The air of gloom is palpable in steelworks on both side of the Channel. The announcement, at the end of March, that Tata Steel is to pull out of Europe is a painful reminder that the European steel industry is sinking deeper into crisis.
The huge concerns in the UK, where 15,000 jobs spread over various production sites are at risk, have been eased somewhat by a reprieve for long steel production units.
On Monday 11 April, Tata Steel announced that it had reached an agreement on the sale of this leading sector. The buyer’s profile was disclosed in March 2016: it is the family investment office Greybull Capital, which has committed to allocate €495 million (US$560 million) to an investment and financing plan.
With this deal, Greybull has saved the Scunthorpe site and its 4400 jobs along with Europe’s only rail production plant, based in Hayange (Moselle, France), which employs 450 workers.
“Our plant is in profit and we have secure orders, thanks to the SNCF, for example, which accounts for 40 per cent of our orders for the next nine years. The rail sector is flourishing and we are going to approach new markets,” Patrick Tintaret, an employee and workers’ representative at the company, relieved by the decision, tells Equal Times.
“Greybull has reassured us: they won’t supervise the site or interfere in our organisation or management,” says the union representative.
“The overall situation is very worrying. In Moselle, like in other places, the tradition of the family business has evolved into management by foreign multinationals, with stakes that are far beyond us,” underlines Michel Liebgott, a Socialist Party (PS) deputy from Moselle, in an interview with Equal Times, alluding to the “unfair” competition from China in the steel industry.
Tata Steel cites the same reasons, as reported in La Croix, for the slowdown in its steelmaking business and its inability to get back on track.
Chinese dumping and surplus production are the key issues currently under discussion within the European Union: China has submitted a formal request to be granted market economy status in December 2016, which could make it more difficult to protect the European market.
A sign of hope?
Aside from the job losses at several sites, British trade unions have other reasons to be worried. “It should not be forgotten though that many workers have already lost their jobs at Scunthorpe and those that remain are making huge sacrifices with their pay and pensions to secure their jobs,” pointed out trade unionist Martin Forster in an official press release published on 11 April 2016 by Unite, which is calling for renationalisation.
For now, the government is only considering part-nationalisation as a rescue solution.
“The latter been particularly lax when it comes to the reform and modernisation of companies. It’s not enough to blame the Chinese,” protests steel expert Marcel Genet of the Laplace Conseil consultancy firm, in an interview with Equal Times.
He also censures the turbulent relations between British management and trade unions each time an attempt is made at restructuring. “If a co-management policy had been implemented, based on the Scandinavian or German models, rather than a policy of confrontation, the situation may not have deteriorated.”
The British sites affected by the withdrawal of Tata Steel – which wants the sale process to be implemented as urgently as possible – have captured the interest of a newcomer, the Liberty House Group, headed by its young executive chairman, 44-year-old Sanjeev Gupta, dubbed the UK’s new “man of steel”.
In Port Talbot, Gupta is proposing to convert the sites into electric arc furnaces and to develop the steel from scrap market, as reported in the Indian business newspaper Economic Times, on 2 May. As reported by Wales Online, the potential investor said that he would not, in any case, save the blast furnaces and that he alone cannot not solve a crisis that a giant like Tata Steel was unable to overcome.
The manufacture of steel from scrap in electric arc furnaces is still relatively minor in the Old Continent.
In 2013, in France, it accounted for 35 per cent of total output (39 per cent in the EU, overall), but only 16 per cent in the United Kingdom, as compared with 44.8 per cent in Canada and 60.6 per cent in the United States, according to the figures of the World Steel Association.
“These countries have fully understood that this sector should be developed,” comments Marcel Genet.
Yet, the development of hi-tech recycled steel, according to an analysis published by the BBC on 15 April, could turn the United Kingdom into a market leader.
This article has been translated from French.
