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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 1/12
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5hoursago Business
Britain'ssteelindustry:What'sgoingwrong?ByTimBowlerBusinessreporter,BBCNews
OneinsixjobsintheUKsteelindustryarenowatrisk
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 2/12
Overthepastfewmonths,onepartoftheUKeconomythesteelindustryhasbeengrabbingthenewsheadlines,butforallthewrongreasons.
TataSteel'sannouncementofanother1,050joblossesatthefirmisjustthelatestblowtotheindustry.
Thecutscomeontopofthe1,200jobsaxedattheIndianownedgiantjustlastOctober,amidanindustrywidecull.
Aroundthesametime,Thailand'sSSIannounceditwasclosingdownitsRedcarworkswiththelossof2,200jobs,thenpartsofCaparoIndustries'steeloperationswentintoadministrationputting1,700jobspotentiallyatrisk.
Thesteelindustrysaysithasbeenhitbyacombinationoffactors:thestrengthofthepound,relativelyhighelectricityprices,theextracostofclimatechangepolicies,andcompetitionfromChinatherehavebeenallegationsthatChinesesteelisbeingsoldintheUKatunrealisticallylowprices.
Sowhat'sthetruthofitalljustwhyaresignificantpartsofBritain'ssteelindustryinsuchtrouble?
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 3/12
What'sbehindthecurrentcrisis?
Demandforsteelworldwidehasnotreturnedtoprefinancialcrashlevels.WitheconomiesparticularlyChina'sstillseeingweakgrowth,globaldemandforsteelissettoremainsluggish,fallingby1.7%in2015andrisingby0.7%in2016.
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 4/12
AstrengtheningpoundhasbeenoneofthefactorsmakingUKsteelexpensiveontheinternationalmarkets.
Insummer2015,sterlingreachedasevenyearhighagainstabasketofcurrencies,afterBankofEnglandGovernorMarkCarneysignalledthefirstriseininterestratessincethecrashcouldsoonerthanexpected.
Atthesametime,globalsteelpriceshavefallensharply.Meanwhile,China'sowneconomicslowdownhasledChineseproducerstoseekexportmarketsastheirhomedemandhasstalled.
Asaresult,UKimportsofChinesesteelhaveincreaseddramatically.In2014theUKimported687,000tonnesofsteelfromChinacomparedto303,000tonnestheyearbefore.
ItistruethattheUK'ssteelimportsfromtherestoftheEUaremuchhigher4.7milliontonnesin2014,butcruciallyChinaissellingitssteelatmuchlowerprices.
AccordingtoEurostat,theEU'sstatisticsagency,EUsteelimportsintotheUKcostonaverage897eurosatonnein2014,whileChinesesteelimportswerejust583eurosatonneleadingtoaccusationsthatitissellingatunfairlylowprices.
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 5/12
Highenergycostsforenergyintensivebusinesseslikesteelproductionarealsoafactor,saystheindustry,addedtobytheextracostofclimatechangepolicies.UKSteel,theindustrybody,saysgovernmentpoliciestocompensatesteelcompaniesfortheseextracostshavebeencomingintooslowly.
TherearealsostrictEUrulesthatrestricthowmuchsupportgovernmentscangivetoparticularindustries.
Howmanyjobsareatrisk?
Almost20,000peopleareemployedinthesteelsector,andmorethanoneinsixarenoweitherlosingtheirjobsoratriskoflosingthem.
Britain'sbiggeststeelproducer,theIndianfirmTata,whichemploysaround17,000intheUK,hasjustannouncedanother1,050joblossesinsteeloperations.
Thecutscomeontopofthe1,200jobsitalreadyaxedlastOctober,amidanindustrywidecull.
AlsoinOctober,thecountry'ssecondlargeststeelproducer,ThaifirmSSI,saiditsRedcarworksonTeesside,wouldgointoliquidationwiththelossof2,200jobs.
Atthesametime,CaparoIndustrieswentintopartialadministration,putting1,700jobsatpotentialrisk.
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 6/12
IsitreallyallChina'sfault?
TheindustryblamescheapChineseimportsforacollapseinsteelprices.
Chinesesteelproducersareaccusedof"dumping"exportsintheEU
ItiscertainlytruethatChina'sdramaticeconomicgrowthsinceliberalisationstartedin1979hasbeenoneofthekeydriversintheglobalsteelmarket.
Itisnowtheworld'sbiggeststeelproducer,accountingforaround822milliontonnesayear.TheUK,whichproducesjust12milliontonnesayear,isaminorplayerintermsofabsoluteoutput,buthassoughttospecialiseinhighquality,highvaluesteelproducts.
WithChina'smarketslowing,theirproducershavebeenlookingforexportmarkets,suchastheEU.
Thishasledtoaccusationsofunfaircompetition,thatChineseproducersare"dumping"steelproductsonoverseasmarketsthatisnotjustsellingthemcheaply,takingadvantageoftheirlowerproductioncosts,butactuallysellingthemataloss.
In2015,theEUimposedantidumpingdutiesforsixmonthsonsomesteelimportsfromChinaandTaiwan.TheEUandChinahavealreadyclashedovertheallegeddumpingofproductsrangingfromwinetosolarpanelstosteelpipes.
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 7/12
UKsteelmakershavealsoblamedhighenergycosts,greentaxesandthestrongpoundfortheirdifficulties,sayingthatcomparedtoforeigncompetitorsthecostofmakingsteelintheUKistoohigh.
HowimportantissteelfortheUK?
Steelitselfisvitalforjustabouteverythingweuse.Whetheritisbuildings,clothes,chemical,cars,lampsordrinkscansalldependonitatsomepoint.
Aswe'veseen,almost20,000peoplearedirectlyemployedinthesteelindustry.GiventhetotalUKworkforceis30million,that'sjustonein1,500jobs.Butcruciallysteelisnotalabourintensiveindustryautomationandcomputerisationhasseentothatsorawnumbersarenotthewholestory.
Almost20,000aredirectlyemployedintheindustry,butthousandsmoredependonitforwork
Manyarguethatthisisnotjustacrisisforthesteelsector,butoneaffectingUKmanufacturingingeneral,whichaccountsforroughly10%ofUKeconomicoutput.
Thisisbecausebesidethejoblossesalreadyannounced,therewillbeanimpactinotheralliedsectorsonsteelprocessors,distributors,scrapmetaldealers,metaltradersandothermetalproductmanufacturers.
Whatcanthegovernmentdo?
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
http://www.bbc.com/news/business34581945 8/12
Theindustryisclearwhatitneeds:lowerbusinessrates,arelaxationofcarbonemissionstargetsforheavymanufacturers,morecompensationforhighenergyprices,andacommitmentthatBritishsteelisusedinmajorconstructionprojects.
ThegovernmentheldasteelsummitinRotherhaminOctobertodiscusswhatcouldbedone.
Thegovernmentisunderpressuretodomoretosupportthesector
Itsaysithasalreadytaken"clearaction"tohelptheindustry,"throughcuttingenergycosts,takingactiononimports,governmentprocurementandEUemissionsregulations,meetingkeysteelindustryasks."
ButindustrytradebodyUKSteel,saysitstillneedstodomore.
"Theworkit'sdoingtohelpusisgoodbutweneedmuchfurtheractiontakingplacetotackletheimports,thefloodofChinesesteelintotheUKandtheEuropeaneconomy.
"WeneedtoseegovernmentandtheEuropeanCommissiontacklingthatheadonandquickly,"GarethStace,directorofUKSteel,toldtheBBC.
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1/18/2016 Britain'ssteelindustry:What'sgoingwrong?BBCNews
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