The decline in the steel industry ANIL, TOM, ARUN, SHIRLEY, MINI AND FRANCIS

How it all started1. Strength of the

pound

2. The prices of electricity

3. Competition from China

3.1 Cheap imports

Strength of the pound

The strength of the pound has risen 11.3% over the dollar and nearly 10% over the Euro for the duration of the past year.

The strength of the pound results in the UK steel becoming expensive on the international market, resulting in countries going elsewhere for their steel.

Hale, T, Robinson, D, Daneshkhu, S (2014) Strong pound wipes more than £1bn off profits of big UK companies. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/6a7c119a-195f-11e4-9745-00144feabdc0.html#axzz3sXgmah00 [accessed 23rd November 2015]

Electricity prices

The production of steel in the UK is expensive in comparison to the rest of the EU.

More than 50% above the EU average. “large UK operators pay 80 per cent above the median EU price for

electricity”. Due to these energy prices, it can be said that the future for the

steal industry within the next 3-5 years looks ‘bleak’.

FT View (2015) British steel industry needs a level playing field. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/9c918afe-62a9-11e5-a28b-50226830d644.html#axzz3sXgmah00 [accessed 20th November 2015]

Competition

China is leading the steel industry being the largest steel exporter in the world.

The amount the UK imports from China has increased dramatically in comparison to the year before.

The UK cannot keep up with the low labour and production costs of China where the UK’s are considerably high.

Schram, B (2015) Redcar and Tata Steel: Four reasons why the UK steel industry is struggling to survive. International Business Times [online]. Available from: http://www.ibtimes.co.uk/redcar-tata-steel-four-reasons-why-uk-steel-industry-struggling-survive-1524375 [accessed 24th November 2015]

Chinese “dumping”

The demand for Steel in China isn’t as strong as it used to be and China’s market is slowing.

China are exporting their steel to the EU market at a loss. The low-grade steel from China is dragging down prices across the

board. “European steel industry executives have accused China of using

its massive overcapacity at steel mills to dump products on the European market, selling them beneath the cost of production”.

Oliver, C, Pooler, M (2015) EU states call for action against China steel dumping. Financial times [online]. Available from: http://www.ft.com/cms/s/0/37f15a42-872b-11e5-90de-f44762bf9896.html#axzz3sXgmah00 [accessed 20th November 2015]

Main impacts

The loss of jobs: - Tata Steel – 1,200 UK Job losses - 900 at Tata’s steelmaking plant in Scunthorpe - 270 at plate mills in Dalzell and Clydebridge, South of Glasgow - 2,200 at Redcar steelworks - 1,700 are at risk in Caparo Industries Pooler, M, Thomas, N, Dickie, M (2015) Tata Steel confirms 1,200

UK job cuts. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/911af130-7710-11e5-a95a-27d368e1ddf7.html#axzz3sXgmah00 [accessed: 1st November 2015]

Opportunities and threats

Labour leader Jeremy Corbyn wants to part-nationalise Britain’s steel industry.

By doing this, he hopes to save jobs and restructure the industry.

Syal, R (2015) Corbyn to call for part-nationalisation of Britain’s steel industry. The Guardian [online] Available from: http://www.theguardian.com/politics/2015/nov/13/corbyn-to-call-for-part-nationalisation-of-britains-steel-industry [accessed 24th November 2015]

Political

• Brazil• “unfair

competition”

Levies on Steel

• UK pays £4.5m• Celsa - €68 per

megawatt hour• Relax!!

compensation package

• “In 2013 it made a £9.5bn contribution to the UK economy and had a £4.9bn export value."

Damaging the economy

Economical

Social

Loss of Jobs

Technological

Everyday steel products:• Transportation – automobiles,

trains, cars, ships• Nails and screws• Office supplies – paper clips,

staples etc• Major appliances – washing

machines, refrigerators• Cutlery

UK manufactures have been finding a growing market

for products in Brazil

2015 – Exports rose in brazil by

50%

11, 627 British cars sold to Brazil

Automotive sector accounts for

roughly 12% of overall global

steel consumption

What happens to this growth?

Reference list

Bowler, T (2015) Britain’s steel industry: What’s going wrong?. BBC [online]. Available from: http://www.bbc.co.uk/news/business-34581945 [accessed 2nd November 2015].

Hale, T, Robinson, D, Daneshkhu, S (2014) Strong pound wipes more than £1bn off profits of big UK companies. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/6a7c119a-195f-11e4-9745-00144feabdc0.html#axzz3sXgmah00 [accessed 23rd November 2015].

FT View (2015) British steel industry needs a level playing field. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/9c918afe-62a9-11e5-a28b-50226830d644.html#axzz3sXgmah00 [accessed 20th November 2015].

Schram, B (2015) Redcar and Tata Steel: Four reasons why the UK steel industry is struggling to survive. International Business Times [online]. Available from: http://www.ibtimes.co.uk/redcar-tata-steel-four-reasons-why-uk-steel-industry-struggling-survive-1524375 [accessed 24th November 2015].

Oliver, C, Pooler, M (2015) EU states call for action against China steel dumping. Financial times [online]. Available from: http://www.ft.com/cms/s/0/37f15a42-872b-11e5-90de-f44762bf9896.html#axzz3sXgmah00 [accessed 20th November 2015].

Pooler, M, Thomas, N, Dickie, M (2015) Tata Steel confirms 1,200 UK job cuts. Financial Times [online]. Available from: http://www.ft.com/cms/s/0/911af130-7710-11e5-a95a-27d368e1ddf7.html#axzz3sXgmah00 [accessed: 1st November 2015].

Syal, R (2015) Corbyn to call for part-nationalisation of Britain’s steel industry. The Guardian [online] Available from: http://www.theguardian.com/politics/2015/nov/13/corbyn-to-call-for-part-nationalisation-of-britains-steel-industry [accessed 24th November 2015].

Leahy, J (2015) Brazil levies imports of Chinese steel tubes. Financial Times. [online]. Available from: http://www.ft.com/cms/s/0/b0dc6124-d96d-11e0-b52f-00144feabdc0.html#axzz3tAfRPslv [accessed 29th November 2015].

Pooler, M (2015) Steel sector demands urgent action to survive. Financial Times. [online]. Available from: http://www.ft.com/cms/s/0/1d8b62f0-7ce1-11e5-a1fe-567b37f80b64.html#axzz3tAfRPslv [accessed 1st December 2015]