The decline of the British steel sector

Nov 17, 2015
Author: Craig Burton
Craig acts as commercial partner for a wide range of corporate and non-corporate clients. He is also responsible for maintaining technical standards throughout the firm.
The decline of British steel

The decline of the British steel sector

The British steel sector has seen prices half in the last 12 months as it falls behind in an industry which is dominated by China. In the last 6 weeks alone a number of steel manufacturers have announced job losses as they look to cutback steel production in the UK.

Although annual steel production in the UK is now higher (at 12mt) than it was following the economic crash in 2008, where it was just 10mt, the number of people employed in the British steel sector has halved in the last two decades. There are also concerns that thousands more jobs are still at risk in the supply-chain, despite new government support.

The British steel sector produces less than 1% of global production

Accounting for nearly 50% of global steel production, China produces nearly 70 times more steel than Britain every year. In fact, there are 17 countries that annually produce more steel than Britain, including Italy, Germany, Turkey, France and Spain.

High energy prices, a strong pound and numerous other factors have contributed to a weakening British steel sector as UK steelmakers have struggled to compete with global prices, particularly those from China.

Steel production figures

Government pledges support to British steel sector – but why is it so late?

Following the announcement of further job losses and the deepening crisis the British steel sector, the government has now pledged support to help manufacturers compete globally.

Chris Hill, Partner at Hawsons, comments: “The British steel sector has suffered greatly as energy costs, in particular, have continued to rise and cripple competitiveness. UK steelmakers have been paying almost twice as much for electricity as their EU counterparts.”

“It is therefore of course good news that the government has announced it will support the sector by offsetting the cost of high energy costs, but it is still disconcerting it has only come as steelmakers are on the brink of collapse. The government could also do more.”

“Twenty years ago British steelmakers were producing 17mt per year; 28mt per year forty years ago. The British steel sector has been declining for decades as input costs – energy prices, wages and other factors – have continued on an upward trend. Those countries that have been producing 30, 40 or even 70 times more steel that the UK will undoubtedly continue to have huge advantages through scale and costs, but further government support could boost the British steel sector against EU competition. Lowering business rates, relaxing strict emission targets and committing to using British steel in UK construction projects would all give this struggling sector a much needed confidence boost.”

“We wait for further news, but it is essential that the government fully commits to our British steel sector.”

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Chris Hill Senior Partner

Chris Hill acts as commercial partner for both corporate and non-corporate clients and has worked for Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Chris on cih@hawsons.co.uk or 0114 266 7141.