The speculation that the company might attract a bid from a Chinese state-backed steel maker is a sign of how the economic balance of power is shifting.
Last month, Tony Pedder, the chairman of Sheffield Forgemasters and a steel industry veteran of 30 years, told The Yorkshire Post that the sector’s decline was “very, very sad”.
Mr Pedder is among a number of leading industrialists who are calling 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 could fatally undermine efforts to rebalance the UK economy.
At the time, Mr Pedder said Sheffield Forgemasters was 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.”
Five years ago the company seemed to have gained support from the Government to help it become a premier producer of components for nuclear power stations.
Forgemasters secured an £80m Government loan in the dying days of Gordon Brown’s premiership to install a 15,000 tonne press to help it smash the global manufacturing monopoly on large civil nuclear forgings. However, the loan was overturned by the incoming coalition Government in June 2010.
The cancellation of the loan led to heavy criticism of Sheffield Hallam Liberal Democrat MP Nick Clegg, who was also Deputy Prime Minister at the time. Mr Clegg insisted the money was never there to fund it.
However, he offered some hope of Government support.
In late 2010, Mr Clegg said: “We have always said that when the public finances become clearer, after the comprehensive spending round, we stand ready to do everything we can to support what is a great Sheffield company.”
However, Mr Clegg suffered another blow in 2013 when Sheffield Forgemasters announced it was pulling out of the Government’s flagship private-sector growth scheme.
Forgemasters, which had been promised a £36m loan from the Regional Growth Fund (RGF) in 2011 for a major investment programme, withdrew from the scheme without receiving any money. The decision to abandon the RGF loan after two years of negotiations was a damaging setback for Mr Clegg’s flagship scheme, which had been repeatedly criticised for the speed at which successful bids were being processed.
Forgemasters said that a slower than anticipated recovery, combined with rapid changes in the global markets targeted by the Regional Growth Fund investments, had persuaded it to rethink its strategy.
At the time, Mr Clegg said: “They are a fine company and a vital part of our city’s economy but they know what is best for their company in both the short and long run.”
Earlier this year, TUC General Secretary Frances O’Grady visited Sheffield Forgemasters and praised its work to support apprenticeships.
She said: “The success of Sheffield Forgemasters in winning contracts and attracting investment shows what can be achieved when forward-looking employers work closely with unions to improve skills, boost productivity and create decent jobs.”