UK Steel Crisis

[telstarbox]

I agree - the problem is that the replacement industries are often nothing of the sort, offer poorer terms, poorer wages and less security IF any regeneration is even attempted. The government should by now have sensible regeneration plans for the majority of our former industrial areas. The sad fact is they don't, and i don't think they care.

The other issue, and one the Tory party seem to excel at, is the destruction of communities, especially in the north east and other former industrial areas. One of my big concerns here is the damage to the fabric of the community. With the steel works gone the community has lost some of its strength and focus and will quickly lose its skilled workers and their wages leading to less economic vitality in the area.

Is there any prospect of skilled workers transferring from the steel industry to the chemical industry, which I understand is still significant on Teesside?

 

[DarloRich]

Is there any prospect of skilled workers transferring from the steel industry to the chemical industry, which I understand is still significant on Teesside?

sadly the chemical industry is no longer as significant on Teesside and is a shadow of its former self, nor is the petrochemical sector as strong as it was but yes there must be some hope of transfer

 

[radamfi]

Is state funding OK if you work for or own or own shares in a competing company?

 

[DarloRich]

Is state funding OK if you work for or own or own shares in a competing company?

i don't have the money to own shares in anything and neither do most people i know!

 

[Tetchytyke]

To an outsider, it looks as if, whenever any replacement industry has been suggested or tried, there has been a reaction of "We are a mining community - we want our mines back".

The issue is that replacement industries haven't been suggested and haven't been tried. The mines and the steelworks and the shipyards have been closed and nothing has replaced them.

Look at Consett, it's 30 years since the steelworks closed and the town hasn't recovered. It never will. What little new work there was was call centre work, and I use the past tense deliberately- the call centres have all closed and been moved out to India. It's the same in places like Seaham, Peterlee, Stanley, Spennymoor, Bishop Auckland.

I've not been to many places as hopeless as Murton in County Durham. The mines were replaced with an outlet village shopping centre, mostly staffed by students from Durham and Sunderland on zero hours contracts, and in any case about 1/3 of the units there are empty anyway.

There has been limited regeneration in the north east in the last 15 years, what success there has been has been led primarily by the development agency One North East. So what did the Tories do the second they came to power? Oh, they scrapped it.
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Is state funding OK if you work for or own or own shares in a competing company?

Most people don't own shares as most people can't afford them. I don't even have a pension because I can't afford one.

So long as state aid is available on a level playing field to all companies in the sector in the UK, I don't have an issue with it.

And, let's face it, the whole engineering and manufacturing sector in the UK needs all the help it can get. We don't make our own clothes, our own electronics, our own steel, our own cars. The entire economy is based on fat cat bankers pushing zeros around on a computer screen, and as we've seen by the worst recession and slowest recovery on record, an economy based on "services" is an exceptionally weak economy.

 

[HSTEd]

How things can change from day to day. Can you, with today's announcement that concerns "The Northern Powerhouse", clarify what you said above concerning "paused" (cancelled).
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What number of new ships and tanks are in the latest defence forecast requirements.

What amount of steel scrap can be obtained in the same period from redundant defence assets that can be re-used for future steel production.

Well in a situation requiring large scale tank and ship production 'redundant' defence steel will end up at the bottom of the ocean or scattered over various battlefields.
And I hesitate to bet the future of the British state on 'projections', especially if the planned reduction of production capacity takes years to reverse.

 

[radamfi]

i don't have the money to own shares in anything and neither do most people i know!

But I did also say "work for" and lots of people work for companies where there more than one player in the market.

Of course, a lot of people own shares through pooled investments such as unit trusts and investment trusts which are sheltered from tax by using ISAs, company pensions and personal pensions.
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So long as state aid is available on a level playing field to all companies in the sector in the UK, I don't have an issue with it.

