Britain set to be the only leading economy to not make steel.

03_03032715_6a8f8e_2776782aIn the Victorian era, Britain was responsible for 40% of the global supply of steel. It may soon produce nearly none at all.

Should Tata sell off its sites in Scunthorpe or Port Talbot, following the closure of their Redcar plant last year, Britain would become the only member of the G7 no longer making steel.

British steelmaking has been in decline for more than a century. By the start of World War I our industry was overshadowed by the USA and was quickly followed by Germany.  By the 1980’s we produced less than 10 million tons, slipping below France, Italy and Belgium.  China is currently by far the biggest producer making 1.67 billion tons of steel, equal to about half of the worlds supply.

But it does beg the question, in a country fueled majoritively by financial services, whether a major industrial economy needs to produce steel at all?

The two sides of the story

It seems that there are two opinions regarding Britain’s need to produce steel.

It is clear that, for the foreseeable future, steel production in the UK is unprofitable. If we engage in a bailout, as many are calling for, we a likely locking both capital and labour into unproductive work. It could be tantamount to giving up on Capitalism all together.

However, as the British automotive industry is currently churning out 1.6 million new vehicles each year. The government has plans to produce, in the short-term, a new high speed rail network, invest Billions in the Trident nuclear program and build a new power station at Hinckley. All of these projects will require hundreds of tons of steel.

Although I read an article in The Sun this morning and it appears that it may never have been on The Governments agenda to use British steel in these projects in any event. It transpires that many of the large scale steel contracts, since the Conservative government took power, have been going abroad anyway thus reversing a previous ‘buy British’ policy for defense projects. (see the image right for details)

It would seem that our own government is conspiring against us fpr years and is, at least partly, responsible for the current situation.

In the sort-term the closure of the furnaces will affect the people in the communities whose welfare relies on them but in the long-term, it will lessen the integrated capabilities of the UK to do anything. The knock on effect could ultimately decimate Britain’s core manufacturing base.

Ultimately is seems essential that such a primary infrastructure, like steel, is protected in order that it can underpin our already stretched manufacturing sector.

In my humble opinion the only option is re-nationalisation but this option looks to be off the cards for this Government.

 

Comments

  1. Very helpful post James. Thank you. Please can this information be broadcast to the population at large so that everyone knows why we are in such a mess. No doubt this is the case for many other things too.

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  2. Fingers crossed for this… http://www.bbc.co.uk/news/uk-wales-35962358 This guy certainly seems to know what he’s doing and is not an axe man, believing firmly in a viable future.

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  3. We should have a level playing field. If the Chinese are dumping cheap steel on the UK then it is upto the Government to stop it. If the UK government stopped the EU from imposing tariffs on unfair practice, as has been reported, then Cameron should resign.

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  4. Rickie says:

    Defence, Admin. Not Defense. keep it English as well as British!

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  5. What I don’t quite get-and which leads me to support the argument that the government are deliberately running down our steel industry, is how come the USA & Germany can produce steel competitively? I raise this given that the economies of all 3 including UK are similar with respect to production costs Etc? In this context it would appear that Germany & USA can hold their own against foreign imports so why can’t the UK? Hence, my belief in UK govt promoting cheap imports covertly & allowing British companies-who themselves should be ashamed in letting down our communities-to look abroad, especially to China for cheap steel.

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    • William says:

      A few engineer friends told me that in many situations they would really like to use British steel – but it is so sad that our steel is of such a low quality that they are simply not suitable for many critical applications, and they have to look in Sweden or Japan for better steel. Blaming Chinese imports isn’t the right solution – we should invest more in education and science so that our steel don’t need to compete with the Chinese at all, like how the American or Germans do.

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