UKC

I know that the government want our industry to be competitive, but surely when the competition is loaded very unfairly in the form of Chinese steel, the public purse should consider loading the balance back the other way to some extent.
We really do not want to lose any more steel production facilities as far as I am concerned. If there was a collective share group I would put money into it in order to bid in Tatra's sale( or whatever the Indian owners are called).

In reply to veteye:

Am I to assume that you are all content and complacent about Tata's sale of most of the steel industry?

In reply to veteye:


I'd say the likelihood of UK steel being saved is the same as the willingness of consumers to pay more for a product built with it.

In reply to veteye:

I'm rather depressed about it because I fear for the communities so affected. However the forces working against the UK steel industry are overwhelming. Global demand has collapsed at the same time as Chinese production severely undercuts thresholds for the viability of production in the UK.

Saving the industry isn't just a matter of buying the company from Tata. The owners will then be left with a money-pit facility, the fortunes of which look set to sink further. It is clear from news analysis that Tata does not believe it will find a buyer and that should tell you all you need to know about the viability of the business. The news report I heard yesterday weighing the qualities of the rival plants in S Wales and Netherlands would have been hilarious if not so sad. The reporter reeled off a whole list of reasons why Eindhoven should prevail, modern facility, lower production costs, ideal for distribution to mainland Europe etc and couldn't find a single reason to justify retaining the Welsh plant in a straight fight, other than it's been there a while.

None of the above alters the fact that I find it a thoroughly depressing outcome, but it's been coming a while now.

In reply to BnB:


Uk electricity prices are a big factor, and a steel plant gobbles electricity. So why on earth is something not been done to address this by Uk govt.. I had heard that local people opposed the development of a power plant to reduce costs as it burnt waste.If this is true,are locals shooting themselves in the foot?Port talbot is a modern plant, last year they installed the biggest AC motor ever built for the european steel industry to improve efficiency.read about it in some wire related magazine. there was a huge leap in efficency as a result. tata have invested millions to make it so. You also wonder about the very good wages that employees earn, what is being done as a compromise by the unions to save those. I know plenty of places which when faced with hard choices have made compromises on wages.

Mind you at least they are been given a chance. As I understand it in China at the moment, the steel mills there just close overnight, and there have been one hell of alot of closures.

I suspect that UK Govt has no choice but to step in somehow. Its too strategic for defence, nuclear etc - not to have 1 steel plant left in the UK.

I use steel in my manufacturing process, unfortunatley its cheap and cheerful from china.My global customers would simply not tolerate price increases to support UK steel.Theirin lies another issue.

As you say it is depressing, my heart reaches out to those involved.

In reply to neilh:


I think the erosion of green energy generation subsidies should help with this.

In reply to veteye:



How much would you put in? https://www.tuc.org.uk/britains-unions states 5.8million Trade Unioinists if they all chipped in £1K that would be £5.8 billion, that should buy you a few steel works. So would you chip in £1K ?

In reply to veteye:

Some good informative posts on this thread.

My view is that, whilst there is an element of let market forces prevail, there are so many jobs at risk and this is such a strategic issue that something should ideally be done to rescue some of this using government money. I have no idea if a pseudo VC approach would work as opposed to the government simply buying it for the nation (until it can be re-privatised). I imagine they are exploring those options now.

In reply to veteye:

Great isn't it. We sell our nuclear knowledge to the Japanese, then 30 years later have to buy the knowledge back from the chinese who then also sell us their steel to make the bloody things because we've stuffed the steel industry too. And mainly because we pay the french to provide us our electricity. Now that I put it like that I totally understand tory privatisation policy. It all makes so much sense. I'm betting when Cameron agreed to have the power stations built by china they didn't insist on them pricing it using UK steel...

In reply to blurty:

A complicated issue , but when as a country we try and subsidise green energy etc and have things like carbon tax, the big energy users in the UK suffer in the global market as that price has to be past on . the problem Uk Gov has is if they do deals for Tata in Port Talbot then the likes of chemical plants, foundries ( Sheffield Forgemasters etc) are likely to scream -this is not fair, what about us?

Its an issue that none of the political parties in the Uk have really got to grips with. Its a fundamental issue with green politics. are we as a country prepared to face the loss of all those jobs partly because of green taxes etc on electricity which increase the price of our steel in the global market?

