Pressure mounted further on the British government to take action to support the country’s beleaguered steel industry, as Lord Swraj Paul’s Caparo Industries became the latest company to succumb to the downturn facing the industry, as parts of the company entered administration on Monday.
PricewaterhouseCoopers, which is acting as administrator confirmed that certain parts of the London-headquartered business, with operations centred in the Midlands, were entering administration. It is part of the wider Caparo Group.
Sixteen businesses within Caparo Industries, which together employ around 1,700 people, including Caparo Industries Plc, Caparo Engineering Ltd, and Caparo Steel Products will be taken under the control of the joint administrators team. A number of other busineses, including Caparo India, Caparo Merchant Bar, and a Polish business Bomet have not been placed in administration.
PwC lead administrator Matt Hammond said in a statement that their first priority would be briefing staff and assessing options for the businesses for this week and the future.
“This is a significant business with a wide range of interests across steel, engineering, vehicles products and technologies. Its scale and reach into significant customers and its importance to suppliers cannot be understated,” he said.
The downturn in the steel market, tepid demand in some of its sectors, and a strong pound that has hit UK exporters, has left the company struggling.
According to the annual report published in June, in the financial year 2014 it reported a loss before taxation of 5.3 million pounds for the year to December 2014, against a loss of 3.4 million for the same period the year before, which it attributed to difficult trading conditions in the second half of 2014, and a rapid fall in steel prices, and adverse exchange rate movements.
Union and opposition politicians urged the government to take urgent action, following a summit on the steel industry that took place last week. “This news is a tragic reminder of the urgent need for government action to help our steel industry survive,” said Roy Rickhuss, head of the Community union. “Crippling energy costs and the dumping of cheap Chinese steel is threatening the very future of the UK's steel sector.” Labour’s business spokesperson Angela Eagle, urged the government to raise the issue of dumping with Chinese President Xi Jinping who is visiting Britain this week.