Yesterday’s Daily Telegraph described problems at SSI in Redcar in the UK as the beginning of the end for British steelmaking, adding that the state of the industry in the UK was ‘anything but rosy’ with demand at 74% of its 2007 level.
The Telegraph claimed that Thai-owned SSI in Redcar was on the brink of administration. Other newspapers – notably the Northern Echo – spoke of potential job losses for the company’s 2,000 steelworkers as SSI failed to meet a series of debt repayments.
SSI Redcar’s problems are not, however, new or revelatory. In a recent exclusive Steel Times International interview with Gareth Stace, the newly appointed director of UK Steel, the underlying problems facing SSI and, indeed, other UK steelmakers, are quite straightforward. There has been a significant increase in steel imports from China; business rates in the UK are 10 times higher than in France or Germany, there are what Stace describes as ‘punishing’ environmental costs; and the UK’s energy bill is sometimes double that of its competitors.
Stace wants the British Government to act and do something about business rates and energy costs. “It’s not that we want to shirk our responsibilities, it’s that we feel we are facing an undue burden and we want the Government or the European Commission to untie our hands from behind our backs and enable us to compete in an open and fair global market. That’s all we want, we’re not asking for hand-outs,” he told Matthew Moggridge, editor of Steel Times International.
According to Redcar MP Anna Turley, speaking to the Northern Echo yesterday, the crisis in the UK steel industry is becoming serious and the government must act to save steelmaking on Teesside.
“We are looking for action on energy costs, business rates and imports,” Turley told the newspaper, and she too brought up the elusive level playing field that is needed to improve the competitiveness of the UK industry.
At SSI in Redcar, losses are expected. The company took over the plant in 2010 and has ploughed over £1 billion into reviving its fortunes. Financial backers are getting impatient and while the plant has set several production records – more than 9Mt of steel slab have been shipped to customers in Europe, Thailand and the USA – is has been a loss-making venture ever since production restarted in 2012.
While Community, the steelworkers union, is fully aware of the problems at Redcar and is pushing management for updates, it firmly believes that a lack of support from the UK government is at the root of the problem.
As Gareth Stace told Steel Times International, UK steelmakers are footing the bill for government policy aimed at reducing emissions and, therefore, can’t hope to compete on an equal basis with those nations not subjected to such policy decisions.