Corus chief says company still has future on Teesside

Apr 30 2009 By Andrew Mernin

THE future of Corus Teesside Cast Products does not solely rely on a successful sale this summer, managing director Jon Bolton said today.

Responding to reports in the Financial Times that a buy-out led by family owned Marcegaglia was cooling, Mr Bolton insisted it had heard nothing from the Italians to suggest they were pulling out.

He said: "We have a memorandum of understanding that’s still in place and we are still operating to that. That’s where we are."

But he said the more urgent and separate issue was making sure the off-take agreement struck with Marcegaglia and three others in 2004 for 10 years remained in place.

Following a 30% reduction in output at the plant’s blast furnace in November, the agreement has been subject to almost continuous review as world demand for steel plummeted.

"The bigger issue is the consortium deal. We needed it to work in 2004 and we need it to work now," said Mr Bolton.

The review was continuing against a difficult economic background, he added.

The plant, which employs 2,000, has made no secret of the fact that order books have taken a massive hit in the first quarter. That is putting extra strain on the blast furnace, which is already operating at historically low levels.

Mr Bolton, who was in London meeting with consortium members, said discussions turned on the ability of the plant to match its operational configuration to the consortium’s demands.

"We are relatively limited as to where we can go with that, although we have demonstrated a level of flexibility that nobody thought we had. The question is, does that still work for everybody? If we’re struggling we need to look at what are the other options for the plant. The emphasis has got to be on getting the consortium deal to work."

The report in the FT - which was based on comments alleged to have been made by Marcegaglia chairman Steno Marcegaglia - has been widely circulated. But Steno’s son Antonio, who led the Corus deal, was not available to comment.

Geoff Waterfield, chairman of the Teesside works multi-union committee, which represents TCP staff along with colleagues in other Corus Long Products divisions at Redcar, said reports that the Marcegaglia deal was under threat was "all speculation at the moment".

But he added: "This deal impacts on a lot of people so there’s a responsibility to either confirm or deny the reports so we can get on with dealing with what that means for Teesside."

Redcar MP Vera Baird said that contrary to the impression that might have been made by the FT article "this is not a jobs emergency at this time".

The World Steel Association revised its demand forecast yesterday, saying it expected a 14.9% decline this year.