Staff lose out as steel plant set to close early

STAFF at a Tyneside steel plant say they have been left thousands of pounds out of pocket after the company was placed into administration by its US owners.

- COREENA FORD

> Gateshead's Union Electric Steel

Union Electric Steel in Gateshead announced in April that it would close next year. Formerly known as Davy Roll, the factory has been producing steel for more than 180 years, but directors cited numerous challenges including high energy costs and inflation which contributed to losses.

Now, however, the plant's US owners have accelerated its closure by putting the Tyneside company into administration. Shaun Hudson, Allan Kelly and Anthony Wright of FRP Advisory’s Newcastle office have been appointed as joint administrators, saying the Gateshead facility had experienced “prolonged financial challenges and was ultimately deemed unviable”.

Around 65 staff have been made redundant immediately, with around 90 kept on to complete orders currently being processed, ahead of a complete wind down of the plant way ahead of the original spring closure. The administration means redundancy agreements struck by unions in February are now not valid, slashing in half and wiping thousands of pounds from redundancy payments for staff, many of whom have worked at the business for decades.

A member of staff who wanted to remain anonymous said: “The way we have been treated is disgusting. Some of the staff have been based at that factory since they were 15, going in as apprentices, and are now in their sixties, but they feel like they've been left high and dry.