IAIN WRIGHT: We lose steelmaking in Britain at our peril
The news that Tata has decided to sell its UK steel operations is of great concern. As the largest steel manufacturer in the country, this throws into doubt the ongoing viability of steel making in this country.
It also has serious implications for our town and region: hard on the heels of the devastating blows to the steel industry and local employment levels that came with the closure of Redcar’s SSI and Caparo’s Hartlepool steel plant, this also questions the future of the town’s pipe mills.
The global steel industry is suffering enormously at the moment. Steel manufacturers in the USA and Europe are being buffeted by the enormous oversupply of cheap Chinese steel.
China produces about 1.2 billion tonnes of steel every year, but it now, because of its slowdown, cannot use all of this production internally.
China produces more than double the amount of steel than the next four biggest steel producers – India, Russia, the United States and Japan – combined. Even its oversupply production is more than the entire production of the US, Japan and Germany. As a result of this, steel prices have halved and steel producers have been left reeling.
In this context, and given the vast global economic forces at work, the notion that the government can simply step in and alter the global price of steel is simply wrong.
However, the UK Government could be doing a lot more. It is very telling and revealing that the Tata board meeting in Mumbai this week was reviewing the recent performance of the European steel operations.
The company has substantial plants and assets in the Netherlands, but it has decided not to sell those plants but only to put up the UK part of the business up for sale.
That does indicate to me that although global forces are at work, UK steel manufacturers are not operating on a level playing field, and things like energy costs, business rates and procurement are not helping. The Government could step in and do much more.
There is a big question here with Tata’s decision. What sort of economy does Britain want to have? Is it important that a modern, advanced economy such as ours has a manufacturing sector and a steel industry within manufacturing? I think the answer to those questions are a resounding yes.
Manufacturing remains an important part of a modern economy and the domestic production of steel is absolutely vital. Steel underpins much of other parts of the manufacturing chain, such as aerospace, automotives, construction, energy and defence.
It must be recognised as a strategically-important sector. In that regard, the government has to consider all possible options to retain the skills, capability and capacity of the British steel industry. If that means nationalization, even for a short time, to steady the ship and maintain the industry at a time of global flux, so be it.
The matter is also important in respect of Hartlepool’s economy.
Unemployment in the town is going up, not coming down, and is now two and a half times higher than the national average. The town cannot afford to lose jobs at this facility, good, highly skilled and well paid jobs. The fear will be that any potential buyer may want to asset strip at the pipe mills, throwing people out of work, losing those skills forever.
It is frustrating that Parliament is not sitting when this important issue unfolds. I believe steelmaking is of profound importance for the British economy that MPs should be recalled to Westminster to question the Government on this vital issue. We lose steelmaking in Britain at our peril.