Over the past months countless column inches have been dedicated to the plight of one particular aspect of the British economy – steel. But what’s gone wrong, and what can we do to fix it?
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These latest panic comes after news that India’s Tata Steel are selling their UK steel business, which currently loses around £1 million per day. Back in January, it announced that 1.050 jobs would be lost, on top of the 1,200 axed in October 2015 and the 750 who were let go last summer. At present, they employ around 15,000 people, but there are significant fears that once sold, those jobs would be lost.
It’s not just Tata who are struggling in the UK though, SSI announced it was closing down its Redcar works with losses of 2,200 jobs and parts of Caparo Industries’ steel production went into administration, putting 1,700 jobs on the line. So, what’s going on?
The big steel industry players lay the blame on a number of factors, specifically: high UK energy prices, the increased cost of climate change policies and competition from China. It’s that last one which has struck the loudest note on the international stage, as complaints of China flooding the market with improbably cheap steel have been rife.
The European steel industry have even gone as far as to claim that Chinese producers are “dumping” steel on Europe. Not just selling it at a low price, but making a loss on it so as to drive European steel manufacturers out of business. In 2015, the EU imposed anti-dumping duties for six months on some steel imports from China and Taiwan, and it wouldn’t be without precedent, there have been similar clashed over wine, solar panels and steel pipes.
Perhaps the largest issue for UK steel though is simply the lack of demand since the financial crisis. Countless building projects were scrapped when the world economy collapsed and demand hasn’t returned to the levels found before the crisis. Compounding the issue, the world’s growth engine – China – has seen sluggish growth as of late, which has made its own steel producers look overseas for sales. As a result, UK imports have Chinese steel have risen sharply, more than doubling between 2003 and 2004 and continuing to rise since then.
So what can be done? Well, the industry has been clear. They want lower business rates, a relaxation of carbon emissions targets for heavy producers, more compensation for high energy prices and a commitment that British steel alone will be used in major construction projects.
The Government, meanwhile, have said they will take “clear action” to help the industry, though “cutting energy costs, taking action on imports, government procurement and EU emissions regulations, meeting key steel industry asks." That’s not enough for the steel industry at present, and pressure is being applied to the government to rescue British steel.
The forthcoming days, weeks and months will tell us more about the Government’s plans regarding the steel industry, but if there’s one thing we can be clear on, it’s that this is not a simple crisis to solve.