Let’s Talk UK Steel – it’s NOT about economics or employment.

UK Employment and UK & International Economics are big important and complex topics for us to worry about.

Tata’s proposed sale of UK Steel is related to both.
But Tata’s sale is NOT about either.

Tata, as a massive sprawling multinational conglomerate was never a good choice to own British Steel / Corus assets in the first place. They have no interest in UK assets. Their interest is in international economics, more specifically their own profitability. Tata have a big history in steel, but they are so much more diversified into services these days. SSI (who were on Teeside) would have been a much better bet, but that horse has already bolted, without a whimper from UK government.

Sure, we should not be artificially preserving UK Steel industry at large (loss-making) capacity – the market (UK and foreign) will find most economic sources of steel. Any intervention on economic grounds should be temporary, transitional, to manage employment and social responsibilities. There may be economic upturns that make the productivity less loss-making, but this would not be a long term operational plan – to compete on UK price. Whatever our best productivity – and it is good – we will never compete long-term on raw materials and energy compared to some other nations.

NONE OF THIS IS THE POINT

What matters is having UK Steel Making capacity at a level governed by strategic capability and need. Look at the scale of funding in (say) Trident – a large defense asset. Massively controversial as to whether it’s now the right defense asset, whether to modify how the funding is best used, but nevertheless massive government commitment to the need to fund a long term defense strategy.

Warships and tanks are one thing, but think also of bridges, railways and buildings. Should we think about whether we in the UK could build these in our future strategic interests? What if most economic steel suppliers were in countries that didn’t share our strategic interests. Is the cost of the steel in these assets really that significant? Hardly.

UK should have some capabilty to make steel – coking and smelting iron and refining steel – sufficient capacity for future strategic needs – greater capacity can be left to questions of economics. And these future strategic needs are not issues for temporary Labour vs Capital government ideologies.

In days of old the king planted forests of oak trees for future generations of warships and bridges. It’s about investment in future strategic assets. Not short-termism about current economic market operations.

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[Post Notes:

Still lots of inept misunderstanding of the real issues – even on last nights BBC Newsnight – and now today in reports from Downing Street (Twitter etc.) Jeez!

More considered and typically radical input from @PaulMasonNews.
“They don’t give a shit” about the real issues.

And this is what is generating so much anger – government rhetoric about “doing all it can” when it is patently obvious they were and still are working ideologically against what the EU has actually been trying to do.

Been out of circulation for a week or so since posting this. The story of the Indian businessman looking to buy the Tata Port Talbot operation has been prominent – and his “green” sustainable plans to use scrap steel rather than blast-furnace iron & steel-making has been promoted. Need to be careful this doesn’t miss the strategic steel-making point. Sure, any steel products business should maximise its possible use of recycled material – most already do, they’d be mad not to. When thinking of steel-making it’s easy to focus on the enormous blast-furnace(s) dominating the skylines, but of course these are the source of crude iron material which, along with available scrap, feed the actual steel-making in the basic oxygen and arc furnaces before con-casting the raw steel. The real significance of keeping the iron blast-furnace in the loop is the the fact the the feed to the steel process is already at molten metal temperatures in an “integrated steel-making” process. A switch to 100% scrap means all the heat has to be added in the steel-making furnace(s). The overall eco-energy-carbon-footprint is not obvious – recycling doesn’t magically make you green.

We don’t need massive steel-making capacity, just enough for future strategic security. In times of hardship we can always scrap the fence-railings to build hurricanes and tanks again, but lost strategic capability for short-term eco-nomics will be hard to recreate from scratch.]