UNION chiefs have reacted with dismay to news that North-East steel firm Tata has signed a memorandum of understanding ahead of a possible sale of its Long Products Europe business.

If the deal with the group led by billionaire US investor Gary Klesch goes ahead it will affect hundreds of staff at Tata's Teesside Beam Mill in Lackenby, the Special Profiles businesses in Skinningrove and Darlington, a rail consultancy in York, as well as distribution sites in Teesside and Newcastle.

Tata sites in Scunthorpe and on the Continent are also affected.

It is not known at this stage if any jobs will be at risk as a result of the deal.

Tata employs about 1,500 workers across all of its North-East sites, and 6,500 across its European Long Products business.

Roy Rickhuss, General Secretary, Community and Chair of the trade union Steel Committee: “We’re extremely disappointed with the way that Tata Steel have handled this announcement, which does not reflect well on Tata’s values. However, I am pleased that Tata Steel Chairman, Cyrus Mistry, has now agreed to meet the unions and I hope this can take place soon so that we can start to address the understandable worries and concerns of our members, their families and communities.”

The National Trade Union Steel Co-ordinating Committee, said: "Tata Steel has failed to consult at all with the trade unions before making this move, which could have serious consequences for employees and contractors right across Tata Steel, not just within the Long Products business that it wants to sell. 

"The unions have been treated with contempt in this process as the level of consultation that we would expect ahead of such a major strategic announcement has not taken place. 

"We were made aware of this fait accompli two days ago which is neither within the spirit nor the letter of longstanding Information and Consultation or European Works Council agreements."

Tom Blenkinsop, chair of the APPG on steel and Labour MP for Middlesbrough South and East Cleveland said: “After the success of the Trade union led campaign to save the Redcar blast furnace the government has rested on its laurels and has even undermined energy intensive industries since coming to power in 2010.

“As I said in a debate on the steel industry yesterday it is clear that the industry is suffering from the twin problems of the rising value of sterling against the euro, and continuing uncompetitive energy prices.

“While there’s little the government can do about the former, this does demonstrate that the UK steel industry remains very fragile, and underlines the importance of the Government acting urgently on items that are within its control – and that is energy prices.

“The coalition government must now roll up their sleeves and get involved in an active industrial policy to maintain our key industries like steel. They must work to protect and support our hard working loyal communities in Teesside, East Cleveland and across the United Kingdom.

“I will be speaking to the management of Tata Steel and officers of the Community Trade Union to see what help can be given to the workforce and I will also be putting pressure on the government to find a buyer for the long product sites within the UK.”

Business Secretary Vince Cable said: “The next few months will be a time of uncertainty for the company and employees. The proposed sale shows the harsh reality of trading conditions in parts of the steel industry.

"I met the global head of Tata in India this week and he has personally re-affirmed to me his company's commitment to the British steel industry and to investing substantially in Port Talbot and strip steel.

"My officials and I will continue to work closely with Tata Steel and seek to meet the potential buyer, Klesch, to understand more about their plans. We welcome Klesch's stated intention to support the continuity of the business".

Karl Koehler, the chief executive of Tata Steel’s European operations, said: “We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome.

"We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.”

Explaining the decision, Mr Koehler said: “We are making huge strides on our strategic journey to become a premium, customer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees.

“We’ve improved the competitiveness of Tata Steel’s European operations, including Long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.

“Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise.

“We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies.

“We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that.”

The European steel industry is emerging from one of the most challenging economic periods in its history. Tata Steel has invested £1.2bn in its UK operations and trained 1,200 UK apprentices and graduates since acquiring Corus in 2007.