Scunthorpe, steel making & railways

[Zomboid]

They're not the same situation. Not even close.

[JeremyC]

8 minutes ago, APOLLO said:

Germany and France certainly support their own industries - steel included. 

 

One rule for them and another one (which we foolishly adhere to) for the UK

 

Brit15 

 

 

 

No, same rules for everyone. It has just suited successive UK governments to use EU regulations as an excuse to avoid taking responsibility for their own actions.

[JeffP]

1 hour ago, Zomboid said:

They're not the same situation. Not even close.

 

 

Which post was this referring to, please?

 

[Bernard Lamb]

The last time this topic cropped up I quoted Ian MacGregor from back in the time when he tried to sort things out in the UK steel industry. His speech to the employees in South Wales was on the lines of. "For every one of you earning £2 per hour there are a thousand  workers in China who will do the job for 10p". " We have to make a better product more efficiently if the industry is to survive".

The industry was split leaving the choice between a rock and a hard place. Port Talbot v Llanwern, not the place here to go into why neither should have been the first choice and why a new super mill should not have been built, for the automotive and similar industries, while the bigger section stuff in plants further north was hived off. Generations of politicians have failed to act and seem to have no grasp of how to deal with the situation long term. Or rather they are too frightened of bring held accountable in the short term for spending huge amounts of money.

I retired in 2003 from working for a major steel using company. The last job that I worked on was to tender for a major distribution and retail firm to become their main supplier of storage racking. The costs came out far too high and I was asked to look into alternative costings. Chinese steel gave a material saving of over 40% but this alone did not make the job viable. Using Chinese labour showed a further saving. However the best solution was to build state of the art robots in China and run them with local labour and locally produced material.  No one was happy with the idea but there was no choice. Six months later  the company had shut down and the site had been cleared.

The writing has been on the wall for a long time.

The UK can be competitive in certain sectors in the steel making industry and as has been said earlier on, needs to weigh up costs against security.

The UK cannot compete against newcomers with vast amounts of cash to invest in traditional in traditional sectors of the industry.

Welcome to the modern world.

Bernard

 

 

 

 

 

[Zomboid]

15 minutes ago, JeffP said:

 

 

Which post was this referring to, please?

 

The one on the previous page comparing British Steel to the banks

[Allegheny1600]

3 hours ago, APOLLO said:

Germany and France certainly support their own industries - steel included. 

 

One rule for them and another one (which we foolishly adhere to) for the UK

 

Brit15 

 

 

 

Nonsense!

This is and has been for many years, decades even - the typical line that "it's the EU's fault" when what is actually happening is that British governments and parliamentarians (of every hue) merely refuse to spend money that supports British industry. Strange that when financial institutions (that said persons are involved in?) get themselves into trouble, money, rules, opinion - nothing matters except bail the old boys out.

 

In my very humble opinion, the businesses that are of vital strategic interest to the nation, should always be the ones that are the focus of the governments support, rules or no rules.

[APOLLO]

France & Germany - If they don't like the rules - get em changed !!

 

The two European countries suggested updating merger guidelines to take greater account of competition at the global rather than the European level.

In their five-page strategy paper, France and Germany also proposed giving the European Council, the forum representing member states, the right to override some antitrust decisions by the European Commission in certain “well-defined cases”.

“It’s the first time that France and Germany have put forward proposals to transform EU competition rules,” Le Maire said. “We have powerful, modern technologies and we don’t want them to serve other continents than ours.”

 

https://www.euractiv.com/section/competition/news/france-germany-call-for-a-change-of-european-regulatory-rules/

 

 Then there's these interesting reads --

 

The study by leading economic research group Oxera shows that Britain spent on average €95 (£70) a year per head of population on state aid to business and industry between 2009 and 2014, compared with €235 in France and €240 in Germany. 

 

https://www.thisismoney.co.uk/money/news/article-3614316/EU-s-state-aid-rules-brakes-Britain-continental-subsidies-soar-car-maker-asks-t-same.html

 

https://www.theguardian.com/global/2016/mar/30/the-uk-could-learn-a-lot-from-germanys-long-term-industrial-strategy

 

https://www.theguardian.com/commentisfree/2019/may/21/wales-westminster-government-support-uk-steel-industry

 

https://buffett.northwestern.edu/documents/working-papers/Buffett_07-001_Alter_Steinberg.pdf

 

The odds are stacked against us - whether we stay in the EU or Brexit.

 

Brit15

 

 

 

 

[Mike Storey]

3 hours ago, APOLLO said:

France & Germany - If they don't like the rules - get em changed !!

