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Corus Sues Foreign Bosses For Millions

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sues foreign bosses for millions

Corus is to sue a number of foreign steel executives individually for 'tens of millions of pounds' in damages for allegedly pulling out of a deal that threatens the closure of its giant Teesside plant, with the loss of up to 10,000 jobs.

Lawyers for the Anglo-Dutch steel company want to apply maximum pressure to force a consortium of four overseas companies to reverse a decision to abandon a ten-year agreement to buy stock from the Redcar plant.

The legal action against the top executives, including Antonio Marcegaglia, brother of Emma Marcegaglia and chief executive of the lead company in the consortium that bears their name, comes on top of litigation for breach of contract.

The other members of the consortium are South Korea's Dongkuk Steel Mill Company and Luxembourg-owned Alvory and Duferco.

The individual legal action has infuriated the foreign consortium, which is now refusing to talk with Corus until it withdraws the threat.

A consortium spokesman said: 'Although it has no obligation to do so, the group has opened the door to new discussions. But the aggressive litigation initiated by Corus remains a block to these talks starting.

'There is no appetite to sit across the table from a loaded gun. All Corus needs to do is to suspend its litigation against the consortium members.

'If that happens, talks can take place. But Corus's refusal to do this suggests it has no real wish to explore ways of saving jobs. Apparently, it prefers the courts to decide once the plant has closed.'

Corus, formerly British Steel, denied that legal action was a barrier to talks.

'There is no unwillingness to talk from Corus,' a spokesman said. 'The crux of this issue is that the consortium has failed to honour a long-term offtake [buying] agreement-which is crucial to our Teesside operations. We have shown considerable flexibility already to the consortium and there are no barriers to further talks. The consortium's failure to meet its contractual obligations automatically triggers arbitration.'

Corus has managed to redistribute work to keep the Teesside plant operating until August. It has the backing of the Prime Minister in its battle to get the consortium to change its mind. Gordon Brown has ordered Business Secretary Lord Mandelson to pull out the stops to save the plant. Brown last week promised union leaders that he was talking to Corus about the situation. And he has been putting pressure on the Italian government to intervene in the affair, which is threatening large redundancies in an area of high unemployment.

What most angers Corus is that the consortium made more than £500m in the first four years of the contract before steel prices slumped. Even more galling is the fact that the Italians came to Redcar in January with their Korean partners and signed a memorandum to buy the whole plant. In Italy, Marcegaglia workers are being paid to stay at home.

Sad times. British steel used to mean something.

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Good news for house prices in the North East as unemployment translates to higher prices.

What we need is more job losses across the country to get house prices going up.

Edited by interestrateripoff

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Good news for house prices in the North East as unemployment translates to higher prices.

What we need is more job losses across the country to get house prices going up.

Can't argue with logic.

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What seems ridiculous to me is that the fate of this gigantic steel mill rests on some shady, swarthy Italian buyers of steel. But last time I checked steel was something traded on an international market, with world prices for the steel.

Why is it that our old steel mills cannot compete on the world market, while other developed nations are able to compete on the world market. In fact some like Korea get accused of 'dumping' steel too cheaply.

I'm willing to bet why our steel companies cannot compete. While sane capitalists quickly pay down the capital of the plant which is usually by far the main expense in tehse type of operations.. more than labour even in developed nations.. British managers and finance geniuses always want to 'free up' the capital and invest it in risky ventures, or buy other companies with mergers. Then when those deals go badly or the price of steel falls, the original plant isn't viable.

Meanwhile in Japan they have been diligently paying off the capital loan for their steel mill, and when the price of steel falls, its ok because they have really reduced or completely paid off the loan, which is the main expense in such an operation.

Shutting down a perfectly good steel mill is so idiotic it would not even be considered in most other nations.

