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Steel shutters, star chambers and how to snuff out recovery

Pulling the shutters down on anything that is not ‘Made in Britain’ and turning up the heat on anyone who dares to use Chinese products in construction is one way to try to solve the steel crisis.

It won’t work of course.

But it may, briefly, make some people feel better – and may lower the political temperature around those who have so far failed to come up with a coherent long-term strategic solution to the problems facing this industry.

With colleagues and other interested parties, I’ve taken an ‘alternative’ steel summit route. 

A few days ago, we met privately in London with a contingent from the China Iron and Steel Association to discuss an industry now characterised by slowing growth in demand and significant production overcapacity.

Worldwide issue

The results of that constructive meeting will follow in due course, but one overarching theme that emerged was a recognition that what we’re facing in the UK is just a small part of a fundamental shift in global key commodities markets.

“Markets are global and playing by the rules works both ways”

As someone who has worked in many of these markets, I can confirm that this shift is indeed hitting everywhere.

This market-driven change, combined with a slew of poor decisions by offshore manufacturers running UK plants and a high cost structure compared with other EU states, are the real reasons we have seen such disastrous consequences for homemade steel.

New procurement rules with more than a whiff of star chamber about what can and can’t be used in public sector projects are now emerging.

Add to that the scaremongering, which has ranged from invented quality questions over imported rebar to the source of steel for future Trident subs, and you have a febrile atmosphere where protectionism becomes the new norm.

Comparable sectors

Contrast that with the structural changes we’ve seen elsewhere in British industry.

Shipbuilding and coal dominated the North-east along with steel a generation ago. But Japan saw an opportunity to tap into a world-beating talent pool and a changed mindset.

“Trying to tilt the table so that only a British product is used has limitless potential for unintended consequences”

The result? Nissan’s Sunderland base sets the pace not only for UK motor manufacture but across Europe, and matches the best globally.

We can deliver the same transformation in the UK’s proud steel industry and its specialist suppliers, traders, distributors and the logistics companies – if they are all allowed to continue to operate flexibly and responsively, in a free and fair market with timely and carefully targeted government support.

That doesn’t mean we ignore dumping, if proven. Or that we become cheerleaders for China. But we must recognise that markets are global and playing by the rules works both ways.

Trying to tilt the table so that only a British product is used has limitless potential for unintended consequences, particularly as we seek significant foreign investment in public transport and energy infrastructure.

Price, delivery schedules and performance will all change, as some have already begun to see in private sector projects where misguided edicts have backfired.

Doing the same across the public sector hits the taxpayer as the hard won fruits of economic recovery are snuffed out by the rules and processes of protectionism.

Jeffrey Kabel is the chairman for International Steel Trade Association

Readers' comments (1)

  • It's about time that we started living with reality rather than idealism. Of course we all want UK industry to survive but it has to be under the right circumstances. We cannot physically produce sufficient quantities of steel in this country. We rely on our steel supply being supplemented by imported steel - wherever it comes from. There is another whole industry of independant fabricators, fixers, processors industry that has to rely on domestically produced and imported steel and their options should not be restricted to a source of supply which is not cost effective, unreliable, and biased towards their own downstream operations.

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