pension scheme to future accrual.
The company will next week start a consultation with its employees on a proposal to close the British Steel Pension Scheme, which has liabilities of over 15 billion pound, and offer employees a "competitive defined contribution scheme" in its place.
The company explained that as part of the current agreement, all parties will work towards making Tata Steel UK a sustainable business.
According to the company, the agreement with trade unions would structurally reduce risks and help secure a more sustainable future for its British business.
"Employees would be offered a competitive defined contribution scheme," the company said in a statement.
The future of its UK business will remain contingent on a solution being achieved to the pension scheme.
"Tata Steel UK has developed a long-term investment plan to make the business more competitive in the future. The delivery of the transformation plan in the next couple of years, combined with a structural solution for the British Steel Pension Scheme fund, is essential to provide the affordability and financial self-sufficiency for future investments and also service its financial obligation to its stakeholders," said Koushik Chatterjee, Group Executive Director Tata Steel and Executive Director for Tata Steel's European business.
The company said the agreement between Tata Steel UK and the unions marks an important step forward in the journey to develop a "sustainable future for our UK steel business".
Stressing that these are "unprecedented times for the steel industry globally" and thereforemuch more work remains to be done to make Tata Steel UK more "financially sustainable", he added: "The proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability. We are also working separately on a necessary structural solution for the British Steel Pension Scheme fund.
"The trade unions and the company have worked hard to reach today's agreement and I would like to thank them for their efforts and seek their continued support in the future.
"We look to other stakeholders such as the UK Government to play their part in addressing the UK's manufacturing competitiveness position especially with relation to energy prices."
Unions said they have been offered a number of guarantees, including a minimum five-year guarantee to keep both furnaces operational at the site, to safeguard jobs.
Steelworkers will be balloted on the latest rescue deal struck by union representatives in the New Year.
Details of the deal include a guaranteed, minimum five-year commitment to two blast furnaces, a 10-year 1-billion-pound investment plan to support steel making at Port Talbot, and a consultation on replacing the current British Steel Pension Scheme with a "defined contribution scheme" with maximum contributions of 10 per cent from the company and 6 per cent from employees.
Tata Steel said both sides had agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration at Port Talbot until 2021.
Further, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, Tata Steel will continue to invest across the UK sites to enhance the competitive position of Tata Steel UK in the European steel industry.
(With PTI inputs)
