THE success of a fledgling steel company has convinced an excavator maker to shift work from the US to the region, The Northern Echo can reveal.

British Steel says Caterpillar has switched some operations to its Skinningrove plant, in east Cleveland, after being impressed by the steel firm.

Paul Martin, British Steel’s managing director, told the Echo the move was a real sign of confidence in the business, which was formed last year from Tata Steel’s lossmaking Long Products division.

Caterpillar has been based at Skinningrove since the late 1990s and uses steel from British Steel’s neighbouring special profiles plant to manufacture track shoes destined for excavators and bulldozers.

However, Mr Martin, British Steel’s managing director, said its arrival in the market, which saw it turn a £79m deficit in Long Products to an earnings before interest, tax, depreciation and amortisation (EBITDA) profit of £47m in the year to March 31, has given Caterpillar officials greater belief.

Although reluctant to divulge specific details, Mr Martin confirmed Caterpillar was assessing potential further additions to operations at the east Cleveland site, on top of what it has already brought.

He said: “12 months ago they would have been a bit nervous but we have seen confidence improve.

“It is a real sign that Caterpillar believes in British Steel for the long-term.

“It’s good for the team and company.”

British Steel, owned by investor Greybull Capital, began operations a year ago after the latter bought Long Products off Tata for just £1.

Long Products had been running at a loss, with bosses blaming cheaper Chinese imports, lower market prices, expensive business rates and high energy costs for the difficulties.

However, British Steel officials told the Echo that the business, which employs hundreds of workers across the region, has been able to succeed where Tata struggled by giving the operation the attention it needs, introducing changes to production methods, such as ending steel plate production at a Scunthorpe base, and making a £21m cut in costs across iron and steel making.

That turnaround, revealed Neil Anderson, Caterpillar’s managing director at its Skinningrove plant, has provided his employer with greater faith in the company and helped strengthen their ties.

He said: “The collaboration is key to our strategy going forward and the great working relationship between our businesses has helped us to make quick progress in key areas.

“Both Caterpillar and British Steel are much stronger because of this and we look forward to continuing to work together.”

Peter Gate, British Steel’s managing director for special profiles, added: “By working together we have been able to jointly tackle some of the challenges we face, thereby improving the quality of the goods we make and improving production methods and times.”

Despite the optimism, British Steel has not been without some issues. It is making changes to its Skinningrove base, as well as a smaller steel finishing plant in Darlington, with up to 70 roles understood to be affected in the alterations.

Officials say the proposed alterations are based around modernising ways of working with a flexible production team.

The Echo understands the consultation process on those plans is continuing, though the firm hopes to transfer some workers to jobs at its Teesside Beam Mill, near Redcar, which will roll steel for Scunthorpe United’s new 12,000-seat football stadium and process structures for the Scalpel and 100 Bishopsgate skyscrapers in London.

The business last week revealed it had taken a 50 per cent holding in the Redcar Bulk Terminal, which sits close to the Beam Mill and oversees rail and sea operations, with bosses hoping the site will act as a gateway to further international markets.