Tata Steel has warned suppliers that if they don’t slash prices by 30% then they risk losing Tata’s business.
The company’s Long Products division, which supplies steel beams, railway tracks and other products, has written to its suppliers asking for a 30% cut in prices in the long term.
It wants an “immediate” price reduction of 10% on all purchases.
The company says market conditions have led to a “difficult business situation” at Longs Steel UK.
Tata says it is trying to transform the business but said it needs support from its “valued” suppliers.
The letter says: “Should you – for any reason – be unable to support us in our efforts, we will need to fully consider other options.”
One recipient of the letter was Neil Smith from recruitment business Kinetic.
He said that in his 23 years as the company’s boss he has “never received anything like this”.
“You don’t have valued suppliers offering valued services and then turn around and say take a 30% cut. That goes against any business maxim on the planet,” he told the BBC.
Tata did not respond to the BBC’s request for a response.
Last month Tata Steel announced nearly 1,200 job losses at its plants in Scunthorpe and Lanarkshire.
Nine hundred jobs will be lost at the firm’s plant in Scunthorpe. The remaining 270 jobs will go in Scotland.