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Why Is the UK Steel Industry Vital to Our Economy?

Why Is the UK Steel Industry Vital to Our Economy?

What role does the UK steel industry play in our economy?

The UK steel industry plays an important role in Britain’s economy. However, the industry is currently experiencing a crisis. Cheaper Chinese steel has flooded the market, leading to a decline in British steel sales.

A number of economic factors have complicated the matter, leading to closures and consolidation affecting all parts of the country. The giant Redcar steel-making plant on Teesside was mothballed by SSI in September. The future of another integrated steel plant at Port Talbot in South Wales still hangs in the balance, together with the rest of Tata’s UK presence.

Beyond that, a number of smaller steel plants have been closed or had their workforces slashed. The implications of this decline extend well beyond the steel industry to the wider economy.

A brief history of the British steel industry

Britain’s seminal role in the Industrial Revolution was such that for the first half of the nineteenth century it was the world leader in steel production. At its height, the UK steel industry employed 37,900 workers and produced 18.3 million tonnes of steel (basic oxygen steelmaking only). Electric furnace steelmaking accounted for another 14 million tonnes.

In 2014 steel output accounted for £2.2 billion, or 1% of total UK manufacturing, with the industry employing 34,500 people across 535 businesses. Although steel hasn’t declined as catastrophically as some of the UK’s other traditional industries, these figures still represent a reduction of 24% since 1990.

UK steel industry decline

Much of the crisis affecting UK production is down to the massive 96% increase in world steel production since the millennium. Most of that increase was in China, and initially satiated that nation’s massive appetite for development. However, the drop in demand resulting from the continued global slowdown has forced the Chinese to look elsewhere for markets, and the low-cost materials produced have made UK production increasingly uncompetitive.

Cheaply produced Chinese steel is not only causing problems in the UK though; most other steel-producing nations are feeling the effects of this overproduction and taking a variety of actions to safeguard their own output, making traditional export markets harder to find.

Government action

As the UK steel industry decline has worsened, government has come under increasing pressure to take action to protect UK producers from Chinese steel “dumped” at below cost.

A number of measures have been put in place to support the industry, but its position has further been weakened by the vote for Brexit.

Ironically, the most dramatic action has come from the EU itself, which imposed anti-dumping duties on imports from China, but even these were considered by many not to go far enough.

The UK steel industry today

The UK steel industry still produces 12 million tonnes of steel a year. It’s not much when compared to the 822 million tonnes produced by China, but is still a significant total in UK and European terms. The UK industry has also, over the years, sought to specialise in high-quality and high-value products with resulting advantages in niche markets.

Steel, of course, is not a stand-alone industry. It’s a crucial raw material supporting almost every area of manufacturing and beyond.

Steel is a basic to the world’s industrial economy

With steel products present in just about everything we produce, the steel industry underpins jobs and growth in multiple sectors. It’s not always apparent though.

We all understand the significance of the material in the automotive industry for example, but it plays just as crucial a part in the building industry, clothing, and chemicals, as well as food and drink production.

To lose UK steel production would cause a loss of supply-chain security right across the manufacturing sector. And that’s before taking into account the direct effects of the loss of steel manufacture itself.

Though contraction and automation have much reduced the steel workforce over the years, it continues to be a large employer in its own right, both directly and indirectly.

Buy British steel to support the economy

(And why British steel is the best)

At Aerocom Metals, we understand the need for the highest quality and supply chain security that comes with locally produced steels. We also understand the benefits that the industry brings to the wider economy through skills and research.

As a company specialising in niche products for the automotive and aerospace industries in particular, the value of using UK-produced metals goes beyond patriotism. By supporting the domestic steel industry, we help to maintain the UK industrial base and the technological innovation that comes as a result of being at the cutting edge of steel production.

The history of the British steel industry is turbulent, and it’s clear that the years ahead will remain difficult for UK steel producers, however there remain high hopes that the new Prime Minister intends to prioritise the wellbeing and value of key manufacturing industries, of which steel is surely one.

Support the UK economy with superior British-made steel. Call us on +44 (0) 2476 645 551 or get in touch online to talk to one of our sales team.

by Paul Smith