British Steel

Bl4ckGryph0n

Distinguished Member
It's not about blaming others, steel is highly competitive, if your margins are lost because of additional tariffs, that is as you say, "life".

But if the reason why it is no longer profitable is because of these (potential) tariffs, and these are related to Brexit, the reason is Brexit.

No one is blaming, they are stating facts which some people don't like.
Reasons are fine, but if a business don’t adapt to regulatory or market changes than that is down to them. Obstacles and challenges are thrown in our paths everyday. A good team will deal with that and use it to their benefit. Many other organisations, and countries have been preparing and dealing with it. Both within the UK and outside the UK.
 

springtide

Well-known Member
Reasons are fine, but if a business don’t adapt to regulatory or market changes than that is down to them. Obstacles and challenges are thrown in our paths everyday. A good team will deal with that and use it to their benefit. Many other organisations, and countries have been preparing and dealing with it. Both within the UK and outside the UK.
Some businesses can't always adopt to market changes as you imply, there are many factors in terms of fixed cost and if the market changes this can take a profitable business into a non profitable one.

It's why some healthy businesses go under not because of poor management.

As an example, there is plenty of coal in Wales, but the cost of mining and production is more than the product is worth, so it's not profitable. If coal increased in price dramatically you'd find that there maybe a business case to start again.

With coal at the current prices, it doesn't matter how good the management are (as you imply), you couldn't make Welsh coal highly profitable at this point in time.

In this example, the UK is in a competitive market with other suppliers in the EU, who as it happens as they are in the EU don't have tariffs within the EU and have good trade deals with countries outside of the EU.

This benefited the UK Steel production, since under new management they were able to turn the business around and it became profitable again (because of better management), as it could complete with other high grade steel producers within other EU countries.

Because of potential future tariffs, the other EU countries can offer similar quality steel, but at lower prices because of no tariffs.
 

Bl4ckGryph0n

Distinguished Member
Some businesses can't always adopt to market changes as you imply, there are many factors in terms of fixed cost and if the market changes this can take a profitable business into a non profitable one.

It's why some healthy businesses go under not because of poor management.

As an example, there is plenty of coal in Wales, but the cost of mining and production is more than the product is worth, so it's not profitable. If coal increased in price dramatically you'd find that there maybe a business case to start again.

With coal at the current prices, it doesn't matter how good the management are (as you imply), you couldn't make Welsh coal highly profitable at this point in time.

In this example, the UK is in a competitive market with other suppliers in the EU, who as it happens as they are in the EU don't have tariffs within the EU and have good trade deals with countries outside of the EU.

This benefited the UK Steel production, since under new management they were able to turn the business around and it became profitable again (because of better management), as it could complete with other high grade steel producers within other EU countries.

Because of potential future tariffs, the other EU countries can offer similar quality steel, but at lower prices because of no tariffs.
So we agree it’s not a viable business unless they change. Just like the welsh coal, it’s not viable now. Perhaps it will be in the future. In the meantime best to do something else.
 

krish

Distinguished Member
After the takeover it started to make a profit
since under new management they were able to turn the business around and it became profitable again (because of better management)
It seems they had been making progress, as since taking over from Tata they managed to get the company from making a loss to making profit again.
You know Greybull have form on this? Acquiring vulnerable businesses for a steal, then extracting maximum GBP up to insolvency. Good old fashioned corporate raiders.

Comet - bought for a couple of quid, £120m recouped from the insolvency, while the taxpayer faced a £50m bill because they failed to follow redundancy rules.

Also look at M Local, Monarch, Rileys et al ...
 

IronGiant

Moderator
So we agree it’s not a viable business unless they change. Just like the welsh coal, it’s not viable now. Perhaps it will be in the future. In the meantime best to do something else.
Thing is you can't just switch off a foundry and mothball it. So if it really is in trouble due to Brexit uncertainty then there may be a case for keeping it ticking over until Brexit is done and dusted and make the decision then. If the Gov is footing the bill it might give them a bit more incentive to get on with it (Brexit).
 

