Policy shifts 'exacerbating’ issues for steelwork manufacturers, says Yorkshire firm Tadweld
A Yorkshire steelwork manufacturer has said that recent government policy shifts have left it and other domestic manufacturers facing a competitive disadvantage.
At the start of July, the Government introduced revised steel trade measures which limited tariff-free imports. It also brought in a 50 per cent tariff to eligible steel imports above the new limits.
Tadcaster-based Tadweld has said the move has meant that UK fabricators may now face higher costs for raw structural steel, while imported fabricated steel products can continue to enter the UK market without facing the same increase in their underlying production costs.
The company said this has created what is known in the industry as the ‘fabricated product loophole’, which creates an "uneven playing field" for domestic businesses that fabricate, weld and engineer steel into finished products.
Chris Houston, managing director at Tadweld, said: “Our concern is that UK businesses are paying more for the raw materials that they need while competing against imported fabricated products that haven't faced the same cost pressures.
“As a result, the policy simply shifts the burden further down the supply chain and rather than strengthening British manufacturing as a whole, it prioritises steel manufacturing above the actual fabricators and manufacturers that use it.”
A Government spokesperson said the steel measure aims to “strike the right balance between protecting domestic production from the effects of global steel overcapacity and maintaining a secure supply.”
They added: "The final quotas and product scope were shaped by extensive engagement with industry, and we will continue to monitor the impact closely, take industry feedback into account and carry out a full review after 12 months.”
But Tadweld said that July’s shifts had caused an "immediate impact" on its business.
The firm said it had found “significant increases” in costs across several of its key categories, with mild steel sections up 24.51 per cent and aluminium sections up 30.63 per cent.
The company also saw a 5.94 per cent increase in the cost of stainless steel sheets.
Speaking on the figures, Mr Houston added: “These are real prices that we've paid, rather than a theoretical market estimate, and they show the pressure manufacturers are dealing with.
“Of course there are several factors causing supply chain disturbance at the moment, but the recent tariffs have exacerbated this. It’s had a real and negative impact on UK manufacturing.”
“The increase in mild steel sections is particularly significant because sections are a major input cost across the construction sector, and for us we use a lot of them in products such as mezzanines, staircases and general structural steel work.
“For manufacturers, the issue isn't simply the price of the material in isolation. It's what happens to the margin on the finished product when your input costs rise and you've already committed to a customer price.”
Nearly three-quarters of UK steel imports by value and over half by volume fall outside of the new measure’s scope, according to Government figures.
The shift also comes as businesses across the globe are facing increased pressure from disruption in the Strait of Hormuz and its knock-on effects on fuel prices.