2,800 jobs to go...
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
Tata Steel has confirmed that it will cut up to 2,800 jobs in the UK by closing two blast furnaces at its steelworks in Port Talbot, Wales.
The Port Talbot steelworks is in the image above. It is the largest in the UK. Nearly three-quarters of the 4,000 staff who work at the site will leave as a consequence of the announcement today. I have visited Port Talbot many times - including in 2016 when the future of the steelworks was seriously in doubt - and the steelworks looms over the Welsh town in a way we imagine that many factories and industrial facilities still do across the UK.
Tata Steel has said it will close the blast furnaces this year in order to shift its steelmaking to new electric arc furnaces, which produce less carbon emissions. However, critics of the move say this will mean that Tata Steel - and the UK - will no longer be able to manufacture steel from scratch and will have to import materials.
The announcement has attracted an angry response from local politicians and trade unions, as you would expect. However, Rishi Sunak, the prime minister, has said the alternative was the entire Port Talbot site being closed, which would cost up to 8,000 Tata Steel jobs around the UK.
The government has provided £500 million of funding to support Tata Steel’s shift to the new form of steelmaking. The company says the cost of this is £1.25 billion in total. The Port Talbot steelworks is the single-biggest source of carbon emissions in the UK, accounting for about 1.5 per cent of all emissions.
Here is some of the reaction to the news…
The chief executive of Tata Steel, T V Narendran, said in a statement:
"The course we are putting forward is difficult, but we believe it is the right one.
"Our ambitious plan includes the largest capital expenditure in UK steel production in more than a decade, guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe's premier centres for green steelmaking."
Of the job cuts, 2,500 will be over the next 18 months and another 300 will be within the next three years.
Other stories that matter…
1. The Office for National Statistics has said that retail sales volumes in the UK fell by 3.2 per cent in December compared to November. They also fell by 2.4 per cent year-on-year. These figures are way worse than economists had expected. The consensus among economists was that sales would be down 0.5 per cent month-on-month. The data means that there is a real risk that the UK has fallen into a recession. Capital Economics has said in a note to clients that the drop in retail sales is equivalent to 0.15 percentage points being wiped off GDP in December. This would push GDP down for the fourth quarter of 2023 as a whole. Given that GDP fell in the third quarter of 2023, this would put the UK into a recession, which is defined as two consequence quarters of GDP falling. The ONS data follows our look at the Christmas trading updates from retailers in yesterday’s Off to Lunch, in which we warned that positive statements from companies may not reflect the reality of how challenging it has been. You can read that here. You can read the ONS report here. The fall in sales is being partly attributed to shoppers bringing forward Christmas spending into November.
2. On a related note, Jeremy Hunt, the chancellor, has said he wants to cut taxes in the Budget, which is scheduled for March 6. "So my priority in the Budget will be growth,” he told Sky News. “Because if I can grow the economy, that will mean that then we have more money for the NHS, we can relieve the pressure on families, we can invest in our brilliant armed forces." You can read more here
3. Sales of electric cars are slowing down. Does this reflect the fact they are not the answer to our future needs? That is the view of Simon Kuper in an excellent column for the Financial Times. “My bet is that, in cities at least, the e-car won’t be the vehicle of the future. I suspect it will keep falling further behind e-bikes, e-mopeds and e-scooters,” he writes. You can read the column here
4. The chief executive of media group Axios, Jim VandeHei, has written about the importance of moving fast. “Mike Allen, the hardest-working person I've ever met, never hesitates to move instantly on, well, basically anything he deems important,” he says. ”If he's going to connect with someone, he does it now. Apologize? Now. You wanna get lunch? How's tomorrow? Start a new health habit? On it!” This approach “eliminates festering problems faster and accelerates vital progress on important to-dos”, VandeHei says. You can read more here
5. An upbeat note to finish on. Every Friday the Manchester-based business journalist Chris Maguire does a round-up of all the positive business news in the north-west of England. It includes appointments, new investment and takeovers. You can find today’s round-up here
Advertise with Business Leader…
We are looking for partners to support our ambitious plans to build a new agenda-setting business publication for the UK. If you would like to advertise with Business Leader magazine or sponsor Off to Lunch or our Business Leader podcast then please get in touch. For more details please email me at graham.ruddick@businessleader.co.uk
Podcast…
You can listen to the latest episode of our Business Leader podcast via Substack here, Apple here and Spotify here
The episode looks at the story behind Castore and how the sportswear brand has taken on Nike and Adidas. Tom Beahon and his brother Phil have built a UK company worth more than £950 million. In the episode you can hear from Tom Beahon about how they founded, built and scaled-up Castore, and the challenges they have faced along the way as the business has got bigger and bigger.
We will be reflecting on the episode in more detail in Monday’s Off to Lunch…
And finally…
It’s a cold Friday in January so it is understandable if your mind is wandering to the weekend and the thought of enjoying a cosy Sunday roast. It certainly will after you read this. The Times has put together a list of the 25 best Sunday roasts in the UK. I can personally vouch for a few of the names on the list. The Marksman in east London, The Camberwell Arms in south London, and the Talbot Arms in Settle, Yorkshire are all superb. You can find the full list here
Thanks for reading. If you enjoy Off to Lunch then please share it with others and spread the word. If this newsletter was shared with you then please sign-up below to get Off to Lunch sent directly to your inbox
Best
Graham