 

The two European countries suggested updating merger guidelines to take greater account of competition at the global rather than the European level.

In their five-page strategy paper, France and Germany also proposed giving the European Council, the forum representing member states, the right to override some antitrust decisions by the European Commission in certain “well-defined cases”.

“It’s the first time that France and Germany have put forward proposals to transform EU competition rules,” Le Maire said. “We have powerful, modern technologies and we don’t want them to serve other continents than ours.”

 

https://www.euractiv.com/section/competition/news/france-germany-call-for-a-change-of-european-regulatory-rules/

 

 Then there's these interesting reads --

 

The study by leading economic research group Oxera shows that Britain spent on average €95 (£70) a year per head of population on state aid to business and industry between 2009 and 2014, compared with €235 in France and €240 in Germany. 

 

https://www.thisismoney.co.uk/money/news/article-3614316/EU-s-state-aid-rules-brakes-Britain-continental-subsidies-soar-car-maker-asks-t-same.html

 

https://www.theguardian.com/global/2016/mar/30/the-uk-could-learn-a-lot-from-germanys-long-term-industrial-strategy

 

https://www.theguardian.com/commentisfree/2019/may/21/wales-westminster-government-support-uk-steel-industry

 

https://buffett.northwestern.edu/documents/working-papers/Buffett_07-001_Alter_Steinberg.pdf

 

The odds are stacked against us - whether we stay in the EU or Brexit.

 

Brit15

 

 

 

 

 

A little....misleading and selective, shall we say?

 

Fact is, the first matter was discussed when the proposed merger of Alstom and Siemens (to tackle Chinese competition) was disallowed, because it would have severely reduced competition to all EU member states in certain specialist areas. Germany and France have not got their way, so where exactly have they achieved something better than the UK? Frankly, I think their proposal is highly appropriate and one the UK should adopt.

 

In your second part, you miss the key explanation of the difference (primarily used in green energy and energy saving, as described):

 

'There are four criteria which define whether government spending is state aid,' said Robins. 'Is public money being spent? Is the measure selective – is it targeted at a single company or a small group of companies? 

'Does it give an advantage to the companies receiving it? And does it distort competition or distort trade within the EU?'

All of the spending detailed by Oxera met all four of these criteria, and so required approval by the European Commission. 

Robins said such approvals were granted when the aid could be shown to be for some wider public good.

She added: 'To be approved you also need to demonstrate that it is limited to the minimum amount necessary and that it is a real incentive. 

'That is to say that the investment would not have been done at all without the state aid.'

So, does Britain's lower spending on state aid mean we are less profligate and more genuinely a free market economy than our European neighbours – or are we simply missing a trick?

 

We are missing a trick because of prevailing UK ideology which sees state aid and involvement as anathema rather than a way to boost the economy in certain areas, not because of EU rules. It does do it, but usually too little, and often too late.

 

But the UK had already provided over £100m to British Steel, in respect of carbon credits, but refused to provide a further, basically free loan because of the unlikely "ongoing concern" state of BS. Why had its freeloading owners just spent £40m on a French steel firm, for example? But I agree with others that HMG could easily step into saving BS as a strategic industry, using the criteria outlined in italics above. They are choosing not to do so, and telling porkies about rules.

 

And in the supposedly greatest free market economy in the world, the USA, federal and state subsidises to large parts of its domestic industries and to attract new ones (either by cash, or tax incentives or other indirect assistance), to a far greater extent than the UK, which is technically disallowed under WTO rules, let alone the EU. But most of that has ended up in assets. That's before you get to what China, India etc etc are doing.

 

 

[62613]

11 hours ago, JeremyC said:

No, same rules for everyone. It has just suited successive UK governments to use EU regulations as an excuse to avoid taking responsibility for their own actions.

Yes, same rule for everyone; it's how each state's civil service interprets the rules. Our MP said he'd heard of EU directive documents arriving in Whitehall 3 pages long, and leaving 25 pages long. The UK civil service had (?) a tendency to "Goldplate" EU directives.

[JeffP]

That I can say is the truth. 

Years ago, the EU made a directive that no pleasure vessel may venture more than 15km from a port.

Our idiot civil service changed that to 15 km ftom it's HOME port.

 

Pleasure craft from Brid to Whitby etc etc killed off in one blow.

 

Utter stupidity,  but hey, what do Whitehall mandarins care?

THEIR pensions ate gold plated. 

[62613]

16 hours ago, JeffP said:

That I can say is the truth. 

Years ago, the EU made a directive that no pleasure vessel may venture more than 15km from a port.