And, let's face it, the whole engineering and manufacturing sector in the UK needs all the help it can get. We don't make our own clothes, our own electronics, our own steel, our own cars. The entire economy is based on fat cat bankers pushing zeros around on a computer screen, and as we've seen by the worst recession and slowest recovery on record, an economy based on "services" is an exceptionally weak economy.

You use the word "our" a lot, suggesting that you view the UK economy in isolation as the only one that matters or that anyone should care about.

 

[DarloRich]

But I did also say "work for" and lots of people work for companies where there more than one player in the market.

but by the same token should British companies be subject to hardship because other governments offer a more "relaxed" taxation regime or are prepared to bend the rules? The shareholders also suffer then.

Of course, a lot of people own shares through pooled investments such as unit trusts and investment trusts which are sheltered from tax by using ISAs, company pensions and personal pensions.

perhaps the people you know. Most people I know have few savings and little ability to acquire any.

My pension fund (a well established employee scheme that i only have because of my job. In my previous career I had none) has a balanced, mature and mixed investment portfolio including but not limited to stocks and shares. They own shares in stolid blue chip companies, property, commodities, futures and precious metals.

 

[ExRes]

You use the word "our" a lot, suggesting that you view the UK economy in isolation as the only one that matters or that anyone should care about.

As the discussion appears to be about the UK then 'our' would seem to be a rather apt word to use, unemployment on Teeside is hardly likely to be top of the agenda in Berlin, Paris, Nicosia or Vilnius

 

[Tetchytyke]

You use the word "our" a lot, suggesting that you view the UK economy in isolation as the only one that matters or that anyone should care about.

Given that we're talking about a steelworks in Redcar, I'm hardly going to be talking about the economy in Rio de Janeiro am I?

Of course, a lot of people own shares through pooled investments such as unit trusts and investment trusts which are sheltered from tax

Not in Redcar they don't.

 

[radamfi]

Globalisation and technology has meant that the world is really one global economy. I find it somewhat old-fashioned to think in terms of narrow geographical areas. On my current project, I work with people around the world, such as in Bangalore and New Zealand, and in various places around the UK. Technology has meant I no longer have to visit the office except for meetings. I could sit in Redcar and do my job. Colleagues no longer have to live in expensive Surrey so some have moved up north to get cheaper housing.

Most manufacturing and heavy industry is best left to countries with cheap labour. That's not how wealth is created in the developed world in 2015. Products need to be "high precision" or "high tech".

 

[HSTEd]

Very little labour is required to make a tonne of steel. About 0.03 man-hours. Energy costs are a far bigger factor.

 

[ainsworth74]

Very little labour is required to make a tonne of steel. About 0.03 man-hours. Energy costs are a far bigger factor.

Indeed. There seem to be, as far as I can tell, two factors here which have conspired as the direct cause of mothballing which is the slump in the price for slab steel which has occurred at the same time as the energy costs for the plant have risen higher and higher.

It might have been possible to survive one of them on it's own but both at the same time have proven terminal.

 

[DynamicSpirit]

Globalisation and technology has meant that the world is really one global economy. I find it somewhat old-fashioned to think in terms of narrow geographical areas.

A question: If, as a result of the Redcar works being mothballed, where will the steel that we import be coming from? What are the environmental costs of transporting it? I'm going to hazard a guess that it will be coming from somewhere a long way away (China?), on ships, with the shipping companies not required to pay anything significant to cover the environmental damage the shipping causes. If I'm correct, would that not amount to a significant hidden subsidy being given for importing the steel? How would this effect the argument that we should not be subsidising uncompetitive industries?
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214 miles door to door for me and I hate it. I want to work at home, I hate the south, I hate southerners and I hate the housing prices but there are no jobs at home.

So, no stereotyping going on there...?

 

[RichmondCommu]

Very little labour is required to make a tonne of steel. About 0.03 man-hours. Energy costs are a far bigger factor.

Indeed, they are much higher than in France which means our steel plants are not even competitive with the rest of Europe let alone China.
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So, no stereotyping going on there...?