In reply to beardy mike:

I do not think it is just a Conservative issue, all parties seem to follow the same line. Our political parties cannot think beyond a few years.

In reply to veteye:

The frightening thing is that it is reportedly loosing nearly £1million a day which is £75,000 per year for each employee. I can't see why each employee would want to mortgage whatever equity they have in their houses and put in £75K a year each just to keep it going so its unlikely that the UK is going to want to do that on their behalf.

In reply to veteye:
I buy steel for a living, I don't as a rule (company policy) buy Chinese steel.
(unless it is for their market, and they specifically agree to it. )
It is the case that we have clients in Shanghai that come to us and ask us NOT to supply Chinese steel in their product.

We are of course not the only ones struggling, the European Steel makers are too. I heard on the radio that the UK are prohibited (EDIT - by EU rules) from supporting their steel industry, but the same commentator said the other European Countries are (despite the rules)

In reply to beardy mike:

Nice rant. Not sure I agree with it.

Past or current generation nuclear fission power isn't significantly cheaper than fossil power (unless you include the long term costs of CO2 release in the cost of fossil fuels and assume some low cost future technological solution to the problem of radioactive wastes. China certainly aren't including these costs in their dirty coal powered steel prices...)

Further, do you think that having an average wage about 8x higher in the UK than in China might affect the commercial viability of steel production in the UK?

In reply to wintertree:

That is changing though, and their own costs are rising. The argument is, that if we can survive the shgort term the longer term prospects are better.
But that would require some long term strategic policies( not something the UK System is good at)
(Edit - What NeilH said)

In reply to blurty:

Its not fast enough....it needs to be done now

In reply to Jim C:

Must be high spec stuff.I assume aersopace related as usulaay the Chinese do not touch their own stuff for that market.

In reply to neilh:


Actually no.
Some of it is Pressure Parts for their power station boilers , but nothing Aero or Nuclear.

In reply to neilh:

Yeah I know. Just having a rant at the Tories expense. This lot do seem particularly short sighted though...

In reply to wintertree:

Was good wasn't it

Costs in China are constantly going up and we are reaching a tipping point with manufacturers returning to the UK. Currently we are apparently 13% more costly for general manufacturing than in China which is not as much as you might think. When you factor in the loss if intellectual property, know how, jobs etc the cost is much higher than that. Whilst I understand the principle that you look for the most competitive price, that price doesn't always represent the best price. If Port Talbot goes down, so does the whole community which is still struggling after the mining left the valleys. The social and economic repercussions of this decision are pretty fundamental to south wales for the foreseeable future.

What gets my goat is that as innovators we design and build these systems, then sell that knowledge because we need the money and then have to go cap in hand to someone else who will just give us a good shoeing whilst we're down. Yes wages are 8x higher, but what will the increased benefits bill be for those workers who will shortly be on the streets, the increase in crime, mental health issues, split families, housing repossessions etc. This not simply an equation about how much less the chinese charge us.

In reply to Jim C:

It is always an interesting to learn that that in their own country they do not buy their own stuff as their quality/ quality standards are not good enough.I have seen this in aero, just not elsewhere. Makes me wonder where they buy their steel for nuclear, probabaly in Europe.

In reply to beardy mike:

No worse or any different to any of the others on industrial strategy.

In reply to beardy mike:

Have you seen the closures in their steel industry?Just as devastating for them, probably far worse.

In reply to neilh:
Edit:- Makes me wonder where they buy their steel for nuclear, probabaly in Europe.

Some of it Korea

In reply to neilh:

Being entirely selfish, that's their problem, not ours. I know we live in a multinational world in which large companies are now the main driving force rather than nations, but I feel we need to start protecting our own interests a little more studiously. We have great engineers and manufacturing in this country when it's well funded and run, it just seems that rather than concentrating on making things to sell to people, successive governments seem intent on forgetting that physical things are as important to an economy as selling magic beans. If manufacturing was as well supported as banking is we'd be doing much better than we are. It makes me sad that we have so much talent and exploit it so poorly...

In reply to Jim C:

Japan probably.......

