Tata's 'devastating blow' to UK steel industry as 1,500 jobs face the axe

The firm said it was proposing to close or mothball part of its Scunthorpe plant, putting at risk 1,200 jobs, as well as cutting 300 jobs at its sites on Teesside.

But Tata announced it would also invest 400 million in its "long products" business over the next five years. It said the division had made losses over the past two years, citing a decline in some of its major markets, particularly the construction industry.

Demand for structural steel in the UK was only two-thirds of the 2007 level and was not expected to recover fully within the next five years, Karl-Ulrich Kohler, chief executive of Tata Steel's European operations, noted.

He said: "We are proposing to take these actions only after going through an inclusive consultative process that involved very careful scrutiny of the long products business performance.

"We have used the experience we gained in turning around our speciality steels business in developing this strategy for the rest of long products and we are convinced it represents the best chance of making this business successful and sustainable in the long term.

"Tata Steel is showing its commitment to making this strategy work by earmarking 400m of investment for this business over the next five years."

Jon Bolton, director of the long products business, added: "As difficult as they are, these steps will help us to shape this business for the future. Over the longer term we will be able to re-invest in our people, our customers, our equipment and the local communities in which we operate."

Unions said the job cuts amounted to 8 per cent of Tata's UK workforce.

Keith Hazlewood, national officer of the GMB, said: "The announcement demonstrates what a roller coaster industry the steel industry is. The recent announcement that steel making is to start again on Teesside is directly followed by these 1,500 job losses across Tata's long products division.

"The job losses will impact at Scunthorpe, Teesside and Hartlepool and in the steel mill sites making steel joists used mainly in construction."This is a devastating blow to UK steel making, to the local communities and to the UK economy."

Michael Leahy, general secretary of the union Community, added: "We are, of course, extremely disappointed at the prospect of further job losses, coming as they do on the back of earlier cutbacks.

"However, difficult though the current position is for all concerned, we recognise that this is part of a wider strategic review of the business aimed at securing its long-term viability and access to new markets."

Business Secretary Vince Cable said: "I am very disappointed at this news. This will be a worrying time for workers at Scunthorpe in particular, and also in Teesside.

"I have asked our local team to establish a task force to work closely with Tata so everything is done to mitigate the impact on jobs and on the local communities in Scunthorpe and Teesside.

"Tata Steel has a strong presence in the UK. I welcome its announcement that it's investing 400m over the next five years to improve the reliability, productivity, and environmental performance of its manufacturing operations."