Steel Trap

800px-Port_talbot_largeBritain holds its breathe as the axe hangs over its largest steel plant. More than 40,000 jobs could be affected. Richard Lutz takes a look.

It’s a wonder that Tata, the Indian multinational, ever shelled out the money to buy the Welsh plant at Port Talbot and others back in 2007.

The company’s steel division plunked cash on the table knowing full well the UK’s steelworker labour force alone was in steep decline: from about 200,000 in 1979 to only under 50,000  when it bought the industry nine years ago. Surely that indicated something. Either a lean and hard sector. Or one in a steep death dive.

Then it never took into account how the globalised steel market was shaken by China. With its centralised subsidised industry, China could drive down prices as a loss-leader to guarantee orders. And when its own economy, always dubious, took a tumble, its own domestic demand shrunk.

The outcome was to dump more steel overseas and undercut UK supply. UK imports of Chinese steel have increased dramatically. In 2014, it imported 687,000 tonnes from China, up from 303,000 tonnes in 2013. That’s more than doubled.

Tata should have foreseen a couple of these factors as a leading multi national force. But it seemed to want to drill harder into the UK industrial base. The outcome: it is losing about £1 million per day. About 4500 jobs could go at the Welsh plant. But think tanks say the unemployment ripples could hit almost ten times that number in the supply chain world. And now the Indian bosses admit they will almost give Port Talbot away for nothing.

So jobs, futures, hopes and the next generation could go not only in Port Talbot but in Newport, the Black Country, Clydeside and the Midland town of Corby (which the FT has strangely called Corbyn in the typo of the week). So why no extra protection for the crumbling steel industry? Why no excess tariff for cheap Chinese steel, produced by a government that the UK is sucking up to really big time when it comes to international commerce?

Tata will have none of this talk. It doesn’t care if the government nationalises the ragged plants. Or uses obfuscating lingo to cloak a part nationalisation in order to shore up things short term;  to protect jobs and mollify voters before the crucial in or out EU referendum in June. Put a buck on the table, they seem to say, and it’s yours. 

One small grain of light, though, on this huge problem is the emergence  of Stephen Kinnock. He’s the newly elected MP for the Port Talbot area and is in India trying to find a jobs-saving deal. He is also the son of Neil Kinnock, former Labour leader, and Glenys Kinnock, an ex-MEP and Foreign office minister.

He comes from political stock and he has put his head above the parapet for the first time for an initial blooding. He now inherits a constituency that will be riven by insecurity, anger and mass job loss. And an area that will remain in the public eye.


2 thoughts on “Steel Trap

  1. Let’s see if the little Kinnock nepot has any real guts or is merely a dynastic placeman hanging on to mummy and daddy’s coat tails. Curious how Mr. and Mrs Kinnock,a teacher,ended up with big EEC pensions. Stephen emerged as the head of the British Council in Moscow before going on to marry the Danish prime minister and be parachuted into a safe labour seat. Good old fashioned socialism at work.

  2. I am surprised there isn’t a general crisis in the EU and US steel industry. Why are Chinese ezports having a much greater effect on the UK industry?

    What is so different about the UK?

    Maybe the UK uses blast furnaces rather than electric arc; apparently the later use less energy and are more flexible.

    Maybe UK electricity is more expensive

    Maybe the UK government hasn’t been sufficiently active in the EU

    Its a mystery

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