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.