Port Talbot buyout: Notes of caution

News that the Managing Director of Tata's strip products intends to lead a management buyout has excited hope that the company's British steel operations have a viable future.

Stuart Wilkie believes the loss-making business can be turned around, and that's obviously encouraging, but at this stage we know precious little about what he proposes.

A few notes of caution:

Those close to Stuart suggest that his rescue plan is similar to the one submitted to the Tata board a month ago - Tata's executive team judged that it required investment they were unwilling to commit to and in any event was unlikely to succeed.

It's not yet clear what Wilkie is proposing to buy. The "strip" steel business is centred on Port Talbot and Llanwern and employs around 5,000 people. Tata has made it clear it wants to sell the British business as a single entity - every steel works, mill and distribution centre. 11,000 jobs are stake here.

Wilkie is clearly hoping for taxpayer support, we don't know how much. For that to be forthcoming he also needs to demonstrate he has other sources of funding - the government says it will "co-invest", but won't shoulder all the risk.

Finally, no one seems to believe that what remains of Tata's steel business can survive in its current form. Costs need to be cut, difficult decisions lie ahead, Wilkie needs to be clear about what the implications of an MBO are for staff.

Sheffield Forgemasters is proof that managements buyouts can work. This one is still in its infancy.