Steelmaker cuts 1,200 UK jobs due to cheap China imports; shrouds Xi visit

Manufacturer Tata Steel announced 1,200 job cuts in the U.K. on Tuesday, underscoring the damage caused by cheap Chinese imports and throwing a shroud over a state visit by Chinese President Xi Jinping that was supposed to usher in a "golden era" of relations between the countries.

Tata blamed the layoffs in northern England and Scotland on a "flood of cheap imports, particularly from China," along with high electricity costs and the strong pound.

Though the cuts had been rumored for days, the timing of the announcement — on the first full day of Xi's visit — seemed designed to win maximum attention.

"The U.K. steel industry is struggling for survival in the face of extremely challenging market conditions," Karl Koehler, chief executive of Tata's European operations, said in a statement. "This industry has a crucial role to play in rebalancing the U.K. economy, but we need a fairer system to encourage growth."

The British government is under pressure to raise the issue of China selling steel at a loss on world markets. Tata's decision comes only weeks after Sahaviriya Steel Industries announced the closure of its plant in Redcar, costing 2,200 jobs. Another firm, Caparo Industries, went into partial administration on Monday, threatening hundreds more jobs.

Tata Steel, Europe's second-largest steel producer, has cut thousands of jobs since it bought Anglo-Dutch producer Corus in 2007.

China's steel exports are "certainly one of the things we'll be talking about," Foreign Secretary Philip Hammond told the BBC on Tuesday, while stressing that increased Chinese investment will stimulate the British economy and create jobs.

The oversupply of steel on the world market has led to lower prices, and the European Union is trying to ensure that Chinese steel is fairly priced by imposing anti-dumping duties, Hammond said.

But Koehler called on the European Commission, the EU's governing body, to do "much, much more to deal with unfairly traded imports."

"Inaction threatens the future of the entire European steel industry," he said.

Tata, whose European operations include plants in the U.K., the Netherlands, Germany, France and Belgium, said that in the past two years, imports of steel plate from China have quadrupled.

A stronger pound has also undermined the competitiveness of British exports, and high electricity costs have eaten into profits.

American steel companies have also felt the bite of both cheap Chinese imports and a strong dollar. The firm U.S. Steel has said that a strong American dollar is one factor contributing to its declining profits, and Chinese imports have contributed to a flood of layoffs in the American steel industry.

Tata Steel, part of a corporation based in India, previously said it planned to cut costs and focus on higher-valued products. Oversupply is greatest among lower-value products.

Union leaders were devastated, but not surprised, by the job cuts.

"I've worked here for 40 years and I don't know my future," said Paul McBean, from the Community union at the Scunthorpe plant. "It's the same for a lot of people in there."

Al Jazeera and wire services