I think the point Darlo Rich is trying to make is that he would much rather be living and working in the NE but the economic situation has meant that he's had to migrate to the South. I've been a Londoner for the best part of 27 years having arrived as an economic migrant and my wife and I have no intention of moving back North but I can easily see why London and the SE is not for everyone.
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Most manufacturing and heavy industry is best left to countries with cheap labour. That's not how wealth is created in the developed world in 2015. Products need to be "high precision" or "high tech".

Try telling that to the Germans with all their car plants, their chemical industry, train manufacturers, ship yards etc. Thanks to all of this they are very good at creating wealth!

The ship yard at Barrow produces submarines for the Royal Navy and yet appears to have no interest in export markets. The same can be said for the ship yard on the Clyde which seems to survive on Naval work alone.

 

[DarloRich]

So, no stereotyping going on there...?

RichmondCommu has expressed things much better than I: I wish there were decent, well paying jobs in large numbers at home.

As for southern people I maintain there is a noticeably different approach and outlook to life. I really don't like it, especially the self important middle management types that seem to dominate.

 

[Xenophon PCDGS]

My mind at the age of 70 may be playing me false, but I recall that about 25 years ago a British politician saying that Britain's future lay in the provision of "service industries".

If this is the case, who was the person who said it

 

[RichmondCommu]

My mind at the age of 70 may be playing me false, but I recall that about 25 years ago a British politician saying that Britain's future lay in the provision of "service industries".

If this is the case, who was the person who said it

In all honesty I've made a very good living out of the service industry but I would much prefer it if we still had a strong and competitive manufacturing base. All your eggs in one basket anyone?

 

[Oswyntail]

Another factor militating against the NE is transportation. You have to get the raw materials there, then ship the product out. Teesside is a far-flung part of a country on the edge of Europe, so transport costs are high; Germany is much better placed, so it is understandable that the lump-bashing industries still thrive there. Effectively, the UK has no mass raw materials, so heavy manufacture is not really a long-term prospect; assembly might be, if we can balance the much higher manpower costs with skill and work quality. But that will never replicate the mass employment of the 19th century, and it is hard to see what will, at least without first going through the impossible process of reducing wages to comparable levels.
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In all honesty I've made a very good living out of the service industry but I would much prefer it if we would still had a strong and competitive manufacturing base. All your eggs in one basket anyone?

There are alternatives. The UK is naturally a rich food producing area; light specialist industries, though small scale can add up; technologically innovative industries. There are surely others. BUT, this does mean the workforce abandoning traditional working models and developing new skills.

 

[RichmondCommu]

There are alternatives. The UK is naturally a rich food producing area; light specialist industries, though small scale can add up; technologically innovative industries. There are surely others. BUT, this does mean the workforce abandoning traditional working models and developing new skills.

Yes but the Germans and to a certain degree the French haven't given up their traditional manufacturing base so why have we ditched ours?

We don't even have the capacity to build our own power stations for flips sake!
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Another factor militating against the NE is transportation. You have to get the raw materials there, then ship the product out. Teesside is a far-flung part of a country on the edge of Europe, so transport costs are high; Germany is much better placed, so it is understandable that the lump-bashing industries still thrive there. Effectively, the UK has no mass raw materials, so heavy manufacture is not really a long-term prospect; assembly might be, if we can balance the much higher manpower costs with skill and work quality. But that will never replicate the mass employment of the 19th century, and it is hard to see what will, at least without first going through the impossible process of reducing wages to comparable levels.

And yet the Germans happily cart BMW's and Merc's all the way up through Germany to Hamburg for export and import pretty much all of their raw materials. I would agree that Teesside is stuck out on a limb but how much difference does an extra days shipping make?

 

[DarloRich]

BUT, this does mean the workforce abandoning traditional working models and developing new skills.

Agree - but it also requires government support to ensure such retraining opportunities are readily and cheaply available and that investment is diverted away from the SE to other areas of the county to help regenerate and develop new industries.

that government support is sadly missing. We should, by now, have a well oiled machine that kicks into life when something like this happens. The fact we don't after so much industrial decay is a sad indictment on government.

