LEADING INDUSTRIALISTS have called for the creation of an independent body to develop a long-term manufacturing strategy as fears grow that the decline of Britain’s steel industry will fatally undermine efforts to rebalance the UK economy.
Tony Pedder, chairman of Sheffield Forgemasters and a steel industry veteran of 30 years, told The Yorkshire Post that an advisory board would give a voice to underpin the Department for Business Innovation and Skills and give it more clout in Westminster.
“Otherwise they get outgunned by Treasury or the Department for Energy and Climate Change as witnessed by how long our energy strategy has been unhelpful to the manufacturing sector,” he told The Yorkshire Post.
Mr Pedder’s comments came as a member of the task force set up to help those affected by 900 job cuts at Scunthorpe steel works warned of a worrying impact on the wider economy.
Andy Tuscher, regional director of manufacturers’ organisation the EEF, said history shows that between four and eight jobs could be lost in the supply chain for each of the jobs lost at Tata Steel.
He added that the task force, which met this afternoon, would try to mitigate against wider job losses, but said the sudden nature of Tata’s move could make this difficult.
The Indian-owned group blamed a flood of cheap Chinese imports, a strong pound and high electricity costs for its decision to mothball plate mills on Scunthorpe, Dalzell and Clydebridge and close one of two coke ovens at Scunthorpe.
Mr Tuscher said: “It is a shock process. It is immediate. It is like a house of cards falling down.”
He said the decision would impact everyone from cleaners and caterers to small, medium and large distribution and logistics firms in the direct and indirect supply chain.
Mr Tuscher said: “To lose 1,000 economic households is catastrophic for the region... Businesses might be able to diversify but there will be an impact certainly in the short term.”
The job losses at Scunthorpe follow the closure of Thai-owned steelworks at Redcar with the loss of 1,700 jobs and the appointment of PwC as administrators to parts of Caparo Industries’ steel operations.
Mr Tuscher said the UK steel industry is facing “a perfect storm” of energy costs 50 per cent higher than European rivals and a flood of cheap Chinese imports. He added: “Chinese steel plants are automated and have very cheap labour. They are government owned and subsidised as are their energy costs. You cannot compete with that.”
He said Britain should maintain its sovereign capability in steel making ahead of investment in infrastructure programmes such as the high-speed rail programmes of HS2 and HS3 and the renewables sector on the Humber, supporting UK jobs and the UK taxpayer.
Mr Tuscher added: “Steel is a base product. Everything from food processing to the clothes you wear to the car you drive, steel is in the product or the process. It is a foundation industry. It is critically important we maintain and look after our foundation industries.”
Mr Pedder, a board member at EEF and former managing director at British Steel, called for urgent action at a European Union-level “in days and weeks not months and years” to address the challenges faced by the steel industry.
“This is not a new problem,” he said, blaming uncompetitive energy prices, the slowness of Government to act and the lack of an industrial strategy.
Mr Pedder added: “If we can have an Office for Budget Responsibility and an Infrastructure Commission, why can’t we have an independent advisory board for manufacturing competitiveness?
“I would like to see some determined effort to grow the manufacturing share of GDP - which has declined from 30 per cent to 11 per cent - and steel is integral in that.”
The EEF said it is seeing significant difficulties among Yorkshire companies in the steel sector, with a number going into administration.
A veteran of more than three decades in the steel industry, Tony Pedder described the sector’s decline as “very, very sad”.
He told The Yorkshire Post: “It is an industry I have spent my working life in. I hate to see what is happening. My heart goes out to the families involved and the workers losing their jobs.”
Mr Pedder has held senior roles in the steel industry, including group chief executive of Corus.
He said Sheffield Forgemasters is also finding it tough. He added: “Orders are tough to win given the collapse in oil and gas and process plant sectors and the slowdown in China and elsewhere. But we’re working hard to chase all possibilities.”