In reply to beardy mike:

In my view the market has spoken. We as consumers chose to buy cheaper foreign goods. We as consumers do not reward companies for keeping jobs in the UK. We might say we would, but when it comes to our money we do not.
I cannot understand why you blame the government, labour or tory. Could you please explain how our country could have avoided Globalisation and the Neoliberal economy.

In reply to beardy mike:

Without trying to sound like an apologist for the bankers, the nature of support is very different from one industry to another. With banking, it's more about legislative efforts like fighting the European transactions tax. With manufacturing, it's far more capital intensive and bucks long term economic trends which cast doubt on a successful ROI.

I am conscious of the 2008 related banking bailouts but these were not primarily designed to keep bankers in champagne and cigars even if they had that effect!!

In reply to Lenin:



Governments are perfectly capable of intervening in markets. One of the problems being faced by many European steel makers has been the dumping of cheap Chinese steel. Much of this is due to over-capacity in the Chinese steel industry. Tariffs could be applied to imported steels to offset the cheap manufacturing costs. Simply saying 'the market has spoken' avoids the issue.

In reply to Lenin:

No, consumers haven't spoken, industry searched for greater profits by turning to cheaper supply. Consumers only didn't understand that the price they would pay for their greed is lower quality and in the long term an economic downturn in their own country due to that greed. Whilst we play by our nice rules of fair competition, China has not. They have understood how to pull a fast one on the imperialist lackey running dogs, because they have understood our fundamental greed. It is our governments duty to TRY to steer our ship in a direction in which we do not lose our own intellectual resources above all else, because that is what we are talking about here. Once the knowledge leaves our shores, we have to reinvent it which is a lot more difficult that retaining it in the first place.

In reply to BnB:

'With banking, it's more about legislative efforts like fighting the European transactions tax. With manufacturing, it's far more capital intensive'

Nonsense, the problem with RBS was massively ever-optimistic expansion, and the UK taxpayer paid £45 billion to bail out that bank alone. You can buy a lot of steel mills for that amount. The issue with the retail banks is that a huge proportion of the British population have their savings and mortgages with them, and the government wish to protect the finances of ordinary people.

In reply to BnB:

Support is really really simple.

I'll give you a direct example. A company I've worked for who employs several hundred people in the automotive industry and which turns over millions each year, has several sites, supplies to car manufacturers the world over, and which supplies highly specialised parts goes to the banks for a loan of circa 100,000 so that it can bring manufacture of a part from France to the UK, mainly because they're getting fleeced by them, despite being another branch of their own company. The bank turns them down. So the part cost will remain higher, meaning the UK company makes lower profits and is forced to import from the EU rather than supporting UK manufacture even though it's been accurately costed and shown to be a viable proposition. There is little risk, as generally these parts can be used in multiple different vehicles and are often repurposed.

So what do you do? The bank clearly does not have a particularly reasonable outlook on this. The government needs to actively get involved in promoting manufacturing in this country by helping ease funds being invested. In some cases it needs to take the bull by the horn and invest itself, because clearly it will benefit a great number of its constituents to do so. Whilst I appreciate the banks needed help, so do other industries which are clearly what keeps the bankers in champagne and cigars, (unless of course you adhere to the imaginary nature of money these days and just regard it as numbers which appear of a computer screen somewhere and all they're doing is make the numbers dance). But in the real world we need to make stuff to earn money, just like Germany, China and many other nations do. Our manufacturing base has been allowed to go down the toilet for no good reason other than they didn't employ the right people for the jobs o running it, and they took a short term view and didn't invest when it was needed.

In reply to beardy mike:


Whose greed, the consumers or industry?

In reply to Lenin:

Both.

In reply to beardy mike:

Personally I doubt a company employing several hundred people would have any issues getting a loan for £100k. I do not think your numbers stack up in the real world.Can you give us a better example.

In reply to neilh:

It seems an odd amount doesn't it?

Reading the post i assume the company in question is Valeo.

Probably more to it, that the UK subsid (which I think was an MBO) is so highly geared it can't raise any more cash, or give sufficient security - weak order book, high costs, poor debt serviceability and short leasehold property interests. It's in a high risk sector, so the bank and more particularly it's underwriters can't get the market to offer the money at anything like an acceptable price. (I'm not a banker but work with the banks/ VC/ PE sector.....)