Our idiot civil service changed that to 15 km ftom it's HOME port.

 

Pleasure craft from Brid to Whitby etc etc killed off in one blow.

 

Utter stupidity,  but hey, what do Whitehall mandarins care?

THEIR pensions ate gold plated. 

I would say, on that point, did any of their political masters not pull them up on their interpretation? Was the interpretation scrutinised in Parliament? Not wanting to spread the blame around, but it's not just the civil service. Doubtless, the EU was blamed, though.

[Mike Storey]

Just in case there is any lingering doubt, here is the matter as seen by the UK steel industry:

 

https://www.theguardian.com/business/2019/may/26/brexit-will-not-save-troubled-steel-industry-says-trade-body

 

[phil-b259]

On 24/05/2019 at 09:19, JeremyC said:

No, same rules for everyone. It has just suited successive UK governments to use EU regulations as an excuse to avoid taking responsibility for their own actions.

 

Indeed

 

Please note that if Germany spends 1.31% of GDP on state aid to industry, Poland spends 1.59% and France spends 0.76% then the UK Government has a lot more room for manoeuvrer than it claims it has (we currently only spend 0.38%)

 

Source https://www.bbc.co.uk/news/uk-politics-41392469

 

In other words where there is the will there is a way round EU rules.

 

I'm of an opinion that recent Governments simply do not care about industry or quality manufacturing / sourcing jobs* in this country - all they are concerned about is their mates in the city and grabbing as much short term cash as they can regardless of the long term consequences - the various EU rules are thus a mighty useful fig-leaf to borrow so they can hide the real agenda. Whether that is because most MPs / the civil service are recruited from Oxbridge / the law / financial services than real world jobs or just a couldn't care less because it doesn't affect us attitude, the net effect is the same.

 

* i.e. fishing / farming where the UK Treasury consistently favours big cooperations and foreign investors (who can give them a big wad of cash outright) rather than settling for much lower returns but keeping small cooperatives and sole traders in rural / seaside communities in business

Edited May 26, 2019 by phil-b259

[Gordon Connell]

At the start of this thread the OP said that rail and steel were intimately connected, well..

 

https://www.bbc.co.uk/news/business-48816458

[phil-b259]

1 hour ago, Gordon Connell said:

At the start of this thread the OP said that rail and steel were intimately connected, well..

 

https://www.bbc.co.uk/news/business-48816458

 

In other words potential Nationalisation - NR being firmly classed as part of Government these days. Not that the current crop of politicians will want it to be seen that way of course....

[black and decker boy]

From the article, it’s not the steel making part and possibly not even the rolling mill:

 

”State-owned Network Rail wants to take over the division responsible for the welding, finishing and storing of rails for the UK's train network.”

[phil-b259]

4 hours ago, black and decker boy said:

From the article, it’s not the steel making part and possibly not even the rolling mill:

 

”State-owned Network Rail wants to take over the division responsible for the welding, finishing and storing of rails for the UK's train network.”

 

There is not a lot of point taking over only the final processing if there is no rail to actually process!

 

Granted NR won’t want to take over the whole process - but they will still want to be able to get hold of the raw materials as it were - so I would have thought that the rolling mill (whether it uses steel made on site or imported) is likely to be included.

[Zomboid]

I guess NR could make sense of the rail specific bits, whatever those are, but running an entire smelting operation is probably not something viable for a rail infrastructure provider. Clearly NRs custom wasn't enough to keep it running as it was.

[royaloak]

I understand there is a path in place to bring Spanish rail over here because there is a shortage in this Country.

[Fat Controller]

10 hours ago, black and decker boy said:

From the article, it’s not the steel making part and possibly not even the rolling mill:

 

”State-owned Network Rail wants to take over the division responsible for the welding, finishing and storing of rails for the UK's train network.”

This would seem to be a similar set-up that used to exist at Castleton, which used to weld lengths of rail (brought in from Workington) into longer strings. There is a plant at Eastleigh that does this already, but presumably without a possibility of expanding its operations to replace Scunthorpe.

[Dava]

Network Rail is aiming to protect a vital part of its supply chain, though it would prefer a complete acquisition of the plant by another buyer. 

 

If Scunthorpe were to close - a possibility which cannot be dismissed, given HM Govts' almost complete disinterest in the matter, then imports of rail and many forms of specialist steel would be more expensive [possibly much more] and much less easy to ensure quality control, which would affect 'Defence' and critical industries such as submarine, warship, armored vehicle production, power engineering, etc.  Believers in 'free market economics' wont think this matters. Concerned citizens and workers should. 

