Yesterday, I highlighted how the cumulative impact of energy policies, including the proposed carbon tax,   has substantially increased costs for Energy Intensive Industries within UK manufacturing. The Alcan aluminium smelter at Lynemouth is one of hundreds of others firms across the UK now exposed to considerable energy cost rises and levies. It is essential that George Osborne announces relief and additional support as soon as is practicable so that other companies aren’t tipped over into choosing closure.

The second part to the equation is the aggressive profit targets Rio Tinto sets its sites.

The firm demands an annual return of 40%. It is high in the current global context high but one they believe they can realise in other parts of the globe. There is a wider point about corporate decision-making. 40% did not have to be a figure carved in stone or one that should determine the survival of the site. After all, Rio Tinto is not a company in crisis. Far from it. The latest financial data from August 2011 reveals Rio Tinto’s global operation achieved record first half net earnings totally $7.6 billion. This represents a 30% increase on their first half results from 2010.

The profit targets were set in boardrooms far away from the East coast of Northumberland. There is no workforce representation on Rio Tinto’s board when these decisions were taken. Had there been they would have been able to highlight how those working at the Lynemouth site were embarking on new lean production practices to further boost productivity. They would have been able to raise the fact that Rio Tinto bought Alcan in 2007 at the worst time for aluminium prices as this table shows.

 
Worker representatives could have argued that it was unfair and unwise to take a short-term view of its UK returns in comparison to smelters in Norway, Cameroon, Australia, Oman, Iceland and France. Instead we are faced with a multinational company taking a hasty verdict on Government energy policy An entire community in South East Northumberland will pay the price.

Equally, Alcan workers have a legitimate grievance that Government has not already taken action to address the cumulative impact of its energy policies on heavy industries.

Rio Tinto’s global code of business conduct states:

‘Actions speak louder than words. The behaviour of each and every one of us will influence how well we perform and how the world views Rio Tinto.’

Let’s all hold them to that. It is now time for Rio Tinto to properly support the workforce and work flat out with agencies and government to provide support and opportunities in its disposal in the coming months. Similarly the Government must swiftly establish and announce a package required for other Energy Intensive Industries as well as new measures for job creation in South East Northumberland. Beyond this we need greater corporate accountability to both the workforces that generate the wealth and responsibilities to the communities in which they operate. It is incumbent on all decision-makers to establish a better way of doing business in the future.

The TUC and unions in the industry have been warning Government about this risk for two years. The Alcan smelter in Lynemouth, Northumberland,  is the county’s biggest private sector employer. It has been a mainstay of good quality and well paid employment for 40 years in an area still working hard to recover from the devastating closure of deep coal mines. Sited just two miles away from Ashington, once known as Europe’s biggest pit village, Alcan has made a considerable contribution to the local economy during the toughest of times.

The owners, Rio Tinto, have issued redundancy notices to the smelter’s 515 workers having failed to find a new buyer. But Alcan is not just another victim of a slowing global economy or a growth-free Great Britain. There is a wider policy and political context.

The smelter at Alcan is one of many Energy Intensive Industries that has increasingly anxious about the industrial implications of the Government’s carbon tax. Faced with the prospect of having to use its annual £40 million profit from the smelter to pay new levies, the plant’s future was increasingly uncertain. As a multinational corporation, Rio Tinto has the ability to hop, skip and jump across the globe to locate and invest in any country in the world – including those with far weaker carbon emission regulations than in the UK.

Chief Executive of Rio Tinto Jacynthe Côté directly attributed blame to Government policy-making:

“This decision follows a thorough strategic review which explored every possible option for continuing to operate the smelter and power station. However, it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation.”

Elsewhere steel, ceramics, glass, paper, minerals and chemical firms are calculating the impact on their business plans and projects. Together they employ 225,000 people in the UK. Just 12 days away from George Osborne’s Pre-budget Report there are growing demands from industry for greater certainty and in particular relief against the carbon floor price for the sector. Earlier this month the Energy Intensive Users Group wrote to the Secretary of State asking for the Government to ‘provide energy intensive businesses with as much investment certainty as possible, through a comprehensive package of measures that recognise UK businesses and sectors exposed to carbon leakage.’

The TUC has always supported a carefully managed ‘just transition’ to a lower carbon economy. To the workers in Lynemouth this is far from just. The Government has no time to lose and must adopt a balanced package of support than enables Energy Intensive Industries to take that transition to a lower carbon economy. It must push ahead to create more green manufacturing jobs to harness and increase the progress and powers of a Green Investment Bank. If they do not then the 515 ordinary working people in Northumberland will soon be joined by many thousands of others across the UK. It is too high a high price to pay for inaction in Westminster.