On the steel issue - I understand the high spec specialist stuff is actually quite profitable and in demand. I'm sure Horse would be able to clarify this if he wasn't on Singletrack arguing about why 26'' is better than 650B.

In reply to tony:

By my reckoning this is a red herring. We do not compete with the Chinese for low quality steel, that went years ago.

The good stuff we produce is in competition with other good producers, and as there is a slump at the moment, it has a knock on effect.

In reply to beardy mike:


At £100,000, if your directors genuinely believe in the move they should be able to scrape that together by e.g. increased personal mortgages and make a directors loan to the company.

Alternatively you could go peer-to-peer with someone like FundingCircle - better rates, and you're helping keep profits in the hands of private investors and out of the big/old/inefficient banks.

In reply to neilh:


12 years or so ago in Demark i made steel chimneys. we made more for the UK that year.
The biggest one was for Corus Redcar, made with steel from Sweden and Finland.
We always made some for Cadburys and Sellafield, always wondered why these rather large chimneys which had to be shipped across the North sea in 5 pieces, was not made in the UK..

In reply to neilh:

Seriously? So you're just going to say it didn't happen? Look them up on Duedil if you like. Magal engineering who are linked with Magal AWT and Magal Metallifacture and Magal Far East. I spent a week of my life quoting on the job. Magal engineering's current turn over is 65million a year - don't know what it was then but it was a few years ago so most likely not that, but not going to be far off. The project would have seen them diversifying into Domestic heating thermostats as the manufacture the thermostat, the valve and the plastics to go with them. We quoted for an assembly and calibrating machine which would have been able to assemble them at their plant in Reading.

I run into this sort of thing plenty as part of my job is making the price of machines attractive enough for companies to buy them and without exception they nearly always heckle on price, not because they won't turnover enough but because they are run by bean counters who don't understand how the decisions they make will affect production down the line. For example I quoted recently for a job which was to implement a production cell system to help the company move towards automated assembly of a gas mains valve which would have allowed them to use their employee's elsewhere and thus expand the company. We quoted, we were the only ones asked to quote and it didn't happen. I know the lines were putting through £4000 worth of product in a day (because the engineer told me) - the bean counters basically vetoed it on the basis that they didn't want to spend the 40-50k to start the process. I know this doesn't have to do with banks or the government, but you can bet if they were able to achieve a government grant or some such to fund a new machine, they'd jump on it because it wouldn't be their money. A large part of the companies machinery was so decrepit, literally from the turn of the last century. The company had nursed these machines on rather than replacing, and what they need is to bring themselves into the 21st century - it simply doesn't pay to try to make do. Sure, you don't have to be exorbitant but investing in plant is hardly a bad concept is it?

In reply to neilh:



Personally I think/ expect that, given our electricity prices are roughly double those in Germany, that our high energy prices are driving manufacturing operations abroad - we are already effectively off-shoring CO2 production.

In reply to beardy mike:
I manufacture capital equipment so know the market.... blaming it on the banks is a red herring. By the way I export 90%. The Uk to me to be brutal is a waste of time.

And your comments happen the world over, its nothing that is particularly a British disease or trait. I can demonstrate the same thing to American or Japanese or Chinese manufacturers.

In reply to Jim C:


I'm not so sure I believe that. Although Beardy Mike notes that costs are increasing in China, there are plenty of other countries stepping in to offer low wage, sod-the-environment manufacturing. So there's no medium term levelling of the playing field expected to make the UK competitive.

Longer term, the future surely doesn't involve hundreds of thousands of workers in giant industrial mills. Automation, automation, automation. If we do keep them alive until the UK can be economically competitive we'll be running a technological dinosaur, that isn't capable of competing with other plants.


Indeed - but I'd rather the long term policies were on lowering the financial and environmental costs of the energy used - which could give us a shorter term competitive edge - and on figuring out the eventual shape of a healthy and happy society where working 30-40 hour weeks in giant industrial complexes is no longer the norm for entire geographic subsets of the economy.

In reply to neilh:

OK, well why is it that you feel the UK is a waste of time? I do get that it's not all the banks fault, but somehow we need to reinvigorate manufacturing and the government doesn't seem to know how to. What would you do to improve it?