Bl4ckGryph0n

Distinguished Member
Actually, Can we take back our BS standard's, Which are now BS/EN/ISO 6399/BS5950

?????
Actually they still exist. I’m on a BSI sponsored committee setting up an ISO standard (blockchain related with 52 countries participating). It’s a global world and there is a mapping. Just not much use to use UK only standard in isolation is there.
 

paulukhenry

Standard Member
Yes, I use those unless certain Euro Codes are stipulated: example (Part K /Part M) , However. Many years ago steel was manufactured to BS codes, and everyone wanted a BS code (British manufactured Steel).
It then became BS/EN ISO, did we give away our expertise/design?
Don't get me wrong, The world scientific collaboration is a fundamental process for the future.

It was just something that popped into me head..

Regards
Paul.
 

Bl4ckGryph0n

Distinguished Member
Yes, I use those unless certain Euro Codes are stipulated: example (Part K /Part M) , However. Many years ago steel was manufactured to BS codes, and everyone wanted a BS code (British manufactured Steel).
It then became BS/EN ISO, did we give away our expertise/design?
Don't get me wrong, The world scientific collaboration is a fundamental process for the future.

It was just something that popped into me head..

Regards
Paul.
No we didn’t give away anything, it is simply comparable and recognisable for others in a standard. The various standards bodies all work together. You can always trace back the originator of the standard as well.
 

tapzilla2k

Distinguished Member
So we agree it’s not a viable business unless they change. Just like the welsh coal, it’s not viable now. Perhaps it will be in the future. In the meantime best to do something else.
There are a few different reasons as to why you can't mothball a foundry, but one of the biggest reasons is cost. Most notably the cost of relining blast furnaces which runs into the hundreds of millions. You'd likely have to reline several blast furnaces before you can fire those back up and get a foundry working. Which would make it incredibly difficult if not impossible to make a profit off the metals produced. You have to plan production around the lifespan of blast furnaces, they only get switched off if they need repairs or it's time to reline them.

Thing is you can't just switch off a foundry and mothball it. So if it really is in trouble due to Brexit uncertainty then there may be a case for keeping it ticking over until Brexit is done and dusted and make the decision then. If the Gov is footing the bill it might give them a bit more incentive to get on with it (Brexit).
There is a case to be made for nationalising (putting aside EU and WTO rules for a moment) our steel industry as a whole as it's a critical industry. If we lose our steel industry (and other metal works) then we are left vulnerable to the changing prices on the international markets. Which is fine when metals are cheap, but not so good when it's expensive and you have to repair or relay entire sections of train tracks or need a lot of steel for big infrastructure projects. I'm sure those who say let the markets decide it's fate might be complaining when the Government has to either raise taxes or borrow more to fund infrastructure projects.
 

Sonic67

Distinguished Member
There is a case to be made for nationalising (putting aside EU and WTO rules for a moment)
Except you can't just do as you want and be in the EU.
 

IronGiant

Moderator
(unless you are France or Germany)
 

maddy

Well-known Member
IITC, you can do it with the permission of the Commission, with some exceptions where permission isn't needed.

Whether they'd allow it for steel manufacturing, given the current utilisation levels of plants in the EU, is another matter.
 

Toko Black

In Memoriam
IITC, you can do it with the permission of the Commission, with some exceptions where permission isn't needed.

Whether they'd allow it for steel manufacturing, given the current utilisation levels of plants in the EU, is another matter.
There is nothing that directly prohibits it meaning you definately can't nationalise and/or provide government aid/support for any industry - it's on a case by case basis.
 

Sonic67

Distinguished Member
That is a myth. You can both nationalise and provide state aid to industry under the rules of the EU.
What are the EU rules about state aid?

What is state aid?
State aid is financial assistance given by the government to companies or other organisations that has the potential to distort market competition.

The aid can be in the form of direct cash grants or indirect aid - such as preferential borrowing rates or tax credits.

Under EU rules, member-state governments are allowed to provide state aid only with approval from the European Commission.