[Steadfast]

17 hours ago, royaloak said:

I understand there is a path in place to bring Spanish rail over here because there is a shortage in this Country.

 

 

By ship to Marchwood, then rail to Eastleigh for offload, from what I saw on Flickr last week

 

Presumably, if NR do get the rail processing bits of Scunthorpe, then could that be a profit stream for them, by selling the output abroad, as Scunny currently does? No doubt the UK government wouldn't be that forward thinking...

 

Jo

[John Tomlinson]

On 26/05/2019 at 18:13, Mike Storey said:

Just in case there is any lingering doubt, here is the matter as seen by the UK steel industry:

 

https://www.theguardian.com/business/2019/may/26/brexit-will-not-save-troubled-steel-industry-says-trade-body

 

Your post from May 22nd did mention the over-riding exemption for industries of national strategic interest, which I thought applied under WTO as well.

 

Presumably the Steel trade body referred to in the article regard this as irrelevant for them, not unreasonably after years of bitter experience. It seems to me that the likely General Election in October does at least offer some possiblity of being a game-changer in this regard, which folk may or may not regard as a good thing. Apologies if I'm not allowed to make such an observation.

 

John.

[Mike Storey]

8 hours ago, John Tomlinson said:

Your post from May 22nd did mention the over-riding exemption for industries of national strategic interest, which I thought applied under WTO as well.

 

Presumably the Steel trade body referred to in the article regard this as irrelevant for them, not unreasonably after years of bitter experience. It seems to me that the likely General Election in October does at least offer some possiblity of being a game-changer in this regard, which folk may or may not regard as a good thing. Apologies if I'm not allowed to make such an observation.

 

John.

 

Almost impossible to judge really. Germany and France (and Poland latterly) have tried to protect their domestic steel industries, but have suffered considerable reverses, despite the attempted imposition of even more, massive tariffs on Chinese steel (to which the UK objected, for reasons that are beyond me, but apparently had to do with making UK manufacturing less competitive, something which other events have already successfully done). But the rationale of nationalisation has also to be accompanied by overriding protectionism, if it is to be successful in terms of survival. The problem then becomes one of reciprocal protectionism by those markets into which we would presumably wish to sell. So such a policy would rely on a major increase in domestic demand, for which other stimuli are necessary. The managed economy strategy has its adherents, but without the scale of say, China or India, or in a different context, the USA currently (whatever their president claims about protectionism and manipulation by others, he is actually taking it to a level with which the traditionally free trade Republicans are no longer comfortable). Britain's attempts to do this, post-Empire, but pre-joining the EEC, were not exactly successful.

 

So, of course there are votes in such policies, as there are in most EU, US and Australian constituencies right now. from both right and left. But no-one seems to know what happens next. The 1960's and 70's tell us in the UK, but nobody knows their history any more. Not that I support the other team that much - we are living in age of extremes. That's why I ended up supporting a centre ground party, where such things are open to debate. But others would see that as being woolly, or weak, or some other derogatory term, instead of eminently sensible, which is unpopular right now, across all viewpoints.

 

To revert to the OP, and in support of the quandary of the British Steel situation, and notwithstanding Network Rail's potential bid, this much was reported in Issue 283 of Today's Railways - Europe (as an article on Channel Tunnel future freight carryings, summarised):

 

The owners of British Steel (BS) own a French plant at Hayange, This makes high quality rail, for the French railway system.

 

BS have recently bought the Ascoval steel works at Saint Saulve, in Northern France, and will (reportedly) invest c.47m euros there. This currently makes steel pipe but was threatened with closure. St Saulve will instead supply steel blooms to the Hayange plant, which currently receives them from Scunthorpe.

 

The Channel Tunnel will lose 25% of its freight traffic if the Scunthorpe to Hayange traffic is lost, But it may well re-gain most of this back, as finished rails from Hayange to various Network Rail destinations (or as some other product direct to NR, if they buy the rail finishing operation from the UK arm of BS).

 

The French plants are unaffected by the current UK problems of the UK arm of BS.

 

So, the current owners of British Steel have absolutely no interest in the strategic interests of the UK, and indeed, why should they? They are in the game to make money, not friends. But if BS is "saved" by somebody (other than NR), the biggest loser will be the Channel Tunnel.......ain't life grand?

 

 

[Dava]

There was a Radio 4 'File on 4' documentary this evening which highlights Greybull Asset Management short-term focus on extracting as much value as they can and disregarding the future interests of Scunthorpe and the U.K. In the way Mike suggests. Irresponsible capitalism in action.