Forging a Future for the British Steel Industry

Start date: 2016
End date: 1 February 2017
Partners and collaborators: UK All-Party Parliamentary Group (APPG) on Steel and Metal Related Industries

Building contractors working on a steel frame

Description

Dr Ian Greenwood is Associate Professor in Industrial Relations and Human Resource Management

The UK steel industry is facing a growing crisis. The period since the financial crash of 2008 was a prolonged, almost perfect storm for the industry. From 2014, pressures intensified through increasing capacity in the Middle East, Russia and China, and an increased import of commodity steel. Adverse energy costs and business rates, diffuse supply chains, and insufficient public procurement policy have only compounded the situation. These factors have led to a number of large steel making plants closing, resulting in thousands of job losses across the UK. Tata Steel disposed of a major portion of its UK interests leading to the establishment of Liberty Steel and British Steel. Although the recent relative buoyancy of the international steel market has provided some breathing space for the UK steel industry, its future is uncertain.

In response to the growing crisis, in early 2016 the UK All-Party Parliamentary Group (APPG) on Steel and Metal Related Industries decided to develop its own strategy for the future of the steel industry. Dr Ian Greenwood from Leeds University Business School was approached by the APPG to research and co-author the report- ‘Steel 2020: Forging a Future for the British Steel Industry’. This was launched in Westminster, in January 2017.

The overriding ambition of the APPG was to more effectively engage with the development and evolution of government strategy for the UK steel and manufacturing sector. At a more specific level, the report was to identify the key policy areas crucial to the wellbeing and future sustainability of the UK steel industry. Once identified, these would be assessed for ways in which government strategy for steel could be built in terms of immediate areas for action and areas that would require more medium and long term planning.

The report contains 43 concrete policy recommendations aimed at immediate needs, such as change to business rates for capital intensive industries and the creation of a Catapult for the steel and metal sector, to more long term strategic considerations such as reengineering supply and value chains and a strategic overhaul of the cost/price base of the UK energy sector.

The launch event for the report was attended by MPs from all UK political parties, civil servants and business leaders. Lord Brookman referred to it as a “first-class report” and noted that “it would be worth the while of everyone who is interested in the future of manufacturing and the steel industry to read it carefully.”

Impact

Government and trade bodies

Prior to the report, the government had been looking for ways to engage with the steel industry to map the current capability of the sector and identify opportunities for steel markets that are commercially sustainable in a competitive global market. The Steel 2020 report has provided substantiated research with concrete policy recommendations, presenting the needs of the industry collectively and clearly, and providing more than the simple ‘opinion’ of the industry. The APPG consider the report to have helped obtain better arrangements for trade remedies through the TRA (Trades Remedies Authority), procurement guidelines, and steel industry pensions.

The importance of the recommendations made in the report go beyond the steel sector. The needs of the steel industry are also connected to the wider macro-economy through the significance of inter-industry connections (particularly the construction, transport, auto and aero sectors) and the supply chains that relate to these. Such a joined-up strategy is far more influential than a single sector approach.

Also, from the perspective of an industry such as steel that is, at present, restructuring and declining, the report makes clear to government its continuing importance to the national economy through, for example, its innovation, R&D, high skills and wages, and job multipliers (one job lost in steel equates to three elsewhere). This creates a case for greater support from government for steel businesses though reduced energy costs for high energy users, business rates (that currently penalise firms for capital investment), and access to finance for investment (capital and R&D) thorough, for example, a bank for industry.

As a result of this initial research, the trade association UK Steel has asked Dr Greenwood to conduct research to provide them with a better understanding of the social and economic impact of the closure of steel works.

European stakeholders

In addition to influencing UK government and industry, Dr Greenwood has used the Steel 2020 report to open a dialogue with various European stakeholders, including relevant European trade union federation, IndustriAll (a global union representing 50 million workers in 140 countries in the mining, energy and manufacturing sectors), the EC Directorate GROW (Directorate General for Internal Market, Industry, Entrepreneurship and SMEs), and the European Steel Association (EUROFER). Dr Greenwood has been asked by IndustriAll to become involved with the development of the next EU Steel Action Plan. As part of this, an event is being organised which will involve stakeholders from business, politics and trade unions to feed into the wider EU deliberations on EU steel strategy.

Events and media

Findings from this research have been shared widely, beyond academia. Dr Greenwood utilised the report as a basis to lead a symposium on regional industrial strategy. Policy makers and representatives from the Department for Business, Energy & Industrial Strategy, together with experts in business and industrial regeneration discussed themes identified in the report and considered ways to support regional politicians and business leaders in their development of strategy.

In July 2019, Dr Greenwood was interviewed on ITV Calendar about the big economic challenges facing the new Prime Minister - including what to do about the British Steel plant in Scunthorpe which had been placed in administration. Dr Greenwood has also been interviewed about the future of British Steel on BBC Radio Humberside and BBC Radio Sheffield, as well as speaking about the sale of British Steel on BBC Radio 5 Live (June 2019).