A vital steel plant which makes parts for Royal Navy nuclear submarines will be nationalised, the Ministry of Defence announced today.
Unions welcomed the move for Sheffield Forgemasters, which traces its roots back to the 1750s and supplies crucial components for the Trident fleet of nuclear-armed boats.
The MoD said in a statement: “The Ministry of Defence has today launched an offer to acquire Sheffield Forgemasters International Limited (SFIL), allowing HM Government to refinance the company and secure the supply of components for the MoD’s critical existing and future UK defence programmes.
“The MoD also intends to invest up to £400million for defence critical plant, equipment and infrastructure into SFIL over the next 10 years to support defence outputs.
“The acquisition has been assessed as the best value for money for the taxpayer due to the unique capabilities and circumstances.”
It said Sheffield Forgemasters was “the only available manufacturer with the skills and capability to produce large scale high-integrity castings and forgings from specialist steels in an integrated facility to the highest standards required for these programmes”.
The Government paid £2.56m “for the entire share capital of the company plus debt assumed”.
Officials said the nationalisation “will not prevent other UK based manufacturers bidding for MoD contracts, which will continue to be run in an open and fair competition”.
It plans to “eventually to return the business to the private sector”.
Last October, Sheffield Forgemasters said it would slash 95 jobs after the Covid-19 pandemic hit global markets.
The company said cuts to the 708-strong workforce were an “unavoidable necessity” but it remained optimistic about its long-term future.
It claimed at the time it was financially secure until 2022 because of its defence work.
UK Steel director-general Gareth Stace said: “The announced purchase of Sheffield Forgemasters by the MoD is to be warmly welcomed, marking the end of two years of discussions and the start of an important new industry and government partnership.
“Crucially, this announcement is an important confirmation of the steel sector’s strategic importance to the UK and the Government’s recognition of this.
“Whilst public ownership is not the answer for most of the steel sector, there is undoubtedly a need for an increasingly closer working relationship between Government and industry and for the development of a long-term strategy that will deliver the right environment for a sustainable UK steel sector.”
Community steelworkers’ trade union general secretary Roy Rickhuss said: “We welcome the acquisition of Sheffield Forgemasters by the Ministry of Defence.
“This move will secure Sheffield Forgemasters’ role as a critical supplier to the next generation of UK defence programmes.
“We know with the right framework of support our industry has a bright future at the core of a low carbon economy, so we are pleased to see some much needed investment going into Sheffield Forgemasters’ to provide long-term security.
“We see this move as a recognition of the importance of the steel industry to our country’s economic future.
“The pandemic has showed us the danger of relying on fragile overseas supply chains, so we are pleased to see a viable future secured for Sheffield Forgemasters.”
Northern Powerhouse Partnership director Henri Murison said: “Today’s announcement is a significant act to safeguard one of our most important manufacturing and infrastructure assets, not just in the North but in the whole of the UK.
“It’s right that Government should put its backing behind the significant economic potential of Forgemasters, which is a bedrock of current defence and future energy technology supply chains.
“This is a huge step forwards for the green industrial revolution here in the North of England, with Forgemasters pivotal for guaranteeing significant further UK-made content for both offshore wind and small modular reactors.”
Shadow Business Secretary Ed Miliband said the party “would back the whole UK steel sector with a comprehensive plan to secure the industry’s future, achieve sustainable decarbonisation, and protect jobs in steelmaking communities”.
He added: “Labour welcomes any move to protect jobs and capacity in the UK’s critical steel industry.
“We have long argued that the Government must step up to secure the future of companies of such strategic value.
“But the Conservatives’ total lack of an industrial strategy is failing steelworkers and leaving the industry lurching from crisis to crisis.”
The Mirror has been campaigning to Save Our Steel since the sector was hammered by plant closures and thousands aof redundancies in 2015.