Wednesday 22nd April 2020

Time is running out to save Britain’s steel industry

As published in The Telegraph https://www.telegraph.co.uk/business/2020/04/22/time-running-save-britains-steel-industry/

By Sanjeev Gupta

It’s been a month that’s upended British business. Since early March, in common with so many others, I’ve been working from home – in my case, at my house in a village on the Welsh borders, keeping in touch remotely with colleagues working in steel, aluminium, engineering and renewable energy around the world.

The tragic toll that the pandemic is taking has forced us, as a country, to make many difficult decisions. For the corporate community, it’s required us to be nimble and to go back to basics.

After years of globalisation, as the country gears up to battle COVID-19 there’s been a hurried focus on local production – whether it’s for ventilators, PPE, food supplies or the hunt for a vaccine.

Within my own group, Liberty Industries in the Midlands has produced steel tubing for hospital beds, trolleys and wheelchairs; our aluminium smelter in Fort William has supplied a rush order of 20 tonnes of oxygen bottles for the NHS and we’ve even been called upon to produce more industrial waste bins for hospitals.

With travel locked down and disruption continuing to industrial supply chains, the pandemic necessitates a focus on proximity for the automotive, aerospace and construction materials sectors. Steel is a foundation industry at the heart of these supply chains – but its future in Britain is imperilled.

Neglect over decades has eroded the foundations of a once proud UK success story. Well-meaning, but ill-conceived, policies have diminished domestic output, leading to a glut of foreign imports.

In the 1970s, there were more than 300,000 steelworkers in Britain. Now there are barely 30,000. Today the entire industry could fit into Sheffield United’s Bramall Lane stadium in the city that was once the steel capital of Europe. If we’re not careful, the COVID-19 pandemic could be the final nail in the domestic industry’s coffin as cashflow dwindles and safety-critical employees are forced to self-isolate.

While everyone in the business community should be immensely grateful for the steps ministers have taken to protect and preserve livelihoods, unfortunately there are gaps: the furlough scheme doesn’t allow for reduced hours working, while business continuity loans are only available under strict criteria, at sums too small to protect large corporations and with a long wait before any money is actually disbursed.

Fixing this is no easy task. Any Government investment is subject to state aid rules and civil servants are rightly cautious about spending taxpayer funds. But, on the other side of the ledger, is an industry which is responsible for tens of thousands of jobs, livelihoods and whole communities in some of the UK’s most vulnerable regions.

Some might say steel’s decline is inevitable in Britain. But in continental Europe – France, Germany, the Netherlands – foundation industries are better invested and more efficient, thanks to far-sighted industrial policy. Similarly those nations have found a way to support their steel sectors through the economic lockdown. The UK now needs to follow suit.

Most gallingly, we’re on the cusp of a genuinely exciting opportunity. The industry, which accounts for around 9% of all carbon emissions globally, is re-tooling for a greener future. By transitioning from blast furnaces to electric arc furnaces, which recycle used steel, ie scrap, rather than burning fossil fuels to make primary metal, we can make economic use of the 10 million tonnes of surplus steel scrap our country produces every year which is currently largely exported.

Further, through investment in technology such as hydrogen-powered steel production, there is an opportunity for Britain to reposition itself as a global leader in low-carbon metal and to bring supply chains back to the UK. To get there, we need an enhanced industrial policy that takes in training, investment and a sensible policy on the cost of energy for industrial use.

But these are issues for another day. The questions for today are how much do we care about the UK steel industry and what role can it play in our recovery plans? The Government has been unequivocal about its commitment to do ‘whatever it takes’ to salvage vital parts of the British economy – steel surely falls into that category.

It would be crass and wrong-headed to describe a pandemic as an opportunity. But it is a wake-up call – about the way we live, the way we consume and the way we produce. The present incumbent of Downing Street has shown he is willing to think big about the future of Britain. That must include a vision for the future of steel.

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