This Steel Town Voted For Brexit. Now Its Jobs Are In Jeopardy | KERA News

This Steel Town Voted For Brexit. Now Its Jobs Are In Jeopardy

Jul 13, 2016
Originally published on July 28, 2016 4:33 pm

When the United Kingdom voted to leave the European Union last month, the seaside town of Port Talbot in Wales eagerly went along with the move. Brexit was approved by some 57 percent of the town's residents.

Now some of them are wondering if they made the wrong decision.

The June 23 Brexit vote has raised questions about the fate of the troubled Port Talbot Works, Britain's largest surviving steel plant — a huge, steam-belching facility that has long been the town's biggest employer.

Before the vote, Tata Steel, the plant's owner, was negotiating to sell all or part of its British operations, of which Port Talbot is the biggest part. To sweeten the deal, Britain's conservative government was reportedly ready to offer buyers a low-interest loan and assistance with the plant's massive pension liability

Once Brexit was approved, Tata announced it was putting the sale on hold.

The vote left big questions about the market for Port Talbot steel, much of which goes into autos that are sold throughout the 28-member European Union, says Ben Orhan, senior economist at IHS Global Insight Pricing and Purchasing.

Much of the rest goes into construction, which is widely expected to take a big hit if, as some people predict, Britain enters a recession, Orhan says.

"People are expecting the worst, and when your main market is construction steels, you are going to be thinking, 'Is that going to still be there in three, four, five years' time?' " Orhan says.

More recently, Tata said it was considering restructuring all of its European operations as part of a joint venture with the German company Thyssenkrupp. Koushik Chatterjee, group executive for Tata Steel in Europe, told the BBC the future of Port Talbot depended very much on what kind of agreements could be worked out with the government and the plant's 4,000 employees.

Part of India's giant Tata conglomerate, Tata Steel is Europe's second-biggest steel producer, with highly efficient plants in the Netherlands, Germany and France. But with the huge glut of steel on the market, caused in great part by a flood of cheap Chinese exports, it's become much harder to make money, especially at less technologically advanced facilities such as Port Talbot, Orhan says.

All of this has heightened the uncertainty in the town, where opposition to EU membership remains strong.

"We want more control of our own laws, rather than laws imposed by Europe," says Kevin Hillier, a retired surveyor who was walking his dog in a Port Talbot park over the weekend.

"And immigration is a big factor as well. A lot of immigrants are coming here and taking low-paid jobs so our youngsters can't even get low-paid jobs," he adds.

But retired steelworker Robert Jones, who voted for Brexit, says a lot of people supported the move without necessarily understanding the impact it could have on the plant.

"None of us knew exactly what was happening. We just listened to people and we voted in or out or whatever," he says. "Now the consequences are coming in, and some people are worried about the way they voted and some people are not."

For the town, the potential impact is dire.

Port Talbot has endured numerous ups and downs since its heyday in the 1950s, when jobs were so plentiful and lucrative the plant was called "Treasure Island," says Bleddyn Penny, who wrote his doctoral dissertation on the plant at Swansea University. Over the years, steel-making became more productive, and the British steel industry had to struggle with competition from cheaper overseas rivals, Penny says.

Today, the plant's workforce is about a fifth of what it was in 1961, which has robbed the town of much of the economic vitality it once enjoyed, Penny says. Its High Street, once a bustling, crowded place, is today pockmarked by closed shops.

One thing everyone agrees on is that losing the plant would be something of a death blow to what remains of the town's economy.

"Everything in Port Talbot — the entire local economy — is entwined with the steel industry, and if people get made redundant, they don't have the disposable income then to go back and spend on local goods and services, and everyone feels the effects," Penny says.

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When the United Kingdom voted to leave the European Union last month, the town of Port Talbot in Wales was in favor of the move. Since then, people there have had reason to rethink their votes. Brexit has cast new doubt on the fate of the town's main employer, a giant steel plant. NPR's Jim Zarroli has the story.

JIM ZARROLI, BYLINE: The Port Talbot Steelworks dominates the town's skyline, a huge steam-belching facility stretching along the sea. The plant employs a fifth of the people it did in its heyday in the 1950s, but it's still operating part of what's left of Britain's steel industry. Bleddyn Penny wrote his doctoral dissertation on the plant.

BLEDDYN PENNY: It still is the big survivor of the British steel industry. You know, I could name scores of plants that were, you know, operational after the Second World War. Most of those are now gone or have contracted to the point of being, you know, so tiny. But, well, as you can see Port Talbot is for the time being at least still here.

ZARROLI: But with its outmoded technology, the plants had trouble competing against cheap Chinese imports. At one point, it was said to be losing a million pounds a day, and the owner, the Indian conglomerate Tata, was trying to sell the plant with a package of aid from the Conservative Government, then came the Brexit vote. Brexit was popular here. Fifty-seven percent of residents voted to leave the EU, people such as retired surveyor Kevin Hillier.

KEVIN HILLIER: We want more control of our own laws rather than laws imposed by Europe, and immigration is a big factor as well.

ZARROLI: Hillier says EU immigrants are driving down wages. Though he concedes there aren't many immigrants in the town. The Brexit vote instantly upended the talks to sell the plant, says Kevin Orhan of IHS Global Insight.

BEN ORHAN: The country is in turmoil. No one's really sure what's going on.

ZARROLI: Orhan says much of the steel produced at Port Talbot is used in construction or in autos and other products exported to the EU. Orhan says Brexit has raised questions about the market for Port Talbot steel, and would-be buyers are suddenly skittish.

ORHAN: People are expecting the worst, and when your main market is construction steels, you know, you are going to be thinking, is that going to still be there in three, four, five years' time?

ZARROLI: Last week, Tata said it may form a joint venture with another company that would buy its British steel operations. But it's not clear what that means for Port Talbot's 4,000 workers. And that's cast a pall of uncertainty over the town.

The Seaside Labour and Social Club is where a lot of steelworkers hang out to play pool and drink beer. Even though union leaders urged them to oppose Brexit, many here voted to leave. Robert Jones was one of them. He says the impact of Brexit wasn't really explained to people.

ROBERT JONES: None of us knew exactly what was happening. We just listened to people, and we voted in or out or whatever in it. Now that the consequences have come in - and I think some people are worried what they voted and some people are not.

ZARROLI: One thing everyone agrees on is the - closing down the plant would devastate the local economy. Bleddyn Penny says repeated layoffs have already robbed Port Talbot of much of the economic vibrancy it once had. A lot of shops on its High Street have closed.

PENNY: Everything in Port Talbot - the entire local economy - is entwined with the steel industry. And if people get made redundant, they don't have the disposable income then to go back and spend on local goods and services. And everyone feels the effects.

ZARROLI: But as bad as the past has been, the future for Port Talbot is likely to be even worse if the plant shuts down. Jim Zarroli, NPR News, Port Talbot, Wales.

[POST-BROADCAST CORRECTION: In the audio version of this story, we incorrectly give Ben Orhan's first name as Kevin.] Transcript provided by NPR, Copyright NPR.