‘Once a historic industry ...but now a national asset’
The steel industry has long been the backbone of the UK’s manufacturing heart but it now faces an uncertain future. Sarah Freeman reports.
WHEN THE world shut down last March, UK steel plants moved up a gear.
From the factories turning out cans to service a food sector swamped by panic buyers, to the steel tubes used to build the beds for the Nightingale hospitals, the fingerprints of the industry were everywhere.
That ability to react quickly to unprecedented world events was, according to the industry’s champions, proof of its relevance in the 21st century and evidence enough to quash any lingering suspicions that the steel trade, like coal mines and textile mills, was destined to be consigned to history.
“The pandemic has definitely highlighted just how important it is to have a home-grown steel industry you can rely on,” says Chris McDonald, chief executive of the Teesside-based Materials Processing Institute, set up to drive forward research and innovation.
RECOGNITION
“Had we had to rely on imports over the last 12 months we would have come unstuck.
“It is true steel was once seen as a historic industry but that has changed in recent years.
“There is now a growing recognition that steel is a national asset. However, we need to act fast to ensure it remains that.”
Few “national assets” have been overshadowed by as much turbulence as the steel industry in recent years.
Undercut by cheap imports from Turkey to China, UK steel has struggled to be competitive on the global market.
Successive takeovers of the country’s biggest producers have created an atmosphere of uncertainty among thousands of highly skilled workers.
Most recently Liberty Steel, which operates across 11 sites in Britain, including Rotherham, had to go cap in hand to the Government when its main financier, Greensill Capital –
now embroiled in the lobbying scandal – collapsed.
In another apparent setback, Business Secretary Kwasi Kwarteng this week rejected a plea from Sanjeev Gupta, who runs Liberty’s parent firm, the Gupta Family Group, for a £170m bailout after failing to secure a guarantee that the money would stay within the UK.
Mr McDonald, a former executive at Tata Steel, said: “Liberty Steel is a specific case but generally I think there is a misconception that if the Government steps in to financially support an industry that must mean it is failing.
“With steel, that is simply not the case. America supports its industry through tariffs. China provides generous subsidies
and in Germany it benefits from preferential energy rates. In this country, government investment would simply ensure that UK steel can compete on a level playing field with Europe and the rest of the world.”
Regardless of foreign competition, there is now a consensus that if the industry is to meet its green targets, government support to fund decarbonisation must come soon.
According to the World Steel Association, each tonne of steel produced results on average in 1.83 tonnes of carbon dioxide.
The industry, which has historically relied on burning coke, accounts for seven to nine per cent of all direct emissions from fossil fuels. While new
greener technologies are available, the deadline to make UK steel carbon neutral by 2035 remains a challenging one.
“Sweden, Austria and Germany are probably about two years ahead of us when it comes to creating an entirely green steel industry,” says Mr McDonald. “But we can see the direction of travel and we can catch up.
“Steel now needs to learn lessons from offshore wind. The relaxed approach to that industry in the UK meant that many of the key companies in the supply chain ended up being based and thriving abroad.
“Latterly, the industry has had to work hard to create its own skills base but it could have nurtured it from the start. With steel, we have a real opportunity to become a world leader. The expertise and skills are here. We mustn’t let them slip away.”
While MPI has both a national and international outlook, Chris Williamson is more concerned with the future of the industry on his own doorstep.
A steelworker of 26 years and Community union rep at Liberty Steel in Rotherham, Mr Williamson has seen first hand the changes within the industry.
“This place has looked after me for 26 years and before me it looked after my dad,” he says. “It should be able to look after the next generation – but who knows?
“We have been repeatedly assured that the money to save the company will be in place by the summer but recently there hasn’t been much movement.
“Ever since my first day at the steelworks it has been a rollercoaster ride. But the truth is that whatever has been thrown at us, we have just put our heads down and got on with it.
SUCCESS
“The powers that be need to recognise the importance of the industry, not just to the people here in Rotherham but to the wider UK economy.”
In the early days of Yorkshire’s steel industry, success was built on supplying the newly formed railway companies, textile factories and keeping up a steady supply of armaments.
The customer base is now much more diverse and while the number of steelworkers in Yorkshire has fallen from 60,000 in the 1970s to just a few thousand today, the new green technologies also bring potential job opportunities.
In South Yorkshire, steel plants operated by Sheffield Forgemasters and Liberty Steel in Rotherham are already operating the less-polluting electric arc furnaces.
And today’s IPPR North report says a clear commitment exists to harnessing this technology, with Liberty Steel alone committing £60 million over the next few years to improve output from its Rotherham plant.
Andrew Denniff, of Barnsley and Rotherham Chamber of Commerce, said: “The UK steel industry isn’t a game to be played by global financiers, which is what it seems to have become. These are real people with real lives and every decision impacts wider communities.
“The fact we produce a higher-value product than 50 years ago with just five per cent of the workforce proves this is an adaptable, dynamic industry. The future shouldn’t be uncertain. It should be full of optimism.”