For example, in 2015 the UK government submitted plans to provide a subsidy to Drax power station to convert one of its units from coal to biomass fuel.

Following an investigation, the commission ruled in favour of the scheme.

There are exceptions to the rules. For example, governments can provide aid for broadband infrastructure without prior approval. And aid worth less than 200,000 euros (£175,000) over three years is exempt.

Do the rules prevent support for the steel industry?
The EU Commission says too much steel is produced in Europe. As a result, it has been inclined to take a fairly tough line on state aid in this sector.

In 2016 for example, the commission ordered Belgium to recover 211m euros in illegal state aid it had given to its steel industry.

That does not mean all state aid is impossible, but the government would have to make a case that assistance was within the rules, or fell under one of the exemptions.

One possibility would be to argue that the steel industry was essential for national security, but it is far from clear the commission would accept that.


 

Toko Black

In Memoriam
What are the EU rules about state aid?

What is state aid?
State aid is financial assistance given by the government to companies or other organisations that has the potential to distort market competition.

The aid can be in the form of direct cash grants or indirect aid - such as preferential borrowing rates or tax credits.

Under EU rules, member-state governments are allowed to provide state aid only with approval from the European Commission.

For example, in 2015 the UK government submitted plans to provide a subsidy to Drax power station to convert one of its units from coal to biomass fuel.

Following an investigation, the commission ruled in favour of the scheme.

There are exceptions to the rules. For example, governments can provide aid for broadband infrastructure without prior approval. And aid worth less than 200,000 euros (£175,000) over three years is exempt.

Do the rules prevent support for the steel industry?
The EU Commission says too much steel is produced in Europe. As a result, it has been inclined to take a fairly tough line on state aid in this sector.

In 2016 for example, the commission ordered Belgium to recover 211m euros in illegal state aid it had given to its steel industry.

That does not mean all state aid is impossible, but the government would have to make a case that assistance was within the rules, or fell under one of the exemptions.

One possibility would be to argue that the steel industry was essential for national security, but it is far from clear the commission would accept that.

So nothing explicitly to stop the UK government attempting to nationalise or provide state aid for any or all industry ?

It's like claiming you can't build an extension to your house because the council has planning permission laws.
Or you can't park in town because the council has parking restrictions.
 

Sonic67

Distinguished Member
So nothing explicitly to stop the UK government attempting to nationalise or provide state aid for any or all industry ?
Read it again and quit the weasel words.

It's like trying to claim you can run a mile in four minutes as you heard someone else did.
 

springtide

Well-known Member
Read it again and quit the weasel words.

It's like trying to claim you can run a mile in four minutes as you heard someone else did.
It's already been stated that the government could step in for British Steel on the basis that this is a temporary drop in orders due to Brexit uncertainty and potentially we are leaving the union at some point, and seek approval from the EU.

Obviously this might get rejected but the government could ignore the EU rules (like Belgium did) knowing that we are leaving the EU anyway.

You don't ask, you don't get right?

It's a pretty fair argument for the UK if a no deal Brexit happens and we might want to impose Steel import tariffs from the EU to protect UK jobs?
 

Sonic67

Distinguished Member
"The EU is great."

"We should be ignoring the EUs own rules."
 

springtide

Well-known Member
"The EU is great."

"We should be ignoring the EUs own rules."
Has anyone engaged with the EU to talk about state aid?
Nope. As I said, it could be argued with the EU that it's for our national interest.

"We want our country back, it is stopping us from saving companies. But if we could save our companies, we wouldn't anyway as we agree with the EU."

So which is it? What is your argument?

Are you complaining about the EU stopping state aid?
Or are you complaining that we shouldn't give state aid?
 

Sonic67

Distinguished Member
Has anyone engaged with the EU to talk about state aid?
Nope. As I said, it could be argued with the EU that it's for our national interest.
Go on then argue it.

A lot of people are going to be out of work and we can't do anything about it. But hey, being in the EU means no loss of sovereignty.
 

springtide

Well-known Member
Go on then argue it.