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What seems ridiculous to me is that the fate of this gigantic steel mill rests on some shady, swarthy Italian buyers of steel. But last time I checked steel was something traded on an international market, with world prices for the steel.

incorrect, steel is not traded like other commodities because there are thousands of grades.

the customer needs to order a specific grade at a specific size.

because of this steel is not traded like say oil or corn or sugar.

Why is it that our old steel mills cannot compete on the world market

lots of reasons, the main one is that CORUS is run by sub prime management. there are lots and lots of problems with corus because of poor management. too many to list.

of course it doesn’t help that corus had old plants and hence it is more difficult to compete with new ones. for example on a new plant you would cast the steel and while it is hot roll or shape it into a semi finished or finished product.

with most of corus plants they cast the product and then move it and then reheat it and then roll it. if that adds only £20 a tonne that is some £500m added to cost because of old plants and methods.

I'm willing to bet why our steel companies cannot compete. While sane capitalists quickly pay down the capital of the plant which is usually by far the main expense in tehse type of operations.. more than labour even in developed nations.. British managers and finance geniuses always want to 'free up' the capital and invest it in risky ventures, or buy other companies with mergers. Then when those deals go badly or the price of steel falls, the original plant isn't viable.

no the main reason is sub prime management at all levels.

what you say is correct though, a business such as steel needs to save in the good times to spend in the downturn to survive whereas corus is heavily in debt.

Shutting down a perfectly good steel mill is so idiotic it would not even be considered in most other nations.

The Teesside steelworks is not a normal steelworks.

They make slab steel and have no outlet for other corus mills (ie we make slab and we do not have the capacity to roll it into anything useful). Thus the Teesside steelworks needs to sell most of its slabs to a customer which has the opposite problem. a lot of mill capacity but not the steelworks to provide that capacity.

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Why is it that our old steel mills cannot compete on the world market, while other developed nations are able to compete on the world market. In fact some like Korea get accused of 'dumping' steel too cheaply.

The answer to your question is that staff in the UK have to be paid much more than staff in other countries so they can afford ludicrously expensive british homes.

This is not a joke, this is the genuine reason.

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incorrect, steel is not traded like other commodities because there are thousands of grades.

the customer needs to order a specific grade at a specific size.

because of this steel is not traded like say oil or corn or sugar.

lots of reasons, the main one is that CORUS is run by sub prime management. there are lots and lots of problems with corus because of poor management. too many to list.

of course it doesn’t help that corus had old plants and hence it is more difficult to compete with new ones. for example on a new plant you would cast the steel and while it is hot roll or shape it into a semi finished or finished product.

with most of corus plants they cast the product and then move it and then reheat it and then roll it. if that adds only £20 a tonne that is some £500m added to cost because of old plants and methods.

no the main reason is sub prime management at all levels.

what you say is correct though, a business such as steel needs to save in the good times to spend in the downturn to survive whereas corus is heavily in debt.

The Teesside steelworks is not a normal steelworks.

They make slab steel and have no outlet for other corus mills (ie we make slab and we do not have the capacity to roll it into anything useful). Thus the Teesside steelworks needs to sell most of its slabs to a customer which has the opposite problem. a lot of mill capacity but not the steelworks to provide that capacity.

Thanks for that info about how the steel industry operates.. subprime management in industry appears a big problem in our nation. Other advanced nations appear to be able to run steel plants, but our very poor managers but highly overpaid seem to fail.

Edited by aa3

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The answer to your question is that staff in the UK have to be paid much more than staff in other countries so they can afford ludicrously expensive british homes.

This is not a joke, this is the genuine reason.

I think a lot of it is British companies are ran by accountants and lawyers, while in most of the world industrial companies are ran all the way up management by engineers. Who actually understand the processes as they worked their way up from doing actual work.

Its quite shocking to talk to some high level managers in Britain who are in like the auto industry but dont' know the difference between an alternator and a toaster.

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Well, I can see these houses on Haverton Hill road and Grangetown appreciating dramatically on the news...

Teesside is bad enough as it is. Mind, a lot of the skilled worker don't even live in the area.

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