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Can patriotism trump price amid steel crisis?

Tata Steel’s announcement that it would sell off its loss-making UK operations, putting up to 17,000 jobs at risk, was a shock.

The underlying reasons behind the decision, however, were not. The company blamed high energy costs, weak demand and cheap imports of Chinese steel for the losses.

This isn’t new. Last October the same reasons were cited for 1,700 jobs being axed after the SSI UK Redcar plant was mothballed.

Imports are a fact of life when it comes to the construction industry. Yet the growing gap between imports and exports, cheap or otherwise, is of great concern, especially as the UK continues to lose much of its industrial legacy.

Trade gap

Last October, Construction News reported that Department for Business, Innovation and Skills statistics showed the trade gap between the amount of construction materials imported versus exported shot up between 2009 and 2014 from £4.9bn to £7.6bn.

While there have been signs of this slowing, it is a significant problem, especially when you consider that in its 2013 report, the Construction 2025 strategy sought a 50 per cent reduction in the trade gap.

“If a client wants to be patriotic, new guidelines will trickle down. But what if it simply wants to pass on the price?”

But to what extent should the construction industry bear some of the responsibility?

It was a question steel industry sources were keen to hammer home this week, as they hit out at contractors for their role in the ongoing steel crisis.

One said: “It’s the private sector that needs to step up, as they are the ones buying the steel and if they are buying from China or Turkey or elsewhere then the British industry will collapse, as we are already seeing is happening.”

But if a contractor is being asked to price a job, in a country with competition laws, in Europe where free trade is protected, should patriotism outweigh price?

Trickle-down effect

New government guidelines have been rushed out in the aftermath of the Tata announcement, encouraging clients such as Network Rail, Highways England and the NHS to consider the social and economic impact on the UK before buying steel from abroad on contracts worth more than £10m.

This may make some difference. If a client wants to be patriotic, that will trickle down. But what if it simply wants to pass on the price?

Wates chief executive Andrew Davies told me this week that clients had not started coming to the contractor asking to know about where its supply chain sources its steel – although he is expecting the calls to start.

But private sector clients picking up the phone and volunteering to pay that bit extra for British steel? Don’t hold your breath.

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