 

[Poolie]

You don't have to work in an investment bank to be greedy or selfish! Would you have rather seen the banks fail?

Ironically, the only bank to fail in recent years was 'Northern' Rock, based in the north east! How many local people lost money in the failure due to the greed of the Chairman and directors

 

[Tetchytyke]

Indeed. There seem to be, as far as I can tell, two factors here which have conspired as the direct cause of mothballing which is the slump in the price for slab steel which has occurred at the same time as the energy costs for the plant have risen higher and higher.

Yet energy costs are the lowest they've been for years. Crude oil- which influences the cost of other fuels such as gas and coal- is at $48 a barrel, roughly half what it was a year ago.

As for north vs south, I've spent the last three years in London and the Home Counties. I've just taken a pay cut to come back to the north east yet, ironically, I now have more disposable income than I did in London. My public transport costs have dropped from £110pw to £16pw and my rent is roughly half what it was in Hemel Hempstead. The grass isn't always greener.

 

[Oswyntail]

Agree - but it also requires government support to ensure such retraining opportunities are readily and cheaply available and that investment is diverted away from the SE to other areas of the county to help regenerate and develop new industries. ...

In a way this brings us back to the point I made earlier. It is surely up to local government to fight for the investment, so that central government knows what it is meant to be helping with. I get the impression that, in some areas, the local tier has taken the view "We're a mining/steelmaking/shipbuilding area, and that's what we want", spending their time pursuing a lost cause, rather than being innovative to benefit their communities. Of course it is all rather late on Teesside now, but a decent local setup would have known what was coming.

 

[DarloRich]

SSI have now placed their UK arm into Liquidation:

http://www.bbc.co.uk/news/uk-england-34425017

BBC: SSI UK, the owners of the Redcar steelworks, has gone into liquidation.

insert head shake icon here!

In a way this brings us back to the point I made earlier. It is surely up to local government to fight for the investment, so that central government knows what it is meant to be helping with. I get the impression that, in some areas, the local tier has taken the view "We're a mining/steelmaking/shipbuilding area, and that's what we want", spending their time pursuing a lost cause, rather than being innovative to benefit their communities. Of course it is all rather late on Teesside now, but a decent local setup would have known what was coming.

the problem is the Conservative obsession with competition. The local councils in those areas, who in the main are not Tory controlled, know how to regenerate their areas but i doubt central government trust them to spend the money on "suitable" projects. They now make deprived areas "fight" for funding to regenerate rather than funding the work through the regional development companies.

The pot should be split according to need, not according to who has the best PowerPoint presentation!

 

[Oswyntail]

....
the problem is the Conservative obsession with competition. The local councils in those areas, who in the main are not Tory controlled, know how to regenerate their areas but i doubt central government trust them to spend the money on "suitable" projects. They now make deprived areas "fight" for funding to regenerate rather than funding the work through the regional development companies.....

That cannot be the whole case, and actually sounds like part of the same problem. There are areas of the country that have been shot to pieces since the 70s, and no substantial sign of regeneration (S. Yorkshire for instance). What was happening to them during the Labour government? At the same time other areas with the same problems (such as Manchester, as has been pointed out) embraced regeneration in the same period.

 

[DarloRich]

That cannot be the whole case, and actually sounds like part of the same problem. There are areas of the country that have been shot to pieces since the 70s, and no substantial sign of regeneration (S. Yorkshire for instance). What was happening to them during the Labour government? At the same time other areas with the same problems (such as Manchester, as has been pointed out) embraced regeneration in the same period.

Imake the same criticisms of all governments. The Conservative never do enough at the time and Labour never take the chance to sort it out. It just festers.What did happen, at least under labour, was investment at the grass roots (so to speak) in things like schools, nursery provision, sure start centres health centres etc. not enough but something.

