Are we about to say goodbye to the steel industry?

The metals industry's woes continued this week, as Tata Steel, the UK’s largest producer, announced a further 1050 job cuts. While the material has seen a steady decline in demand by most major sectors, its actual manufacture tells another, more troubling, tale.

The European steel industry is now in crisis. Since 2009 a fifth of the work force has been lost, and demand is down 25% from levels prior to the 2008 recession. Cheap metal is flooding in to Europe from the Far East, making it almost impossible for manufacturers in the UK to compete.

Industry insiders claim China’s steel industry is deliberately selling to the European market at beneath the cost of production, a practice known as dumping, due to massive over capacity. Pictures of closed yards and rusting stock laying dormant do not show the Chinese initiating a strategic underhand pricing war, but an industry also in crisis.

As global markets slump, and over capacity as it is, it seems the worldwide steel industry is struggling to overcome turbulent market forces. No more so than in UK, where so far more than 4000 jobs have been lost since last summer. And the situation shows no sign of improving. The European Commission is due to make a proposal to recognise China as a market economy. Such a move would leave EU member states powerless to impose any kind of countervailing tariffs against what many say are unfairly cheap imports from the Far East, that are dramatically distorting the global market price.

Coupled with the strong pound it is serving a decisive blow for the UK industry. However, this is a perfect storm on many fronts. The UK has been fighting an uphill battle for some time. While cheap imports might take some blame, the enemy has also been within. The steel industry - like so many others - has for years been blighted by high energy prices and business rates several times higher than many other European countries.

Ministers must act quickly, and the Government should offer immediate concessions. The Prime Minister pledged, ‘I want to have a strong British steel industry at the heart of our important manufacturing base’, yet little real action has followed. Others have called for a ‘strong and rapid response’ as discussions continue in Brussels. The region is, unfortunately, is renowned for being slow and unnecessarily bureaucratic.

As we usher in the New Year feeling positive about UK industry and 21st Century innovation more widely, are we about to be saying goodbye to an old friend, traditional player, and foundation industry? I sincerely hope not. But, the threat is very real, Tata is cagey about the future, and the industry is paralysed by Government inaction.

Author
Justin Cunningham

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When you sell out to every tom dick and harry, and you are in the "E.U." You have had it. All we would have to do, in the good old days, would have said get all your power for free. Then "Bobs you're Uncle" Richard Vere-Compton

Comment Richard Vere - Compton, 20/01/2016
A very interesting article, I do think that some of our manufacturing industry must shoulder some of the blame, whether its car, ship or rail, they insist it must be cheap and the consequence of this is that they source away from the UK, thus contributing to the decline in what was once a proud industry

Comment Deryck Shead, 19/01/2016
A very interesting article, I do think that though that some of our own manufacturers are partially to blame, they insist everything must be cheap, whether its car, ships or rail they source from non UK steel producers without a consideration for the long term difficulties that they create and the consequence is a decline in a once proud Industry

Comment Deryck Shead, 19/01/2016
An interesting article, but I also think that our manufacturers, whether car, ships, rail etc must shoulder some of the blame because they insist that we must be cheap so they buy steel from non UK companies thus helping towards the decline of a once proud industry

Comment Deryck Shead, 19/01/2016
Once again we see the absolute lack of long term strategic planning by successive Governments going back decades - the inability to plan long term for anything, be it manufacturing, energy, flood prevention, the list goes on, is staggering. Parliament appears to have become a self serving institution solely for the benefit of those lucky enough to have been elected to it. Its no accident that the strong economies of Germany and to a lesser extent France are where they are due to strategic planning that goes beyond the next General Election !

Comment Colin Ward, 19/01/2016
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