Should the government do more to help the steel industry or....

[Danthus]

Should we just allow market forces prevail?

With the recent news regarding SSI shutting the plant in Redcar and the announcement that TATA will be cutting 1200 jobs in the UK should the government do more to support the steel industry?

A quick read up on on the subject and there are lots of pressures on producing steel in this country from energy costs and also business rates.

Should they be given relief from these factors?

 

[Danthus]

We live in a Globalised, liberalised, economy now. The liberalism which allows foreign companies to invest in ours, let us invest in theirs. The issue is, on a whole, we do not like investing, at a government or individual basis. There is nothing stopping you buying shares in a foreign company.

Pretty sure France stop foreign companies buying up their companies.

 

[Danthus]

Prices are falling because of overproduction worldwide. There would be no support for the government changing the working and reward practices at the steel plants to make them much more cost effective, so the idea is a non starter.

I can think of 3000 people straight away who would support government help.

 

[Danthus]

Could more than 3000 people be helped if the money was spent more effectively..?

There is a huge supply chain to the steel industry so I imagine job losses will extend beyond the steel works themselves.

 

[Danthus]

Government help to make the industry viable would result in redundancies as plants are improved and automated, and pay cuts to make the economics work. I doubt you would support that...

What do you know about how steel plants work Dolph?

 

[Danthus]

Investment I can get behind, but part of that investment has to also include automation, which in turn means job losses. The challenge in getting a viable proposition is that it has to work with current or lower steel prices. That means tackling costs of production, which isn't just about energy costs and green taxes, but manpower costs which are also much higher in the UK.

I think you under estimate the damage green taxes have caused to the UK steel industry.

There were huge capital costs incurred in the industry just get ready for green taxes, never mind the subsequent levies that were imposed.

 

[Danthus]

The same applies to the wider pool of people. Why's propping up something unsustainable on an indefinite basis better than spending money on creating new jobs/moving people to other work/etc, with the aim of creating sustainable work and useful skills which mean that subsidy can end (as opposed to dragging on indefinitely)?

I wouldn't support indefinitely propping the industry up. I think there is some merit in looking into the possibility of changing the tax and energy regime around the industry.

 

[Danthus]

So you don't support propping them up... but you would look at propping them up through tax breaks...

Propping them up in terms of cash handouts I meant sorry.

 

[Danthus]

The problem is you cannot compare car making process with steel making in the same amount of energy used, you cannot ask some one to work 12 hours solid in 50+ degree heat. Instead you rotate the personnel around so you work 4 hour blocks. Hence the higher than proportional personnel.

And wages in the steel industry for craft are on average £10 grand lower than the most industries and around £40,000 lower than the oil industry.

The only cuts that can happen is the management, I have 4 bosses above me. Production could be reduced but we already have shortages in staffing that are filled with overtime.

I worked for a company that produced rolls for rolling mills, the Climate Change levy pushed costs through the roof.

 

[Danthus]

Snear all you like but we should be allowing that to grow even larger. The UK has a massive, stupendous comparative advantage in the provision of financial services. The more that it grows, the more tax revenue can be redistributed to other sectors. By crippling the financial sector, we cripple all sectors. Like it or not.

This will be the financial sector that played loose and fast with its own money than went cap in hand to the taxpayer when it all went wrong?

 

[Danthus]

And yet were and are still one of the largest employment sectors and contributors towards tax revenue.

It is amazing what £500 billion in handouts and guarantees can do for you.

 

[Danthus]

 

[Danthus]

Yeah, David Cameron's fault that the price of steel has tanked.

This is the same thing as the coal mines in the past. Overseas cheap slave labour, we just can't compete with this.

It's a terrible situation really.

You have ignored the energy costs and green taxes.

In the here and now what has Cameron done?

 

[Danthus]

We are bout to embark on a huge rail infrastructure project, which needs steel.

Hmmmmm.

 

[Danthus]

Sajid Javid just questioned whether the state would actually be allowed to give aid to the steel sector.

I don't remember the same question being asked when the banks were in a mess.

 

[Danthus]

Not that I want to derail the blame the Tories for everything party but wasn't it a Labour government that oversaw the bank bailout, not a conservative one?

They did, but the idea that Javid was putting out was that they might not be able to.

About £200 billion was overseen by the coalition.

 

[Danthus]

Probably because it wasn't the entire banking sector that was being propped up. Barclay's got capital from the middle east, HSBC just moved capital from elsewhere in the group, Standard Chartered didn't get involved and I think Santander may have gotten support from Spain but I don't remember. That's 3 of the largest UK banks and the other major UK retail bank

You could argue the support through the BoE was propping up the sector, but that was for the wider economy and mostly guarantees to encourage lending.

In any case, in the nicest possible way, even if the UK steel industry collapses and never revives, the overall impact on the UK economy is nothing to compare to the FS sector collapsing. People may not like it, especially in the traditional manufacturing areas, but unfortunately that's the truth.

I'm an engineer but all I see is market forces causing this. Steel is very cheap at the moment and if the UK business was viable it would have not have closed. There is a little bit of an opportunity with the Chinese investment as they will be looking for somewhere to put money in European steel to avoid the impending European tariffs that are going to be added to Chinese steel. The UK can live without a steel industry but unfortunately not without banks and people's money that are in them. Don't like it then put your money elsewhere.

I wasn't arguing for against bailing out the banks, I was querying Javid and his assertion that state aid may not be allowed.

 

[Danthus]

Given the news regarding Tata Steel.

Holy thread revival!

 

[Danthus]

So at a time when lots of people risk losing their jobs, you want to look at if they are being paid to much.

 

[Danthus]

Is 75% of current pay better than no pay? That is what happens if the industry can't be made sustainable.

The staff shoulder the burden?

Is it the staffs fault that green energy policies have pushed up costs?

Is it the staffs fault that energy prices are a huge problem?

Is it the staffs fault they they are playing by the rules when others are finding ways to work around them, the German and French states seems to be able to support their industries and no fall foul of EU rules?

Maybe our government just lacks the will?