Published: 18th November 2015
The recent liquidation of the business behind a major steel production facility in the north-east of England has costs its parent company in the region of £530 million.
SSI, the Thai owner of SSI UK, which operated the steel plant in Redcar on Teesside, has confirmed the scale of its losses in relation to the liquidation of what was until recently a significant part of its international operation.
“Global steel over-capacity and demand imbalance since late 2014 and the continuous decline in steel price resulted in a huge operating loss for the group this year,” said Win Viriyaprapaikit, SSI’s group chief executive in a statement.
“At present, the company on a conservative basis expects zero recovery after the completion of SSI UK liquidation.”
SSI UK’s Redcar steel plant was mothballed in October, with more than 2,000 people losing their jobs as a direct result.
A fall in the price of steel around the world in recent quarters is cited as the key reason for SSI UK’s struggle to keep its Redcar plant in operation and the difficulties being faced by Britain’s steel industry as a whole.
“Despite the significant progress we made in the financial performance of the business during 2014, market conditions this year have been extremely challenging and unfortunately this has led to the decision we are announcing today,” said SSI UK’s business director and chief operating officer Cornelius Louwrens as plans to close the Redcar plant were confirmed.
Tata Steel, from which SSI UK acquired its now mothballed Redcar facility in 2011, also announced job cuts in the UK last month, with the company announcing a total of 1,200 redundancies at two plants in northern England and in Scotland.
Elsewhere, the UK-based steel products group Caparo Industries also recently announced that it was entering 16 of its 19 businesses into administration, with hundreds of its employees left uncertain about their job prospects as a result.
Losses linked to the Redcar plant’s liquidation saw SSI record losses totalling around £600 million for the third quarter of this year, with global demand for its products dropping by 15 per cent during the same three-month period. With 78 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.