Britain’s steelmakers will gather in London today and urge the Government to give the UK steel sector “half a chance” by taking five immediate steps to alleviate short term pressures, while allowing it to compete on a level playing field with other steel producing nations.
The plea comes as senior executives attend the UK Steel Forum - the sector’s flagship biennial conference – in London later this morning. It will be the first industry-wide event following North-East steelmaker SSI’s announcement late last week that it would be halting production. It also follows a Government announcement that it would be holding a crisis summit about the UK steel industry.
The UK steel sector is vital to the success of manufacturing, employing 30,000 well-paid and highly skilled people, often in areas with higher-than-average unemployment. In 2013 it made a £9.5 billion contribution to the UK economy and had a £4.9 billion export value. The sector is also the foundation of many of the country’s most important manufacturing supply chains, including aerospace and construction.
However, according to UK Steel, the sector is in the middle of a perfect storm and facing its most difficult situation since it was privatised 27 years ago. As well as battling against falling prices, a rise in unfairly-traded steel imports and a persistently strong pound, the sector is being hit by disproportionate policy and business costs, higher than those faced by both global and European competitors.
These costs include an additional £130 million a year added to energy prices by climate change policies that make the UK steel sector’s energy costs up to double those of French and German plants. At the same time, business rates in the UK are up to ten times higher, while new air emissions limits from the EU Industrial Emissions Directive will add another £500 million to costs by 2020.
According to UK Steel, there are five key actions that the Government can take in the short-term to demonstrate its commitment to the UK steel industry:
Fully implement the Energy Intensive Industry Compensation Package, ahead of April 2016. The sector is currently still paying 70% of the policy costs that the full Package aims to address,
Bring Business Rates for capital intensive firms in line with their competitors in France and Germany. UK companies are currently paying between five and 10 times more than their EU competitors,
Fully consider derogation requests from the sector on a realistic timetable to meet increased commitments under the Industrial Emissions Directive. Under current proposals, the cost of meeting revised permits for the sector are estimated at up to £500m by 2019,
Continue to back EU-level action on anti-dumping measures which support the UK steel sector against the rapid rise in global imports,
Support local content in major construction projects.
Gareth Stace, Director of UK Steel said:
“This is a critical time for the future of the steel industry which is facing a perfect storm. If the sector is to continue its vital role supplying the rest of manufacturing then we simply cannot afford to stand by. Government has within its power the gift to take immediate steps which can alleviate pressure in the short term.”