Caparo in administration: Black Country workers fall victim to growing steel crisis

Caparo employs 1,600 people at around 20 sites across the Black Country, part of a vast multinational business empire headed by Lord Swraj Paul – Chancellor of the University of Wolverhampton – and his family.

Born in Jalandhar, in the Punjab, in 1931, he was the son of small foundry owner, who made steel buckets and farm equipment. But an impressive education took the young Paul to MIT – Massachusetts Institute of Technology – in the United States before he joined the family business.

But in 1966 he came to England seeking medical treatment for his younger daughter, Ambika, who was seriously ill with leukaemia. She died two years later but, rather than return to India, Swraj Paul decided to stay and work in the UK.

He started building what would become Caparo in 1968, taking out a £5,000 loan and starting up Natural Gas Tubes. The company, based in Huntingdon in Cambridgeshire, manufactured spiral weld tubes and achieved first year sales of £14,000.

Caparo Industries, the heart of the group specialising in the manufacture and supply of steel engineering products, now has sales of around £370 million.

The group expanded, acquiring a string of often historic metal-bashing businesses in the Black Country, where the group's industrial arm was based.

At the same time, Mr Paul became a leading philanthropist, getting involved with a number of charities, including the Ambika Paul Foundation, which he set up in memory of his daughter.

He also established the Ambika Paul Children's Zoo at London Zoo at a time when the famous institution was in danger of closure. It is a cause close to his heart because the zoo was a place his daughter loved to visit before her all to brief stay was cut short.

Meanwhile, Caparo has expanded to include new product development, materials testing services, hotels, media, furniture and interior design, financial services, energy and private equity investment. It employs more than 10,000 people in worldwide operations across Europe, North America, and Asia, including the Middle and the Far East.

His close links with the city have seen the university's new business school building named in his honour: the Lord Swraj Paul Building.

But the Caparo Industries group within his £1.3 billion empire is a major producer of steel products and has been hit by the growing crisis within the UK's ailing steel industry, struggling against cheap Chinese imports, high energy prices and the soaring value of the pound.

Lord Paul and Caparo's senior management have now called in accountants PwC – formerly PricewaterhouseCoopers – to take on the administration of the engineering business.

No-one at Caparo was commenting on the situation yesterday, but the aim of an administration will give Caparo breathing space; keeping the business going and continuing to pay the employees, while the long-term future of the engineering group is sorted out.

PwC says it will be 'business as usual' while it carries out a review of the business, aiming to stabilise trading while looking at the opportunities to restructure or sell the various businesses within Caparo Industries.

PwC lead administrator Matt Hammond said: "Its scale and reach into significant customers and its importance to suppliers cannot be understated. We will be rapidly assessing all options for the business through this week and beyond."

The most recent accounts for Caparo Industries, for 2014, show turnover inching down by 1.3 per cent to £368.1 million while the group fell to a £700,000 operating loss, compared to a £3.1m profit the year before.

However, Caparo Industries' UK operations made a £2.5m operating loss during the year.

Described as a yet another 'hammer blow' to jobs and livelihoods, Unite vowed to do everything in its power to protect jobs and skills at Caparo Industries and the wider steel industry. Unite is calling on the government to support a key component of the UK economy by taking action to stop the 'dumping' of cheap Chinese steel, help with high energy costs and business rates and ensuring that major infrastructure projects use British steel.

Tony Burke, Unite assistant general secretary for manufacturing said: "This is yet another hammer blow for steel and manufacturing communities across the UK already reeling from the closure of Redcar and job losses at Tata steel.

"Our members at Caparo Industries are highly skilled and work hard to produce world class products. We believe that the company has a future. Unite will be working with Caparo's administrators and doing everything in our power to save jobs.

"Government ministers need to ask themselves: How many more steel firms need to go to the wall before they step in and support the UK's steel industry?

"Failure to act urgently could lead to a 'domino effect' taking hold across the industry, leading to the loss of yet more skilled jobs.

In the UK Caparo is operating from 43 sites. There is also the Caparo Innovation Centre (CIC) at Wolverhampton Science Park, a collaboration between Caparo and the faculty of science and engineering at the University of Wolverhampton, which provides new product development services to businesses and independent inventors.

While the Caparo parent company is based in London, Caparo Industries' headquarters is as Popes Lane, Oldbury – also home to Caparo Precision Tubes and Caparo Tube Components. The group owns distribution business Hub le Bas, based in Rose Street, Bilston. It also owns Caparo Accles and Pollock in Oldbury; Caparo Atlas Fastenings in Wednesbury; Caparo Tube Components and Clydesdale Jones in Neachells Lane, Willenhall; CMT Engineering in Corngreaves Road, Cradley Heath; and Bridge Aluminium, in Wednesbury.

The business serves a wide variety of customers, both in the United Kingdom and abroad, in industries from stockholding and distribution of steel products, to original equipment manufacturers and off-highway vehicle manufacturers, the motorsport industry, railways, aerospace, marine and many others. There are also a series of speciality steel businesses under the Caparo Precision Steels banner, including Ductile Stourbridge Cold Mills in Willenhall, JB & S Lees and Firth Cleveland Steel Strip, both in West Bromwich.

Just a year ago the company invested £1.6m in its Black Country operations. Caparo chief executive, Lord Paul's son Angad Paul warned at the time: "We are operating in markets which are heavily price driven and under attack from cheap exports.