A BILLIONAIRE remains in talks to buy a North-East steel business, which is being forced to cut jobs after a drop in demand.

The Northern Echo understands discussions are continuing between Tata Steel and American Gary Klesch over the firm’s European Long Products division.

Mr Klesch last year signed a memorandum of understanding with Tata, ahead of a proposed sell-off of all or parts of the business.

That has now been extended for further due diligence, though no date has been set for a decision on any deal with the ex-steel mill electrician’s Klesch Group.

Long Products employs about 750 North-East workers and includes the special profiles plant, in Skinningrove, east Cleveland, which is shedding jobs due to market pressures.

However, the firm says it doesn’t expect to make any compulsory redundancies.

The company employs about 360 people at Skinningrove, and the factory has previously supplied steel for the £6.2bn HMS Queen Elizabeth aircraft carrier and earthmover track shoes.

Referring to the job cuts, a spokesman said the plant is led by demand, meaning numbers can vary when orders rise and fall.

He added: “The company has started consultation into the reduction of 25 positions at the Skinningrove plant.

“This decision has been made to allow the company to reduce its costs to match current demand.

“There will be no loss of shifts or capacity at the site.

“While Tata Steel understands this is distressing news for employees and their families, the company is confident none of the job losses will be compulsory.”

The plant is one of many in Tata’s Long Products arm, which also includes the Teesside Beam Mill, near Redcar, and Tom Blenkinsop MP for Middlesbrough South and east Cleveland, said he will talk to unions and management to help staff in his constituency.

Mr Blenkinsop, who chairs the All Party Parliamentary Group on Steel, said: “It is clear the UK steel industry is in a perilous state and as the biggest producer, Tata Steel is particularly affected.

“I will be offering my support to those affected and will work with unions and management to try and mitigate against compulsory redundancies.”

The Skinningrove announcement comes just days after Tata revealed it is looking at cutting up to 720 posts at its speciality and bar business, in South Yorkshire, though bosses have said the two are not linked.

The company is making the changes at its specialist and bar arm, which oversees high-value steels, including some products for aircraft landing gear, as it fights against increased imports and rising energy rates.

Last week, steel unions also approved changes to the company’s pension pot, officially ending the threat of the industry’s first strike in more than 30 years.

Workers accepted a deal on the British Steel Pension Scheme, which will see the programme remain open.