Caparo Industries is set to file for administration, it has emerged, putting 1,800 jobs in the British steel industry at risk.
The business operates from around 20 sites across the UK. PricewaterhouseCoopers will be appointed as administrators, reports the Telegraph, and it is understood that the firm is looking for buyers. All staff are currently remaining in work and are being paid, according to sources.
Caparo Industries is part of Lord Paul’s Caparo Group. It has dealt with a number of challenges recently, including cheap imports of Chinese steel leading to lower prices, higher energy costs and heavy taxes.
The strength of the pound has also been problematic for the company, as it meant products were more expensive for export customers.
According to the Telegraph, not all of the businesses that make up Caparo Industries are facing difficulty. The company also operates within the piping, automotive, aerospace distribution and testing sectors. Many of these divisions are understood to be viable operations with lucrative contracts.
However Caparo Industries’ UK operation has seen a £2.5 million operating loss this year.
Filing for administration will give the business time to identify the strongest parts of the company and decide which ones are strong enough to survive.
Difficult times for the steel industry
Last week, business secretary Sajid Javid chaired a summit aimed at helping the steel sector. This followed the closure of the SSI plant in Redcar, which result in the loss of nearly 2,000 jobs.
In addition, Tata Steel is expected to announce that it will cut around 1,000 jobs at its plant in Scunthorpe.
Commenting on the news that Caparo would be filing for administration, Gareth Stace, director of UK Steel, said it was another “shattering blow for the sector”.
He explained that the industry is now looking to the government to make the next move. “It’s now a question of how many more plants and jobs will be lost before the government takes the actions it committed to at the steel summit.”
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