Steel: The need for a holistic approach

Published:  05 April, 2016

The news from TATA Steel Mumbai that it is exploring all options for ‘portfolio restructuring’ including the potential divestment of Tata Steel UK, in whole or in parts, is extremely concerning. It is difficult not to agree with Terry Scuoler’s, chief executive of EEF, sombre analysis: "This is potentially a massive blow for the UK steel industry, wider manufacturing and for the local community.”

As Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers, highlights, this will not only mean significant losses of around 14,000 jobs but it could lead to a serious long-term impact on UK manufacturing.

In the latest budget the Government announced commitment to our transport infrastructure, supporting the National Infrastructure Commission’s recommendations for Crossrail 2 and extensions of HS2 up to our northern powerhouse region. In addition, UK car production has reported a growth of 13.1% growth in February. At the heart of all these projects is the requirement for steel.

I absolutely agree with Oldham who encourages the Government to think long and hard about how they can help the steel industry, making sure that it enables our manufacturing sector to have a sustainable future. To do this they must ensure that we do not become solely dependent on imports of all raw materials such as steel – it is also imperative that the UK Government supports measures at EU level to prevent Chinese dumping.

As Oldham emphasises, if the Government is committed to long-term strategic industrial and infrastructure plans it must take a holistic approach with a better understanding of how such closures could affect our domestic supply chains. We must ensure that the UK has the necessary skills and raw materials that we need to support these upgrades with suggestions of improved forms of financing and life-cycle costing to be part of the public procurement policies.

Scuoler says that it is now essential that ongoing support is provided by the company to continue operation of the plant, which will provide time to find a suitable buyer. In tandem with this, the UK and Welsh Governments must match words with action and take all necessary steps to ensure there is a future for the steel industry in the UK by any means possible: “As well as short term emergency measures, in the longer term we need to see all major procurement projects, from HS2 to Hinckley Point, all using British Steel. Ministers can also do more by reforming business rates to exclude some of the penalties steel companies and others face if they invest in plant and machinery. Alongside this, the UK has one of the highest electricity costs for the energy intensive industries in Europe because of hindering domestic policy. We need to see a level playing field with our European competitors to ensure a positive future for the steel sector.”

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