In reply to wintertree:

It's great that you identify automation as the way forward - I agree totally. It's sad you think Port Talbot is a technological dinosaur, I suspect that is somewhat wishful thinking on your behalf though - they are good at what they do. Given that you can't simply just repurpose an entire community in South Wales, what do you do?

In reply to beardy mike:

Stay in Europe for a start.....

In reply to beardy mike:


No, I'm suggesting that if we wait until we can compete financially with China whilst still providing so many jobs, that then we will have a technological dinosaur. Not now. So what's the point in spending money keeping it going?


Adapt. The same thing everyone laid of from every other job has to do.

Living as I do in a former mining area it's clear to see how bad it is for people, including those born decades after a big industry vanishes, to go through that adaption. Or more precisely, how insufficient the support from any government has been for several decades.

I'd much rather see the government focus on helping the adaption along. I don't have much faith in that however.

In reply to neilh:

I want to stay in Europe but I'm not sure how that helps reinvigorate manufacturing? Much of our product already goes there so that won't change. If what you're saying is don't screw it up by leaving then I agree wholeheartedly. But it won't suddenly make everything better by staying in, it'll just stay as is, so we have to actively encourage manufacturing somehow. I think I know what I'd do, but interesting to hear someone elses perspective...

In reply to wintertree:

Well it won't be a technological dinosaur if you invest in it correctly. As some one pointed out their market is high quality steel, we need to keep that market and either expand it, diversify or reduce costs. Energy costs is one way, adding value to the end product is another (i.e. employ the steel to make things at source, not supply it to someone else). I'm not sure what end products the mills sells other than just raw material? Anybody know?

And yes, adapt is the answer, but given that the government/s has/have an epically crap track record on helping people retrain, surely it would be a good idea to minimise the number of people being put out of work and at least slow down the rate of closure or keep the plant open in some smaller capacity?

In reply to beardy mike:

I do not consider there to be an easy answer. If there was it would have been done. I am certainly not convinced of nationalisation to keep things going when there is no strategic interest- that only can just prolong the agony.

It depends what you mean by manufacturing for a start ....its now so broad.Its too easy to get it tied in with "engineering" or "chemicals" or whatever.

There is as I see it little point in investing in "mass production" whatever that means, you have to be niche and design/marketing led( Dyson or F1 spring to mind) You have to be driven by exports. I despair of manufacturing companys who are not export driven, their shareholders and directors should be dragged out and shot at dawn.They wil die a slow death.

What I call strategic industries- defence etc- the political parties have to form consent ( it will never happen- just look at Labour on Trident) and the Treasury has to switch to 20/ 30 year plans.Really that is so pie in the sky its not worth considering.

I do not think manufacturing is as dire as you make out. Its just Port Talbot has been left high and dry by a downturn. But as I said in my posts at the start sort out the leccy bill, get the unions to compromise on the "above average " salaries and you start to get somewhere in the short term.

So no "silver bullet" I am afraid.

In reply to John2:



If you had quoted the relevant part of my post it would be obvious that this was what I implied, ie that the government was bailing out savers, not the banks.

In reply to veteye:
In our little valley
They closed the steel works down down,
And the workers baths are a supermarket now.
Empty gurneys red with rust
Roll to rest among the dust
And the workers baths are a supermarket now.

CHO:
'Cos it's hard, Duw, it's hard
Harder than they will ever know.
And it's they must take the blame,
The price of steel's the same.
And the workers baths are a supermarket now.

In reply to beardy mike:

The more added value it gets in the UK, the more likely it is priced out the market. The local news just did a piece on it, speaking to workers as they drove out, not one was in a UK owned or assembled car. The unions seemed to have convinced them they can have the good wages etc.. but then spend them on cheaper overseas goods in their homes and the ordered book would remain full. Dream land.

The only thing that will assist UK industry is some national pride in the population on what and where it chooses to spend its money. It might mean a very slight drop in overall standard of living, but more jobs and so forth.

In reply to veteye:

Anybody watch newsnight last night. There was an american/canadian lady on it who made a lot of sense - sorry I forget her name. She was basically advocating the middle road with improved investment in manufacturing infrastructure to help increase demand. I'm assuming she was some sort of expert although you never know with telly. Practically anybody can get on these days At anyrate, worth a watch if you can sneak I-Player past the work firewall...