Credit: Třinecké železárny,

Tata has dodged a reputational bullet

The steel crisis blame game is underway but the Indian conglomerate has escaped a potential hammering.

by Jack Torrance
Last Updated: 11 Apr 2016

The Chinese. The European Union. David Cameron. Many fingers are being pointed in the crisis engulfing Britain’s steel industry but few have been aimed at the company whose decision to sell its British steel mills, at the potential cost of 15,000 jobs, has caused this latest round of handwringing.

That matters because Tata is much more than a steel company. Its Motors division owns Jaguar Land Rover, one of Britain’s other big industrial operations. It has a giant IT consultancy, a chemicals devision and a string of luxury hotels. And it even makes Tetley Tea.

These are all distinctive businesses in their own right, financially insulated from the perils in the steel industry, but the Indian conglomerate has been keen to bring some coherence to the Tata brand (it has hired former diplomat David Landsman to herd all these cats in Europe). ‘The company that killed British steel’ is not a moniker it would like to be stuck with, and so far it seems to have succeeded in that regard.

And to be fair that’s largely because it isn’t to blame. Tata can’t do much about the performance of the Chinese economy, whose ups and downs hold so much power over the global commodities industry. While the People’s Republic's demand for steel has faltered in recent years, its mills are still churning out tonnes of billets, flooding Europe with cheap metal.

Nor is it Tata’s fault that the British government, keen to stay in China’s good books, led opposition to new EU-wide anti-dumping rules that could have helped the continent’s steel-makers ride out the storm. Rightly or wrongly, the government’s aversion to state aid (which Italy, Germany and others have been happy to dole out) should also take some share of the blame.

That’s not to say Tata has made all the right calls. Its decision to take over Corus back in 2006 was a big bet on the British steel industry. While it might have survived the initial waves of the financial crisis, that £6.2bn gamble was clearly ill-advised and now it regards the business to be worth ‘almost zero’.

Job cuts, especially when infused with the emotive issue of Britain’s industrial decline, can be disastrous for a brand. Just look at Ineos, whose (since reversed) decision to close the petrochemicals refinery in Grangemouth led to uproar and a fierce campaign of industrial action. Tata should count itself lucky that, for now at least, the ire generated by this crisis is firmly focused on the government.

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