Since January, Tata Steel has been negotiating with three unions over the planned closure of two blast furnaces at the company’s Port Talbot steel works. The closure of one blast furnace started in early July, and the second closure is slated for September. This could signal the end of an era for the South Wales town, where around 4,000 people are employed at the UK’s largest steel works.
Shutting down two blast furnaces so they can be replaced with one electric arc furnace is set to result in 2,800 job losses.
The electric furnace requires fewer operational staff, is less energy-intensive and represents a pivot away from manufacturing virgin steel at Port Talbot, in favour of recycling scrap metal.
Read more: Tata Steel and Unite reach agreement to postpone strike action and site closure
July’s planned strike action was paused to allow for further talks between Tata Steel and the Unite, Community and GMB unions. If the life of one blast furnace was extended during the electric furnace’s construction, this could save 2,000 jobs, potentially for up to three years.
Speaking on the BBC’s Sunday with Laura Kuenssberg programme, Jonathan Reynolds, secretary of state for business and trade, described saving jobs at Port Talbot as “a major priority." During the interview, Reynolds said that if Tata steel is to receive public money for green investment, “they have to guarantee those jobs".
He added that the situation facing Tata Steel was “a good example of how we have to make sure that decarbonisation is not de-industrialisation, and we’ve got to do that together."
Sharon Graham, Unite’s general secretary, told the BBC programme that the union is asking for “two things: investment in steel with jobs and... procurement legislation that all UK infrastructure projects should use UK steel.” In public statements, Tata Steel has promoted its commitment to a “just transition”.
The ongoing dispute at the Port Talbot steel works has shone a light on the challenge facing companies seeking to make a green transition: is it possible to strike a balance between becoming a more environmentally friendly business and addressing workers’ concerns about job security?
John Stewart, HR director for the energy firm SSE, urges a realistic approach. He says that while Tata’s transition from blast furnaces to an electric arc furnace “will, over time, result in a loss of jobs in the local community”, the transition “will sustain some low-carbon jobs and may provide a platform for future growth and investment”.
Stewart adds that it’s important for businesses moving towards greener operations to recognise that “there won’t always be a match of jobs during the short term. It can be hard work to find a way to replace existing jobs in the impacted area.”
At SSE, Stewart says that the company’s just transition plan includes steps such as delivering robust stakeholder consultation, forming partnerships across sectors, promoting further industrial development and respecting and recording cultural heritage.
A joint poll from the Chartered Institution of Wastes Management, the Environmental Services Association, Groundwork and ESS Expo revealed that 58% of UK professionals believe businesses aren’t prepared for a sustainable economy.
Read more: HR's role in aligning a people and sustainability strategy
The poll suggests that the same proportion fear a green skills gap. So HR leaders’ role will become increasingly crucial when employers worldwide undergo the change management process required to become more sustainable, and meet new skills needs.
“Once you’ve lost people, you’ve lost experience and talent that you may need to call upon in the future, once any changes have been implemented and potential new jobs are created,” says Lisa Seagroatt, managing director of the training company HR Fit For Purpose, on potential job losses at Port Talbot.
“It’s essential for business leaders, especially HR, to be able to share their strategy, vision and purpose for the change, and to be clear about how, unfortunately, some jobs may no longer exist, but new jobs will be created.”
Seagroatt agrees with Reynolds’ BBC statement that Tata Steel’s transition has to “work for working people”. She says that Tata Steel needs to “keep the lines of communication open and available to those people most affected – the people working there”.
Tata Steel should not underestimate how radical the changes will be for Port Talbot workers, says Seagroatt, advising consultation for such circumstances: “Consult regularly and primarily with employees, and build trust and credibility with union representatives from the very beginning of any consultation.” She adds that it’s important to liaise with partners and investors, too.
Seagroatt continues: “When employees are poorly informed about any change to their working arrangements, they often experience anger and fear at being kept in the dark about their future. This creates a barrier to achieving effective communication, leading to potential conflict with unions who are there to protect and represent their members.”
In the meantime, nervous Port Talbot workers and their union representatives, an international industrial company keen to move forward with new operations, and now a new government hopeful of negotiating a mutually beneficial settlement, are on the verge of discovering how realistic it will be to save jobs and meet sustainability goals.
For HR managers, it could serve as a powerful case study about clear communication during change, and the importance of anticipating new skills requirements when making the green transition.
This article was published in the July/August 2024 edition of HR magazine.
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