Turkey's military pension fund OYAK recently announced intentions to relocate its chemicals factory in Tyneside, U.K. to elsewhere in Europe, amid growing uncertainties over Brexit, the Guardian reported.
The Chemson factory, which makes additives used in the production of PVC plastics, may be moved to Turkey and Austria.
The Wallsend-based firm said last week it would halt production at the facility by the end of September and move its activities to other plants, amid moves to reduce costs, leading to a loss of 64 jobs, the Guardian reported on Monday. The move comes after OYAK reached a provisional agreement last week to take over the U.K.-based industrial giant British Steel, with plans for closure of the deal by the end of 2019, potentially saving thousands of jobs.
"The decision was taken after a Europe-wide review of production capacity, which demonstrated that the group could service its markets more cost effectively from its plants in Austria and Turkey," a spokesman for Chemson was cited as telling the U.K.-based newspaper the Chronicle.
The company will retain the site in the U.K. for its storage distribution, quality control and technical services team. Chemson reportedly said the decision is based on the business and financial benefits of capacity rationalization.
It did not mention whether the U.K.'s departure from the EU played any role in its decision, however, according to the Chronicle, in its most recent accounts, covering 2017, Chemson referred that the referendum and "ongoing uncertainty due to the Brexit negotiations" had affected the U.K. market.
"Like any other U.K. company Chemson Limited is affected by the Brexit vote, which increases uncertainties referring to the U.K. home market and affects exchange rates," the Guardian cited Chemson as
saying in its accounts.
A slump in the pound against the euro since the referendum was reportedly one of the main factors driving the company to a loss of 834,000 pounds (over $1 million) in 2017. Chemson estimated its currency-related loss was 165,000 pounds over the year.
Ataer Holding, an affiliate of OYAK, said on Friday it would have the exclusive rights to carry out due diligence on British Steel and expects to finish this in October and the deal could be completed by year-end.
Based in Scunthorpe, North Lincolnshire, Britain's second-largest steelmaker was put into compulsory liquidation on May 22 after Greybull Capital, which bought the firm for one pound from Tata Steel three years ago, failed to secure funding to continue its operations. Greybull blamed Brexit strains for its financial collapse.
Closure of the company, which produces high-margin, long steel products used in construction and rail networks, would jeopardize 5,000 jobs and a further 20,000 jobs in the supply chain.
The head of OYAK's mining and metallurgy division, Toker Özcan, said Friday his priority would be "to increase the production capacity and to invest in clean steel production in British Steel."
The Official Receiver said Friday it was focused to complete the sale of British Steel to Ataer in the coming weeks, during which time British Steel would trade and supply its customers as normal.
Ataer has nearly 50% of Turkey's biggest flat steel producer Erdemir.
U.K. Business Secretary Andrea Leadsom welcomed the deal as a step forward in securing British Steel's future. She also said she was committed to "a modern and sustainable future for the industry."
British Steel, with a heritage of 150 years, has production activities in the U.K., France, and the Netherlands.
It has the capacity to produce 4.5 million tons of raw steel annually, and manufactures rail, construction steel, special profiles and wire rod.
Oyak, established in 1961, is active in several sectors including mining, cement, automotive, finance, chemistry, metallurgy and energy.
Its assets and exports reached $19.1 billion and $4.7 billion, respectively, as of the end of 2018.