Cameron holds crisis talks as UK steel fights for its future
Prime Minister David Cameron held crisis talks Thursday to salvage Britain’s steel industry after Indian giant Tata Steel said it was putting its troubled British business up for sale, threatening 15,000 jobs.
The sale throws into doubt the future of an industry that fuelled British industrialisation and helped build its empire.
Tata’s decision notably puts at risk Britain’s biggest steel plant at Port Talbot in the former industrial heartland of south Wales. The facility is Wales’s biggest single employer and closure would have a devastating impact on the local economy.
While Cameron said “I don’t believe nationalisation is the right answer” to protect the steel industry — hit by plunging prices triggered by cheap imports from China — he vowed to explore all options to help find a new buyer after Tata’s announcement Wednesday.
“Those jobs are vital to workers’ families, vital to those communities and the government will do everything it can working with the company to try and secure the future of steelmaking in Port Talbot and across our country,” Cameron said after meeting ministers following his early return from holiday.
Port Talbot, a central part of the Welsh economy since 1901, is reportedly losing £1 million (1.3 million euros, $1.4 million) a day in the face of high energy costs and plunging prices caused by a chronic global oversupply of steel.
“Everyone either works in Tata or knows somebody who does,” said Christina Rees, a local MP for the main opposition Labour party.
“For every job lost at Tata, four others will be affected in the local communities.”
– Little chance of finding buyer –
Metal processing company Liberty House said it was looking at some of Tata’s British assets but the group’s president Sanjeev Gupta suggested it was more interested in processing plants rather than production facilities like Port Talbot.
Analysts warned Tata would struggle to offload the production plants, of which there are three in total.
“They are not going to find a buyer, because they would ask for substantial help and if they (the government) were ready to give such help, then they would have rather helped Tata,” Mohan Sodhi from the Cass Business School at London’s City University told AFP.
The government has been accused of turning a blind eye to Chinese dumping of steel on world markets in order to secure wider investment in Britain’s economy.
It rolled out the red carpet for China President Xi Jinping during a state visit last year while opposing EU plans to impose higher tariffs on Chinese steel.
“It is galling that the UK government… has continued to block these changes in the EU — leaving the steel industry on its knees,” said Gareth Stace, director of UK Steel.
“The government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK.”
Compared to the United States EU import tariffs on Chinese steel imports are low, including a 16-percent duty on Chinese cold-rolled steel, against a 236-percent tariff by the US.
Britain is holding a tightly-fought referendum on its membership of the European Union on June 23.
Nigel Farage, leader of the anti-EU UK Independence Party, said the situation in Port Talbot showed that a vote to remain in the EU would mean the end of Britain’s steel industry.
But Cameron said it showed Britain needed to be in Europe “making sure the markets are open”.
– ‘Total disarray’ –
The steel industry’s woes are the latest chapter in the demise of Britain’s once-proud heavy industry in traditionally working-class regions in Scotland, Wales and the north of England.
Britain accounted for 40 percent of the world’s steel production in 1875, exporting to its empire and the United States with the northern city of Sheffield a world leader.
The industry dwindled as it lost foreign and domestic share to cheaper rivals and it has since become a politically-charged lightning rod for Britain’s industrial policy.
It was nationalised by Labour in 1949, privatised by the Conservatives in 1952, nationalised by Labour in 1967 and then privatised by the Conservatives in 1987.
The government has come under fire over its response, with Labour MP Stephen Kinnock accusing it of being in “total disarray.”
Business Secretary Sajid Javid was due to visit Port Talbot on Friday after having cut short a trade visit to Australia while finance minister George Osborne raised the issue with other finance ministers during talks in Paris.