A lot of people are going to be out of work and we can't do anything about it. But hey, being in the EU means no loss of sovereignty.
Last time I checked I wasn't elected :)

I see you carefully avoid the question on your opinion.
I guess for challenging you on this, you'll reply and ask my opinion?
 

Sonic67

Distinguished Member
Last time I checked I wasn't elected :)

I see you carefully avoid the question on your opinion.
I guess for challenging you on this, you'll reply and ask my opinion?
If we wasn't part of the EU we'd be free to balance up what's better.

People who are unemployed need to be paid benefits. They will need to be retrained. The loss won't just affect those directly employed. It will affect everyone in the area who benefits from those people's wage packets. It's a huge cost either way.

Then there's whether making our own steel is an important strategic resource and we should do it anyway as we need that independence.

Maybe our steel industry is like our coal industry and maybe it isn't worth saving. It just isn't viable any more.

Or maybe politically it needs saving as we have a hung parliament and votes are needed and maybe there's some in this.

Either way we should have the choice. The fact we haven't the choice and it's down to what the EU says is down to our loss of sovereignty.
 

maddy

Well-known Member
Regardless of being in or out of the EU, I very much doubt a Tory government would prop up British Steel. Nor should it.
 

Toko Black

In Memoriam
Go on then argue it.

A lot of people are going to be out of work and we can't do anything about it. But hey, being in the EU means no loss of sovereignty.
... because of the UK governments lack of action, nothing to do with the EU.

The UK government could do something about it, but don't seem to want to ... and conveniently allowed the misinformed public to believe it's because the EU won't allow it, which many will automatically believe because of their dislike/distrust of the EU.

Just like it was easy to let the EU take the blame for the British Steel industry struggling a few years ago. Under pressure from Chinese tariffs on UK Steel(not just UK but everywhere else as well) proposals to combat that by increasing tariffs on Chinese steel in an attempt to get the Chinese to lower their tariffs.
Unfortunately the EU failed to implement those proposals and the British Steel industry tanked.

People like yourself were then fed the story of the EU not raising tariffs and letting the UK Steel go under.
More ammunition for the anti-EU brigade and a plausible denial of responsibility or inability to act on behalf of the UK Government.
However, the truth is somewhat different, as we now know, the UK Government led the opposition to the EU proposal to increase tariffs on Chinese steel and used it's pull to get enough votes to cause the proposal to fail.

... and yet again we are in a situation where the government could do something, the EU doesn't have any rules that automatically prohibit any action, but the story is that it's the EU's fault and we can't do anything.
History repeating itself and the anti-EU brigade seem happy to carry on holding the EU responsible despite evidence to the contrary.
 

Sonic67

Distinguished Member
... because of the UK governments lack of action, nothing to do with the EU.
...Because we can't. A sovereign nation that can't even invest in our own industries due to EU rules but we are funding other countries with £10 billion. Every year. Money that could go here for exactly things like this.
 

Pacifico

Distinguished Member
State Aid is prohibited in the EU except in very specific circumstances. What is different about the British Steel situation that would allow the UK to override EU rules?
 

springtide

Well-known Member
State Aid is prohibited in the EU except in very specific circumstances. What is different about the British Steel situation that would allow the UK to override EU rules?
Do you believe in State Aid? As in, propping up businesses that would fail otherwise as are not viable?

Businesses that wouldn't fall into a category that maybe considered in the national interest.
 

Trending threads

Latest news

Netflix reveals how viewing metrics determines a show's success
  • By Andy Bassett
  • Published
Discovery launches dplay AVOD service in UK and Ireland
  • By Andy Bassett
  • Published
Cyrus announces ONE Cast Smart Audio System
  • By Andy Bassett
  • Published
Chord Electronics debuts ULTIMA 3 power amp at UK Hi-Fi Show Live
  • By Andy Bassett
  • Published
Virgin Media unleashes Gig1 home broadband in Manchester
  • By Andy Bassett
  • Published
Top Bottom