UK Edition
Jingye to cut up to 500 British Steel jobs as part of rescue plan
The Chinese firm buying British Steel will axe up to 500 jobs after reaching a deal with trade unions, cutting the bailed-out company's workforce by 10pc.
Jingye's proposals will now be sent to British Steel staff for final sign-off, sources said, amid negotiations to take control of the collapsed firm after eight months on taxpayer life-support.
The buyer is understood to be trying to avoid compulsory layoffs and will offer redundancy packages in a bid to minimise the cuts' impact.
Employees are expected to decide whether to accept the terms which have been jointly negotiated by unions Community, GMB and Unite within a fortnight.
The cuts are seen as an essential part of making a viable business out of British Steel, which is understood to be losing about £1m a day at the moment.
British Steel had about 4,500 staff - the majority of them at its sprawling Scunthorpe steel works - when it collapsed into insolvency in May. A further 20,000 supply chain jobs depend upon the survival of the company.
After it imploded, the business was taken over by the Official Receiver - part of the civil service - which has kept it operating as it tries to agree a sale.
British Steel is currently being bankrolled by a taxpayer-backed indemnity while discussions continue with Jingye.
In November, the Chinese industrial company signed an agreement in principle to buy British Steel for £50m. It swooped after exclusive talks with Turkish military pension fund Ataer collapsed.
Jingye is understood to have also agreed employment terms which will modernise what were seen as “outdated” contracts, for example by cutting workers' days off in lieu so they are in line with industry practice and introducing paternity leave.
However, across the board pay cuts are not thought to be part of Jingye’s turnaround plan.
Controlled by former Communist party official Li Ganpo, Jingye’s business interests include steel, manufacturing, tourism and property.
The company has pledged to invest £1.2bn to get British Steel back on track.
Sweeteners in the form of loans and funding for training worth about £100m in total are also on offer from the British government to help get the deal over the line.
The initial agreement signed with the Official Receiver is understood to give Jingye until the end of February to thrash out a deal. The sale must also win approval from the Paris government, which will rule on whether it can accept ownership by a firm based in authoritarian China.
This is because British Steel’s plant in Hayange, northern France, is seen as strategically important as it is a major supplier of rails to the country’s train network.
Jingye declined to comment. Unite declined to comment, Community and GMB could not be reached for comment.