A few years ago my point of view was that the South Wales part of Tata Steel may not have been in great shape, but that “it probably will last my time”. That was when I was planning to retire some time between the age of 60 and 65.
In the end the wake-up call did not come from the business results. The latter may not have been good (after all, we hadn’t made a profit since 2008), but no-one seemed to think that we were getting awfully close to the cliff edge. For the financial year 2015/16 we even congratulated ourselves on our realism that our plan aimed for a loss of 50 million, and we marvelled at the fact that the parent company in India kept the faith and continued to approve investment plans to make us more competitive in future years.
And then came the thing that made me decide to retire at 60 : the British Steel Pension Scheme had a growing deficit, and something had to happen to stem the deficit. Initially this was to mean the end of the final salary scheme, and the change of the age where you can retire without financial penalties from 60 to 65. In my case this meant that if I retired on the 31st of March 2016 I could leave with a full pension, but from the first of April 2016 I would all of a sudden be penalised by about 5% per annum for early retirement.
So I decided to apply for retirement on the 31st of March 2016. That was in May 2015. Shortly after my wife and I went on a 3-week holiday touring around Andalucia, and when we were back the company had caved in to union demands with the offer of a capped final salary scheme, and a reduction in the penalty for early retirement. In my case the latter would have amounted to 4.3%, which would have meant having to work for about 2 years for no additional pension.
Still, the change in terms and conditions made me doubt whether I had made the right decision. However, since my request had already been signed off by the HR director there was no going back, so we started to make plans to find a replacement for me.
Things took a turn for the worse when in the August quarterly review the bombshell was dropped that we already had made the 50 million loss from the annual plan in the first 3 months – with the prospect of a 200 million loss over the full financial year if things continued the way they went.
Still, no-one thought that this might mean the end would come this fast. McKinsey was brought in, rescue plans were put together, projects for making big savings were launched, and the result ? It seemed to make precious little difference. People started talking to me about my planned retirement in terms of “you appear to have made the right decision”. Even so, I don’t think many people thought we were going to be sold off any time soon. We knew that dealings were underway to sell off Scunthorpe to Greybull, but in our case the view was that we would stay as part of Tata Steel or be closed – with closure on the horizon 2 or 3 years hence.
In the December quarterly review we were shown a “bridge” which aimed to turn a loss of 200 million around to a profit of 100 million, not in the original time scale of 3 years, but in the space of 1 year ! That was the moment that I lost all faith that this business could be saved. When was the last time we made a jump in profits of 300 million ? Never !
Things took a turn for the worse when our CEO suddenly decided to leave the company on the 29th of February 2016. He must have known he was not going to cover himself with glory, and presumably didn’t want a closure on his CV. Although this made things look a lot more serious, the talk still was that we had 1 year to turn this business around.
And then came the Tata Steel board meeting of the 29th of March, where clearly the promised turnaround sounded too much like the “jam tomorrow” promises of previous years, and they decided to pull the plug on us. Three days later I stepped into retirement – although I’m not yet totally convinced that I’ve come out scot-free, that’s what it’s starting to look like.