A TYCOON’S bid for a steel business today lies in ruins, but his failure can galvanise a North-East organisation, it was claimed last night.

Gary Klesch has ended his interest in Tata Steel’s Long Products division, citing Government failures over crippling industry energy prices and cheap imports.

Mr Klesch’s advances, revealed in October last year, were long met with disapproval by unions and MP Tom Blenkinsop, amid fears of potential job cuts and changes to the business.

But, after Mr Klesch’s shock pull-out, which came after due diligence was extended for further talks, they spoke of their satisfaction, saying Tata’s decision to make Long Products a standalone wholly-owned subsidiary was an opportunity for a fresh start.

Mr Blenkinsop, Middlesbrough South and east Cleveland MP, previously told The Northern Echo he had doubts over Mr Klesch when his company, The Klesch Group, last year ended negotiations to take over the Murco refinery, in Milford Haven, Pembrokeshire, leaving hundreds of workers futures’ in limbo.

The billionaire’s acquisition sheet may include well-known companies such as Aegon and Shell, but Mr Blenkinsop said he was always wary of Mr Klesch’s steel credentials, particularly as his business back catalogue also includes lingerie firm Knickerbox.

The chairman of the All-Party Parliamentary Group on Steel said: “He has a diverse business background owning companies such as Knickerbox, French shoe manufacturers and oil refineries, and I did question how much real interest Gary Klesch had in steel.

“Tata’s decision, and one supported by workers, to make Long Products a standalone business offers it the best chance of success in the future.”

Roy Rickhuss, general secretary of the Community union, echoed the claims, saying a report on alternatives to Mr Klesch, put forward by all unions, has come to fruition.

He added: “It seems Mr Klesch may not have been the right person for the job.

“The unions have supported the creation of a standalone company for Long Products because, of all the options on the table, we felt it was the one that provided the opportunity for a sustainable future for the business.”

But, despite welcoming his retreat, Mr Klesch’s criticism of the Government over its help for the UK steel sector did strike a chord.

Mr Rickhuss said: “All aspects of UK steel production have challenges to overcome, and it is clear further support is needed so the steel industry can be competitive in a global market.

“The Government’s much-heralded support for energy-intensive industries has been slow to come on stream, whereas French and German producers have benefited from policy changes by their own governments for a number of years.

“Nobody denies the market is difficult, but the UK steel industry should not be held back further by the lack of a serious industrial policy.”

Mr Blenkinsop added: “The Business Secretary (Sajid Javid) apparently doesn't want to talk about industrial strategy at just the point when the steel industry needs an active strategy to support tens of thousands of skilled UK jobs.”