HEADLINES:
November 15 2018
British steel seeks a post-Brexit future
12 February 2018

The U.K’s steel industry, unions, politicians seek to prevent a repeat of Redcar, a former steel heartland

By the wind-battered seaside of Redcar, a town on England’s north-east coast, stands the shell of the former steel works of SSI. Bought by the Thai firm from Tata Steel in 2011, hopes of a stable future were dashed within the next four years, as the site was closed in 2015, with the loss of more than 2,200 direct jobs plus more in the supply chain and beyond.

While concerted efforts to regenerate the area have been made, the impact of the job losses has had a devastating impact on the local economy, which had been a centre of steelmaking for more than 175 years, with many former workers still struggling to find employment, or forced to take on jobs at knock-down wages.

Since then, fears that it wouldn’t be the last steel heartland in Britain to collapse have haunted the industry — not least when Tata Steel U.K. put all its U.K. assets up for sale in 2016, prompting a hurried journey to Mumbai by the then business secretary Sajiv Javid.

Five-year breather

Later that year, Tata Steel and the unions agreed on a deal to keep both the blast furnaces open at Port Talbot — the Welsh plant home to its strip steel operations — for at least five years, with a £1 billion investment, in return for changes including the restructuring of the pension scheme. Its long products division has been sold to Greybull Capital and now operates as British Steel Ltd., while its speciality steels business has been sold to Liberty U.K. Earlier this year, Tata Steel struck a deal with the U.K. authorities over its pension arrangements which it said was key to a sustainable industry. While global demand has revived, as have prices, few within the industry remain complacent about the future. Earlier this week, Community, a union representing Tata Steel workers, hosted a conference that brought together its members, politicians and industry in an effort to kickstart change, and push for the sector-deal that industry has sought from government. “The past few years have been the toughest the industry has had to face… thousands of jobs have been lost … it’s a reminder of what happens when industry is not properly supported,” said the Union’s president Jacqueline Thomas.

“The crisis may have left but there are big challenges ahead,” said Roy Rickhuss, the union’s general secretary who led its cross-union “Save our Steel” campaign in 2016, in a drive to put steel at the top of the political agenda.

“The crisis was about short-term emergency measures…. and government did listen but where we are now – we are not in crisis but we are not out of crisis – the steel sector is a global sector cyclically – it will suffer a downturn and we don’t want to be here in the U.K. at the bottom of the crisis as we were in 2015,” says Gareth Stace, the director of industry body U.K. Steel, who submitted an industry-led vision of a steel sector deal to the U.K. government last September, which included industry pledges for significant new capital investment, including in R&D (focus on value-added specialised products is seen as crucial for the industry going forward) in return for further action by the government. Such deals have been struck with other industries, including Britain’s auto sector.

Among the industry’s biggest asks are measuers to tackle high energy prices — these remain around 50% higher for U.K. industry than they do compared with European competitors including in France and Germany.

“We cannot compete at the moment… it’s about cost fundamentally,” said Jon Bolton of Liberty Steel U.K., owned by Sanjeev Gupta, and which has been acquiring largely distressed steel assets globally. He called for a level-playing field, as part of the sector deal.

With the uncertainty around Brexit, clarity was key, said Henrik Adam, the COO of Tata Steel Europe, who warned that the industry had been boosted by “artificial” factors — the movement in exchange rates in the industry’s favour, and the increase in trade defence measures against dumping from China and beyond.

“That is not there forever — it gives us some time — four to five years, to recover our industry,” he said. ”It’s not about hard or soft Brexit... we need clarity which gives investing parties some form of security they can rely on.”

The future of Britain’s trade defence strategy is a growing concern to industry and unions, fearful that Britain — which had in the past blocked some EU efforts to bring in anti-dumping measures — will have a weak system post-Brexit, with recent legislation doing little to allay concerns.

‘No evidence of action’

“At least with the EU you are part of a block of 500 million consumers with the power and leverage to stand up even to a giant like China…” said Stephen Kinnock the MP for Aberavon (which includes the Port Talbot works), who believes that under the system likely to come forward, it will be “incredibly difficult” for producers to initiate anti-dumping measures… “Where is the evidence that the government is actually taking the action we need to see?”

Industrial Strategy Minister Richard Harrington sought to reassure industry that it was on the case, pointing to efforts to increase public sector procurement of U.K. steel. The government’s industrial strategy provided the obvious opportunity for boosting the steel industry, through a “landmark” sector deal, he insisted. “There are lots of words… what we want is action,” said Redcar’s MP Anna Turley, whose perspective at the conference offered a very human face to what was at stake.

“We can’t let [what happened in Redcar] happen to any other community…we are trying to move on in Redcar but it should never ever happen again.”

 

 

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