There is also the issue of a sensible government plan to make investing and locating business in the disadvantaged areas more attractive via lower taxes, site rents, attractive loans etc etc. They simply don't do it.

 

[Tetchytyke]

That cannot be the whole case, and actually sounds like part of the same problem. There are areas of the country that have been shot to pieces since the 70s, and no substantial sign of regeneration (S. Yorkshire for instance). What was happening to them during the Labour government? At the same time other areas with the same problems (such as Manchester, as has been pointed out) embraced regeneration in the same period.

I think the regeneration needed in big cities is very different to that needed in smaller towns and villages.

Manchester, Leeds and Newcastle have all undergone a renaissance since the problems of the early 90s. A big chunk of this was due to the regional development funds being set up to manage the regeneration, tempting businesses back into these cities. Manchester, too, also did very well out of the insurance money and investment following the 1996 IRA bombing; insurers put £700m at today's prices into the city, of course things improved.

These regional development funds were, of course, abolished the second the Tories got back into power in 2010. Why? Because they were a Labour and an EU development.

But the regeneration in big important cities is very different to what happens in smaller towns. With the best will in the world, big finance companies aren't going to set up their regional headquarters in Rotherham or Scunthorpe when there's Leeds, Sheffield and Manchester just up the road.

What regeneration that has gone to places like Doncaster has been call centre and other menial work; outsourcing has meant most of the call centres have moved out of the country because Indian call centres are cheaper.

You keep talking about how towns like Middlesbrough or Rotherham should be "innovative", but apart from buzzwords you don't seem to actually be giving any concrete examples of what they should do differently.

As an aside, Middlesbrough are suprisingly innovative, far more than people seem to give them credit for. Funding for the arts was historically strong on Teesside- MIMA is always worth a visit, not to mention the music festivals in Boro- but of course "austerity" (that doesn't seem to affect Tory shire councils) means that they can't continue to fund this sort of work.

 

[flymo]

Out of curiosity, what are the local MPs saying about this, surely there must be a question or two in PMQ's about the upcoming unemployment in Teesside and what the Government are going to do about it. If not, why not??,

 

[Oswyntail]

I think the regeneration needed in big cities is very different to that needed in smaller towns and villages.

Of course, but the local authorities should know how to handle local issues.

These regional development funds were, of course, abolished the second the Tories got back into power in 2010. Why? Because they were a Labour and an EU development.

Restructured into the Regional Growth Fund.

But the regeneration in big important cities is very different to what happens in smaller towns. With the best will in the world, big finance companies aren't going to set up their regional headquarters in Rotherham or Scunthorpe when there's Leeds, Sheffield and Manchester just up the road.

Why not? After all that is what Leeds did in the 90s when it was dying on its feet - fought for firms to move there, promising financial breaks, available workforce, cheap premises and improved standard of living. That approach is open to S. Yorkshire authorities, but they don't seem to have tried very hard.

What regeneration that has gone to places like Doncaster has been call centre and other menial work; outsourcing has meant most of the call centres have moved out of the country because Indian call centres are cheaper.

The word "menial" does betray a certain approach. Call centres not good enough?

You keep talking about how towns like Middlesbrough or Rotherham should be "innovative", but apart from buzzwords you don't seem to actually be giving any concrete examples of what they should do differently.

Fight, for a start. Stop clinging to a long-lost history. Sell the area for which they are responsible. Do the local authorities on Teesside have a plan for what has happened? If not, why not? If they have, that should be the well-oiled machine purring into action.

As an aside, Middlesbrough are suprisingly innovative, far more than people seem to give them credit for. Funding for the arts was historically strong on Teesside- MIMA is always worth a visit, not to mention the music festivals in Boro- but of course "austerity" (that doesn't seem to affect Tory shire councils) means that they can't continue to fund this sort of work.

An innovative approach to generating employment is not about "festivals", which generate tiddly-squit. Perhaps it would appear they "Tory shire councils" are less affected because they know what they are doing and have plans in place for most eventualities.