Caparo collapses as UK steel industry woes worsen
21 Oct 2015
The crisis in the UK steel industry claimed another victim as Swaraj Lord Paul's Caparo Industries collapsed and parts of the group went under administration on Monday.
Sixteen businesses within Caparo Industries, which together employ around 1,700 people, including Caparo Industries Plc, Caparo Engineering Ltd, and Caparo Steel Products, will be taken under the control of the joint administrators team.
PricewaterhouseCoopers, which is acting as administrator, said certain parts of the London-headquartered business, with operations in the Midlands, were entering administration.
PwC will now brief staff for assessing options for the business both current and future, lead administrator Matt Hammond said in a statement.
Some of Caparo's other businesses, including Caparo India, Caparo Merchant Bar, and a Polish business Bomet have, however, not been placed in administration.
Caparo, which operates from about 20 sites across the UK as well as sites in India and the US, filed for administration in court in Birmingham as pressure on the sector intensified.
Caparo's troubles were first revealed by The Telegraph on Monday, as the sector reeled from a series of blows.
The collapse of Caparo Industries has increased pressure on the British government to take action to support the country's beleaguered steel industry.
''This is a significant business with a wide range of interests across steel, engineering, vehicle products and technologies. Its scale and reach into significant customers and its importance to suppliers cannot be understated,'' Hammond said.
The downturn in the steel market, tepid demand in some of its sectors, and a strong pound that has hit UK exporters, has left the company struggling.
During the financial year 2014 Caparo reported a loss before taxation of £5.3 million for the year to December 2014, against a loss of £3.4 million for the same period the year before, which it attributed to difficult trading conditions in the second half of 2014, and a rapid fall in steel prices, and adverse exchange rate movements.
Union and opposition politicians urged the government to take urgent action, following a summit on the steel industry that took place last week.
British steel industry has been hurt by rising energy costs and the dumping of cheap Chinese steel, which threatened the very future of the UK's steel sector. Prime Minister David Cameron is expected to raise the issue of dumping with Chinese President Xi Jinping who is visiting Britain this week.
