Should the government do more to help the steel industry or....
- Thread starter Danthus
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This. Always.
Soldato
Be interesting to see how the government handles this. Dave's already refused to recall parliament as he knows he would be roasted.
What should be done?
Steel is a global commodity, the UK is a tiny player, making 12 million tonnes a year compared to China's 790 million. Also interesting to note China has made more steel in the last two years than the UK has in history!
The physical act of making steel is more expensive in the UK than elsewhere.
In addition to that some other countries, especially China are producing/selling below cost price with state subsidies.
I don't really think import tariffs are the answer as they push the problem down the supply chain, UK car manufactures would be forced to pay more for steel than Chinese car manufactures etc.
It's not dissimilar to food. Many places can produce food far cheaper than we can, but we regard food production as strategically important so put billions of pounds of subsidies to it. The same didn't happen with the UK electronics industry in the 1970s and 80s - we were happy to let that one go.
Whilst plentiful, cheap steel can be imported easily now, that situation could change.
Should we subsidies steel manufacture as we do agriculture?
Should we let the industry die as we did with textiles, electronics etc?
I think I would support a loss making, state supported UK steel industry (like agriculture) but on a smaller scale than currently. Maybe a quarter the current scale - maintain the skills and key infrastructure without losing £1m a day.
Steel is a global commodity, the UK is a tiny player, making 12 million tonnes a year compared to China's 790 million. Also interesting to note China has made more steel in the last two years than the UK has in history!
The physical act of making steel is more expensive in the UK than elsewhere.
In addition to that some other countries, especially China are producing/selling below cost price with state subsidies.
I don't really think import tariffs are the answer as they push the problem down the supply chain, UK car manufactures would be forced to pay more for steel than Chinese car manufactures etc.
It's not dissimilar to food. Many places can produce food far cheaper than we can, but we regard food production as strategically important so put billions of pounds of subsidies to it. The same didn't happen with the UK electronics industry in the 1970s and 80s - we were happy to let that one go.
Whilst plentiful, cheap steel can be imported easily now, that situation could change.
Should we subsidies steel manufacture as we do agriculture?
Should we let the industry die as we did with textiles, electronics etc?
I think I would support a loss making, state supported UK steel industry (like agriculture) but on a smaller scale than currently. Maybe a quarter the current scale - maintain the skills and key infrastructure without losing £1m a day.
Caporegime
Britain cant compete with the likes of China and India for quantity, its just not gonna happen. What Britain does well is make quality instead. Loads of British products are premium compared to the low quality tat that comes out of China. That's where the industry needs to go, not sticking with industries that lose billions just because jobs. Instead of pouring billions in to failing industries, use that money to support those workers and train them in an industry which generates a profit. And hope the goalposts don't move again.
Soldato
Yep... In Feb..
http://www.theguardian.com/business...eel-industry-blocking-eu-lesser-duty-proposal
Not sure what can be done, but it would be foolish to no longer have the capability to produce sufficient quantities of steel ourselves. Losing those production facilities will hurt us long term.
The news piece on the BBC said that the UK only imports something like 700k tonnes of steel from China but 4.7m tonnes from the EU.
It doesn't matter if you impose import tariffs on Chinese steel, because it affects the price of suppliers you don't impose tariffs on i.e. the EU or other trade partners.
Imposing an EU wide import tariff would be effective, but I wonder what those UK (and other European) importers of steel would think of such a policy. They would be subsidising uncompetitive steel companies.
It doesn't matter if you impose import tariffs on Chinese steel, because it affects the price of suppliers you don't impose tariffs on i.e. the EU or other trade partners.
Imposing an EU wide import tariff would be effective, but I wonder what those UK (and other European) importers of steel would think of such a policy. They would be subsidising uncompetitive steel companies.
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And from a Tory newspaper for people who dismiss based on sources:
http://www.telegraph.co.uk/business...es-steel-industry-to-curry-favour-with-china/
http://www.telegraph.co.uk/business...es-steel-industry-to-curry-favour-with-china/
Funny isn't it that the general perception is that it's been the big bad EU stopping us protecting our national industry's whereas it seems it's us stopping the EU protecting everyone's industry's!
So much for our lack of influence in the EU
You do realize it is the same equipment making the the high quality steel as the low quality ****e from China. You still need the same amount of manpower to make either.
What's killing the industry is the high energy tarrifs and the fact the government would rather buy advanced steels researched in the UK from Sweden for defense products.
But there is no longer a point in getting the government involved, it isn't in London or the South of England.
It may be only 15000 jobs but each of those support 3-4 service jobs, South Wales will become even more desolate.
So high energy costs, huge (£500m+) pension deficit, high employment costs, below cost price dumping.
Why is all the focus only on two of the four problems Tata has acknowledged.
Where is the proposal to put the pension fund into the PPF? Where is the proposal for a full review of employment costs based in what the factory could afford, rather than what it has historically paid?
If we are going to save the British steel industry, it needs to go through a full review similar to being put into receivership.
Why is all the focus only on two of the four problems Tata has acknowledged.
Where is the proposal to put the pension fund into the PPF? Where is the proposal for a full review of employment costs based in what the factory could afford, rather than what it has historically paid?
If we are going to save the British steel industry, it needs to go through a full review similar to being put into receivership.
So at a time when lots of people risk losing their jobs, you want to look at if they are being paid to much.
Is 75% of current pay better than no pay? That is what happens if the industry can't be made sustainable.
Caporegime
Why is it always people who want to work hard who have to take pay cuts? I don't recall the bankers taking pay cuts when their industry got bailed out - in fact I seem to recall them enjoying bumper bonuses.
One thing I would recommend doing is nationalising Por' Talbot now, before Tata have the chance to asset strip the best bits of the business.
Soldato
It is better than no pay however if was made to take a pay cut I would immediately look for another job. Even if the pay cut was only in real terms that is enough for me to start looking.
Firstly the huge £500mil deficit in the pension fund is caused by Tata taking out of the pot to prevent mass redundancies in the 2008 economic crash. They haven't and don't look like they are going to replace the money either way.
Secondly only employees signed up before 2009 were on the final salary pension, that has now gone it's pretty much in line and to make things better for the pension pot the average life expectancy of a steel worker is on 65. The number of people I have known that retired at 60 then died within the first 5 years, there's a reason why heavy industry in Europe has a lower retirement age than the rest of the industries.
To be honest the steelworks could have been more successful financially with correct investment. We spent £200mil on a new blast furnace But that was done so badly and we are plating so much because the bos plant is a bottle neck, then the hot ill hasn't been upgraded since the 80s so we couldn't roll the extra wide strip (limited to 1860mm, new plant from Siemens £80mil would have let us go to 3600mm) which all the car manufacturers/ship builders and defence. Also the energy costs would be a 1/5 of current costs if they actually invested in the coke ovens and byproducts plant which when running properly would create enough cog to power the plants 4 electric turbines and provide enough gas for all the flares.
But hey it's all just years of chronic under investment building up.
Soldato
I'm pretty sure a lot of bankers lost their jobs. I don't disagree with you, but it wasn't exactly rosy in the finance industry during that time.