UK steel: ‘significantly worsened’

The competitiveness of the UK steel industry is being destroyed by weak industrial demand, the strength of the pound, Chinese steel dumping and high business costs, Tata Steel Europe’s chief executive, Dr Karl-Ulrich Koehler, has said.

The position of UK steel had “significantly worsened” in the second quarter of this year, he said in a statement.

Across Europe the dumping of cheap steel by subsidised steelmakers was “massively distorting competition.” He did not mention China specifically, but they are widely regarded as the major “dumpers” in Europe.

Tata Europe made a loss of ÂŁ23.8m in the second quarter of this financial year. Worldwide the group’s consolidated profit rose by 22 per cent to ÂŁ302m although much of this was due to a sell-off of some assets in India.

Demand for steel in India fell by 5 per cent, and Tata was under pressure because of a ‘currency war’ with Japan and China devaluing their currencies to make their goods cheaper to buy. In response there was a 20 per cent tax placed on imports by the Indian government.

But the Indian steel industry took a massive hit. There was a 100 per cent net increase in cheap imports, mainly from China, but also from Japan and Korea.

Less support

Chinese steel dumping and other issues are also hitting Europe hard, especially the UK steel industry which gets less support than its European counterparts. In a statement Tata Steel said,

“Tata Steel in the UK is facing a structurally challenging environment of weak domestic manufacturing demand, surging imports, a strong pound and steep regulatory and business costs.

“Given the rapid and sharp deterioration in the underlying business environment in the UK, Tata Steel UK, an indirect subsidiary of Tata Steel has taken a non-cash impairment charge of the Strip and other businesses in the UK.”

Tata Steel’s Europe CEO Dr Karl-Ulrich Koehler said in a statement, “Our operating result has turned negative this year, reflecting the huge challenges the global steel industry is facing.

‘Unhelpful’

“In the UK these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness.

“We have made three restructuring announcements in the UK since July leading to reduced volume and costs.

“Across Europe we are calling on governments to ensure the European Commission upholds international trade rules firmly and more speedily. Surging volumes of dumped imports, including from countries that subsidise their steelmakers, are massively distorting competition.”

Unite is calling on the government to support the UK steel industry by taking action to stop the ‘dumping’ of cheap Chinese steel, help with high energy costs and business rates, as well as ensuring major infrastructure projects use British steel.

Desperately need support

Martin Foster, Unite convenor for the Scunthorpe steel works said, “Steel runs through the veins of Scunthorpe and is the lifeblood of the local economy. We desperately need support from local and central government on business rates and help with high energy costs.

“Action on this and the dumping of cheap Chinese steel, combined with cast iron government guarantees to use British steel on infrastructure projects will give the industry and Scunthorpe a fighting chance.”

Unite national officer Harish Patel added, “The clock is ticking for the government to take action to save our steel. Communities like Scunthorpe with a proud tradition of steelmaking and manufacturing risk seeing good quality jobs being lost forever because of minsters’ inaction.

“Business leaders, unions, MPs and the public all want robust action in the UK to save our steel. It is time for the government to act and develop an industrial strategy which secures the future of steel and manufacturing in the UK.”

Rally for steel

Scunthorpe steelworkers, their families and the community will be marching through Scunthorpe to ‘Save Our Steel’ tomorrow Tuesday November 10 as Tata Steel UK looks to shed 900 jobs in town.

The march organised by steel unions Unite, Community and GMB is set to start at 12 noon in Church Square DN15 6TA. From there, marchers will head up Scunthorpe High Street, along Oswald Road and Ashby Road to finish outside North Lincolnshire council offices where a petition will be handed in and a rally held.

Speakers at the rally include Roy Rickhuss, general secretary of Community, Unite assistant general secretary Tony Burke, Nick Dakin MP, John Mann MP, Martin Foster, Unite convenor and David Hulse national officer for the GMB.

Last month Tata Steel UK announced plans to cut 900 jobs at its Scunthorpe plant and the mothballing of its sites at Motherwell and Cambuslang with the loss of 270 jobs.