Tata Steel criticised by small businesses after asking suppliers for 30 per cent price cut
Embattled Tata Steel has drawn criticism from small businesses after asking suppliers to give it a massive price cut.
According to the letter seen by the Sunday Telegraph, it has asked for an immediate 10 per cent cut which it plans to increase 30 per cent as it tries to pass on the effects of deteriorating market conditions.
The company, which recently slashed around 1,200 jobs at plants in Scunthorpe and Lanarkshire, warned suppliers about refusing the offer.
“Should you – for any reason – be unable to support us in our efforts, we will need to fully consider other options,” the letter said.
A spokesman for Tata Steel said:
Our Long Products unit has been in dialogue with suppliers for a month. Initially some were spoken to directly, others were contacted by letter to begin a consultation process.
We have had an excellent response with positive and innovative ways we can work together.
The current position in UK steel is no secret and has been explained in all communications with all partners as we look for collective ways to find better solutions to solve the difficult and challenging trading conditions.
John Allan, national chairman at the Federation of Small Businesses, said he was "deeply concerned" by Tata's actions. He added:
Small businesses rely on the integrity of their bigger customers when it comes to honouring agreed contracts and paying up in full and on time.