Liberty Steel has announced plans to cut 200 jobs in the UK at plants in South Yorkshire and the West Midlands, as industrialist Sanjeev Gupta’s metals group looks to shift production to Rotherham.
The company said on Friday that it would cut 160 jobs at a plant in Stocksbridge, South Yorkshire, and 45 in West Bromwich in the West Midlands as it focused production on the plant in Rotherham, also in South Yorkshire.
Liberty said an increase in production at Rotherham could create a “potential” 160 new jobs, meaning that many of the affected workers in Stocksbridge may have the option to move to the nearby plant.
The two affected plants make specialised alloys for customers in aerospace and energy.
Liberty Steel and other parts of Gupta’s GFG Alliance metals businesses have been under financial pressure for a year since the collapse in March 2021 of their main backer, Greensill Capital. GFG says it employs 35,000 people worldwide in its group of mines, steel and aluminium plants, and an energy company.
Liberty Steel’s UK operations have also been threatened directly. In February HM Revenue and Customs filed winding up petitions against four companies employing 3,000 workers, including those operating the Stocksbridge and West Bromwich sites, over unpaid tax. HMRC withdrew the petitions last month after negotiations.
GFG has tried to restructure its complex web of UK operations and find new financiers to invest, although it has not so far announced any significant external backers.
It is also facing an investigation by the UK’s Serious Fraud Office, and the French government has evidence that GFG companies have “misappropriated” funds from a steel plant in Romania, according to court documents in a case involving one of the metal magnate’s companies.
Gupta is listed as a director on 77 active UK companies. Accounts for 29 of those are overdue, nine of them by more than a year. Not filing an annual report is a criminal offence, although the maximum financial penalty for late filing is only £1,500 for a private company. It is generally seen as a red flag for other companies carrying out due diligence.
Liberty said its restructuring of the special alloys business would “enhance their productivity and competitiveness ahead of a possible sale or partnership”.
Alun Davies, national officer for Community, a union representing steelworkers, said the restructuring announcement “provides some much-needed clarity on the company’s intentions”.
He added that the union believed Liberty Steel’s restructuring plans were “credible”, but would fight against mandatory redundancies, and that the company should ensure jobs were secure in the supply chain if it moved forward with the sale.
In a written statement, Jeffrey Kabel, Liberty Steel Group’s chief transformation officer, did not address the redundancies but said the plants were “high-potential businesses”.
He said: “The steps we’re announcing today will help ensure they are competitive in the future, with job creation at our Rotherham plant enabling us to mitigate a large percentage of role reductions at other sites.”