British Steel’s Turkish rescuer plans to move chemical firm out of UK

The Turkish firm poised to buy British Steel recently announced plans to move a chemicals factory it owns from Tyneside to Europe, after sounding the alarm about Brexit uncertainty.

Chemson, a Wallsend-based firm that makes additives used in the production of PVC plastic, said last week it would cease production at the site by the end of September.

The decision will involve moving the site’s activity to Austria and Turkey, at the expected cost of 64 jobs on north Tyneside.

Chemson is owned by Oyak, the £15bn Turkish military pension fund that was last week chosen by the government as the preferred buyer for British Steel, which employs more than 4,000 people in the UK and owns the Scunthorpe steelworks.

“The decision was taken after a Europe-wide review of production capacity, which demonstrated that the group could service its markets more cost effectively from its plants in Austria and Turkey,” Chemson told local newspaper the Chronicle when it announced the redundancies.

The company did not list the UK’s departure from the EU as a factor in the decision, which comes less than six years after Oyak bought the business, but accounts filed at Companies House repeatedly refer to Brexit uncertainty and the damage caused by the pound’s slump against the euro since the referendum.

“The Brexit vote and continued and continued uncertainty due to ongoing Brexit negotiations still affect the UK market,” the company said in its accounts.

“Like any other UK company Chemson Limited is affected by the Brexit vote, which increases uncertainties referring [sic] the UK home market and affects exchange rates.”

It pointed to the weakness of sterling as one of the factors that drove it to an £834,000 loss in 2017.

“It has to be mentioned that the company’s result was affected by the unfavourable development of the [pound] vs the euro,” Chemson said, estimating its currency-related loss was £165,000 during the year.

The company also cited pressure on its finances due to rising raw material costs, among the factors that led to British Steel’s collapse into liquidation earlier this year.

Chemson’s board includes Suleyman Erdem, Oyak’s chief executive, and Toker Özcan, who runs the mining and metallurgy division that will oversee British Steel if the £70m purchase goes ahead.

Özcan said he wanted to increase the “very low” output of the Scunthorpe steelworks by increasing productivity in an interview with the Financial Times, which said his plan was likely to result in hundreds of job cuts.

Rebecca Long-Bailey MP, the shadow business secretary, said: “It is essential that Oyak submits its full plans for proper scrutiny by the steel unions and works closely with them to ensure the long-term future of British steel in the interests of the workers, not just shareholders.’’

Oyak’s record has already attracted attention among trade union sources and Labour due to concern about its record on corruption, labour rights and its ties to the military of a country ruled by autocratic leader Recep Tayyip Erdoğan.

The Guardian revealed last week that Oyak was accused of corruption by a parliamentary commission and jointly owns a car plant where striking workers were allegedly mistreated.

Long-Bailey said she was seeking assurances due to Oyak’s “track record”, while Unite, the UK’s largest trade union, said it was “scrutinising the labour and human rights records of Oyak operations carefully”

The Guardian has approached Oyak for comment.

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