The UK’s aerospace trade body has called for the government’s “urgent intervention” to protect steel production at Sanjeev Gupta’s wavering Liberty Steel empire.
The interim chief executive of ADS, Kevin Craven, last week wrote to business secretary Kwasi Kwarteng warning that the sector faced a shortage of steel for plane parts if the plants were to fail.
Ministers have already rejected a £170m bailout bid by the tycoon’s firm.
In his letter, which was reported by the Telegraph, Craven said: “The aerospace industry relies on Liberty for the supply of special high strength, anti-corrosive grade steel… there are very few alternative sources worldwide for these types of aerospace steel and capacity is limited.”
He added: “ADS urges the UK Government to support the continuity of production at Liberty’s steelworks.”
Gupta’s Liberty Steel, a subsidiary of the tycoon’s GFG Alliance, owns 12 metalworks in the UK, employing around 5,000 people.
Fears over the solvency of the group have been growing since its main financier, Greensill, went bust last month, triggering a major lobbying scandal in the process.
Gupta is in the process of trying to secure alternative funding for the business, but is racing against its various creditors, including banking giant Credit Suisse.
The firm said that demand for aerospace parts had declined 60 per cent due to the Covid-19 crisis.
Yesterday Kwarteng told MPs that the government would not step in to prop up Liberty Steel under Gupta had finished his attempts to refinance the business.
He defended the government’s decision not to grant GFG Alliance a bailout, blaming the “opaque” nature of the family-run conglomerate.
“There was no guarantee that the money would have stayed in the UK”, he said.
An ADS spokesperson said: “We are in discussions with our members over any potential implications to our industries in the event that supplies from Liberty Steel were disrupted. All discussions are commercially confidential.
“It is in the interest of our industries for a solution to be found that ensures continuity of production at Liberty’s steelworks.”
A government spokesperson said: “The government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.
“The government recognises the important role steel plays for sectors such as aerospace, and has supported the sector extensively with almost £11 billion made available through grants, loans and export guarantees.”