On three occasions this month I have spent time in the BBC Radio 5 Live studios answering questions on the ailing British steel industry. My on-air ‘appearances’ were the result of SSI UK and Tata Steel closing plants and slashing jobs in Redcar and Scunthorpe in the United Kingdom – and it’s all China’s fault.
The Chinese economy is slowing but China is producing more steel than it needs. Result? It ‘dumps’ excess metal on foreign markets, the global steel price dips and steel producers struggle to survive. It’s happening all over the world, but unlike in North America – where anti-dumping and countervailing duties are imposed on ‘rogue nations’ like the Chinese – Europe’s lumbering bureaucratic machinery is slow, and some would say unwilling, to react.
Something must be done, but I doubt if David Cameron, the British Prime Minister, will jeopardise his rather dangerous nuclear power deal with the Chinese by berating Xi Jingping for dumping cheap steel on the UK market.
The Chinese problem is one that requires a multi-lateral approach. Xi Jingping needs to be told – in no uncertain terms – that China can’t expect to be granted ‘market economy status’ (which it craves) if it doesn’t behave like one. Make no mistake: Chinese steel producers, unlike those in the west, don’t have to generate a return on capital. We’re back to what western steel producers crave most: a level playing field. But will they ever get one and does anybody really care? Not the UK government, it seems.
The proverbial ‘man on the Clapham omnibus’ must be wondering whether the British Government is serious about the survival of its homegrown heavy industry and, indeed, the much talked about ‘northern powerhouse’ it promised to create if a high speed rail link is established between London and ‘the north’. It’s all beginning to sound like empty rhetoric.
How is it that we find ourselves in a position where, through countless European directives and punitive green taxes, we have regulated our foundation industries into virtual oblivion? Why have we given steel producers in other regions of the globe an unfair advantage when it comes to competing on the world stage?
Applauding ‘globalisation’ is fine, but why should western steel producers play with both hands tied behind their backs?
This issue of Steel Times International discusses many different subjects. On the technical front we have three interesting articles on ironmaking and then, in keeping with our aim to keep readers abreast of the latest steel industry conferences, a report from the editor of the magazine on the 49th World Steel Association Conference, which this year was held in the Windy City, Chicago, USA.
Myra Pinkham discusses the US Oil Country Tubular Goods market and, in Perspectives, we hear from Thermo Fisher Scientific's Kevin Quinn who argues that overcapacity creates opportunities.
Regular features, such as industry news, country updates and, of course, the History page make up this month's issue and we still have one more issue to go before the year-end.
Gareth Stace, the recently appointed director of UK Steel, is a keen cyclist and so am I, although my definition of ‘keen’ is two rides a week on a heavy mountain bike through the rural country lanes of Northern Kent. Gareth rides to work from the southern reaches of Surrey into Central London – roughly 25 miles each way and early enough to avoid dangerous encounters with crosstown traffic.
There’s nothing negative to say about cycling: it keeps you fit and I believe there’s a spiritual dimension too. When I’m on the saddle, out in the sticks with fields to the left and right of me and a clear road ahead, I find I have time to think about ‘stuff’. When my father died in 2011 I dealt with the grief alone, while riding the bike, allowing any tears to fall by the wayside and be absorbed by the tarmac.
Cycling into and out of London on an almost daily basis, Gareth has time to think – and let’s face it, as the new director of UK Steel he has plenty to think about, as I discovered when we met for an exclusive interview a few weeks ago.
Gareth arrived in the job at what he describes as a very challenging period for the steel industry in the UK, Europe and globally; and I find myself wondering whether, while riding into town or heading south on his homeward journey, Gareth is coming to terms with what he describes as ‘the perfect storm approaching’.
There is plenty to be concerned about: a significant increase in steel imports from China; business rates that are 10 times higher in the UK than in France or Germany; punishing environmental costs; a strong pound; a new Conservative government; and that elusive level playing field that doesn’t appear to be getting any closer, even if you’re riding a bicycle.
Gareth is fully prepared to meet head-on the challenges gathering like storm clouds overhead, but even the most effective waterproofs might struggle to keep him dry if, as predicted, they all hit the ground simultaneously.
There is a huge ‘but’ that should follow on from the headline of the Gareth Stace interview in this issue. “I’d like to be optimistic,” Gareth told me at the start of our interview, but he implied that it wouldn’t be an easy ride.
That said, most cyclists would agree that the best way to approach a steep hill is to select the right gear and keep pedalling – eventually you will reach the summit.
When it comes to optimism, Manik Mehta's report from the 30th Steel Success Strategies conference in New York talks about 'signs of optimism' in the US marketplace even if some of the big names – Lakshmi Mittal being one of them – not gracing the event with their presence. According to Manik, the conference provoked some interesting discussions on the big issues affecting the global industry.
We have three interesting features on rolling and some interesting articles on special and stainless steels, not forgetting our regular features.
If you work in the steel industry you would be well advised to read Ayn Rand's Atlas Shrugged. It's a huge brick of a book that you might regret buying the moment you try to fit it in your briefcase, but the steel industry is a central theme, it is extremely well-written and it contains some vividly descriptive, well observed passages on the steel production process.
While it would be wrong to say that Rand's epic novel is all about the steel industry – in essence it expounds (some might say arrogantly) her philosophy of objectivism – there are a few choice quotes about the steel industry and one in particular that is of relevance to an article, penned by yours truly, in this month's edition of Steel Times International.
"In view of the critical plight of the steel industry," said Mouch with a sudden rush, as if not to give himself time to know what made him uneasy about the nature of Rearden's glance, "and since steel is the most vitally, crucially basic commodity, the foundation of our entire industrial structure, drastic measures must be taken to preserve the country's steel-making facilities, equipment and plant."
Nothwithstanding the fact that the entire quote resonates when issues such as EU emissions regulations and Chinese exports are considered, it's the last bit that should be ringing bells in the boardrooms of global steel companies.
Rand's brick-sized tome was published in 1957, but its relevance continues today, especially where the reputation of the steel industry is concerned.
While some people argue that a career in the steel industry offers little more than 'dark grey to black prospects' and describes it as a 'dying elephant' with a 'smoke stack' image, others are more optimistic.
Nicholas Walters, director of communications and public policy at the World Steel Association comments that, "Steel is central to making modern society sustainable. It is everywhere in our lives and is at the heart of delivering solutions to so many of today's problems."
There is, to put it mildly, plenty to shout about, but who's shouting the loudest? Those who see only smoke stacks and black prospects or those, like Walters, with a more positive perspective?
My message to steel associations and steelmakers – who are ultimately responsible for improving the image of the industry – is simple: get out there and spread the word that steel is one of the most 'right on' products on the planet and remember that today's steel industry is modern, technology-driven and operates more sustainably than at any time in its long and distinguised history.