The Advice from Mr.Price

Just read the most recent venture of a politician into steel land on the BBC website :

Plaid AM urges Tata workers to reject ‘unacceptable’ pension deal

This according to Adam Price, Plaid Cymru’s AM for Carmarthen East and Dinefwr. And what is his reasoning ? All of a sudden “The economic climate that the steel industry faces in 2017 has been radically transformed. The medium-term outlook has improved and profitability has returned to Port Talbot.” Really ? Honestly ?

True that Port Talbot is no longer making horrendous and unsustainable losses, and now makes a modest profit on the back of the weak pound and a slight upturn in the steel prices in Europe. But that’s still a long way from proclaiming that the business is now healthy and can withstand anything the markets and industrial disputes can throw at it.

Also remember that the parent company has stated that any future investment will depend on the South Wales business not just returning a few measly million pounds in profit, but something in the order of 100 million or preferably more. In short, they’re looking for signs that this part of the business will not slip in a few years time and start haemorrhaging money again.

And let’s also remember why Tata Steel put us up for sale in April 2016 : not only was it the horrendous losses, but also the mill stone of the defined benefits pension scheme. Whereas one of the two is already hard to bear on an indefinite basis, the combination of the two is sufficient to put off potential mergers with the likes of Thyssen Krupp, who probably have seen how BMW divested itself from Rover in just such a situation.

Even with the improved financial situation Port Talbot remains a poisoned chalice as long as the current pension scheme with its potentially unlimited liabilities remains in place. And no talk of nationalisation and restarting the original selling process changes this. After all, do you really think that new owners will want to carry the burden of the current pension scheme ?

So if we followed Mr. Price’s advice that “If Tata is not prepared to do this, the company should be nationalised on a temporary basis and talks reopened with those firms that have been waiting in the wings to buy it”, what do you think the outcome would be ? You still will have lost your defined benefits scheme, but now your parent company is far smaller and financially less capable to take the blows as Tata have been doing for the last 5 years. Do you really feel confident that this saga would even last the minimum guarantee of five years given by Tata Steel ?

And if Mr. Price’s advice turns out to be bad advice, who do you think will have sleepless nights because they don’t know where the next mortgage payment will come from ? I doubt whether it will be Adam Price AM.


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