TV Narendran, who is a first-time grandparent, has been able to soften her personality.
The CEO of Tata Steel – one of India’s leading businessmen – smiled when he revealed that he had only become a grandfather four months earlier. “And it’s great fun, because if the child cries you give them back.”
The 58-year old isn’t a softie. Just minutes before our meeting, when he was putting on the charms, he had stared union leaders straight in the eye and rejected their proposal to keep one of two blast furnaces open at Britain’s largest works in Port Talbot.
Tata Steel is now preparing to convert its production process to the electric arc (EAF), a technology more efficient and producing less CO2. This move will affect the livelihoods of about 2,800 South Wales residents.
Narendran agreed to meet in the Tata owned St James’ Court Hotel, Westminster where he held the union summit. One of the union leaders stomped out of the room while grumbling into his mobile: “It is just shit. It’s shit. “, as Narendran later said: “This business is brutal.”
It’s brutal. It is so bad that the BBC drama “The Way” has given Port Talbot the Hollywood treatment. The BBC drama was directed and starred by the award-winning Welsh actress Michael Sheen. The foreign owners are depicted as raiders, whose management operates on the basis of broken promises. Sheen said in February that it was “incredibly unfortunate” that the story they wrote came so close to the truth.
Narendran, seated in the library of the hotel’s plush rooms, was not interested in the story told by the millionaire. Tata Steel had penciled in a £380million loss for this year, which is more than £1million per day. “It is not sustainable.” “The status quo wasn’t an option.”
Narendran said that the end of Port Talbot’s blast furnaces, and the switchover to electric arc smelters, will mean “sovereign” steelmaking in the UK.
According to him, the Tata global conglomerate is still a benevolent organization that operates in the mold set by its founder Jamsetji Tata in 1864, whose picture hangs above us. In India, Jamsetji Tata is seen as a benevolent organisation that still operates in the mould set in 1864 by its founder Jamsetji Tata. His portrait hangs on the wall above us.
Tata is India’s largest conglomerate. There are 29 companies listed on the stock exchange, with a combined market capitalisation of about £250 billion. Tata Steel won a bidding battle with Brazil’s Companhia siderurgica nacional to acquire the FTSE 100 Steelmaker Corus for £6.7 billion in 2007. In the years following, a flood of cheap steel from China made its Port Talbot operation unprofitable. Tata says it has spent £5billion since acquiring Corus to support its operations.
Narendran: “People believe that we will continue to invest because we have done it for so long. “Hey, they can keep investing” is the feeling.
He said that enough was enough.
But union leaders remain defiant. One union leader insisted, “This isn’t over”. They want to keep one of two blast furnaces open in Port Talbot, while the works switch to EAF production. This is not an option for Narendran, especially since Tata estimates that the union plan would cost £1.7 billion more.
Roy Rickhuss is the general secretary of Community – a union that represents steelworkers – and he claims that retaining one blast furnace will return the company to profitability. He said that an additional PS450million of UK state assistance could be used to fund it, on top of £500million the government has put in to help the switch to new furnaces.
Narendran said that the UK’s steel production was a huge loss. “So, it couldn’t continue as it was forever”
He said, “It is a drop of water compared to the amount other European countries invest in their domestic steel industry.”
Tata’s Dutch port city Ijmuiden, which is Tata’s second European plant, is about to restart blast furnace production.
Narendran says that a comparison between the two would be flawed. Ijmuiden “has always made money”, said Narendran. “The UK was bleeding money so it couldn’t continue as it was forever.”
Narendran wanted to respond to criticisms that the closing of the Port Talbot smelters poses a risk to national security, as it would leave Britain at the brink of losing its ability to produce “virgin” steel – used in the UK for car bodies and cans. EAFs create new steel by recycling scrap metal, while blast furnaces melt raw iron ore to produce it.
He said that Britain’s reliance on imports would continue because blast furnaces rely on iron ore, coal and other materials shipped from places like Australia and Brazil. Britain, on the other hand, is one of world’s largest exporters of scrap steel. According to UK Steel, the UK produces 11 tonnes of scrap metal every year. Of that, 80 percent is exported to countries like Pakistan, Bangladesh, and Turkey, where they repurpose it, and then sell it to Britain. Narendran says that the UK has enough raw materials to produce EAF.
You are using scrap that is readily available in the UK in order to produce steel in the UK. You’re not dependent on imported goods from around the world. If you are looking at sovereign steelmaking then what we propose is sovereign steelmaking.
EAF production has some quality issues, but it is still able to produce 90% of the grades produced using traditional methods. Narendran acknowledged that “the 10% is a problem” but he believed that the technology was developing rapidly enough that EAF production would be able produce the higher quality steel grades that are used to manufacture car bodies.
Port Talbot union leaders have promised to continue their fight. Tata will remain a dirty name to them, and Sheen who has moved his family from Hollywood back to Port Talbot.
Vaughan Gething will travel to Mumbai this week to ask Tata Steel to reconsider its decision on Port Talbot. The Labour politician is likely to receive a harsh response.