The Rise and Fall of the WELSH Steel Industry

Many people would have been shocked and worried last week when they heard the news that British Steel was closing with the potential loss of 25,000 jobs. But this is not the British Steel that used to operate plants at Port Talbot and across Wales. These plants are now operated by Tata Steel Europe – and the Company that is closing is primarily based at Scunthorpe in England. The Scunthorpe plant was sold off by Tata to a private equity company in 2016 who rebranded themselves with the now unused British Steel name – some say cynically to ensure UK government support. This closure should have little or no impact on Wales, but this does not mean that the Welsh steel industry is secure.

Welsh Strategic Success

That is a phrase you don’t hear very often, but in 1947 a group of independent Welsh steelmakers recognised that their small and fragmented industry could not compete internationally and so combined their resources to create the Steel Company of Wales. They developed a plan to create a huge modern integrated steelworks at Margam, Port Talbot, complete with its own port to enable imports of iron ore, and linked by rail to a series of tinplate works at Trostre, Llanelli (which opened in 1951) and Felindre, Swansea (opening in 1956).

A sister plant was later built in 1962 at Llanwern, Newport, supplied by iron ore by rail from Port Talbot, and by the 1970s the Welsh Steel industry was at its peak employing more than 35,000 people and producing 10 million tonnes of steel and steel products a year.

British Takeover and Decline

During the 1950s and 60s it was UK Labour party policy to take over ‘the means of production and distribution’ and so the Steel Company of Wales was first nationalised in 1951, reprivatised shortly after in 1952 and then nationalised again as part of the British Steel Corporation in 1967. This led to bureaucratic and politicised mismanagement and the once mighty Welsh steel industry started to stagnate. BSC posted some massive losses – peaking at more than £1 million per day in the 1980s, which led to ‘streamlining’ – that is, plant closures. Older plants such as Ebbw Vale, East Moors in Cardiff and Shotton on Deeside were closed at this time, together with the Felindre tin plate works, and political nepotism seemed to be conspiring against Wales – it was widely acknowledged that British Steel was run by a ‘Yorkshire Mafia’. It was even rumoured that Arthur Scargill and his union power base had intervened on behalf of Scunthorp,e resulting in Llanwern missing out on critical investments. Hardly a Union of equals…..

The Privatised Era

The Steel industry was privatised again in 1988 and political interference ended, but it was then subject to full Thatcherite market forces – which had a severe impact.

British Steel merged with a Dutch manufacturer in 1999 to form Corus Steel which was then taken over in 2007 by Indian Company Tata.

Cost cutting and efficiency improvements led to the workforce at Port Talbot being slashed from 18,000 at its peak to around 4,000 today. But production levels were largely maintained and the plant is now one of the most efficient in Europe.

At Llanwern, the ‘heavy end’ of the plant – which manufactured raw steel – was closed in 2001 but its rolling mills still manufacture strip products using steel slab from Port Talbot. The Felindre tinplate works had already closed and tinplate production is now concentrated at Trostre.

Until a few years ago Welsh Steel was being exported around the world – and we were in competition with European, Japanese and American manufacturers for a share of the world market. But then things changed – China started to build steel plants – and Chinese steel production over the last 22 months alone has already exceeded total UK production since the start of the industrial revolution! Welsh Steel could no longer compete in world markets.

Welsh Steel Today

The steel industry has steadily contracted across Britain, with the closure of Ravenscraig (1992), Teeside (2015) and Scunthorpe (2019), and is now mainly confined to the footprint of the original Steel Company of Wales. We may have lost most of our primary steel production but Port Talbot is still the largest steelworks in Britain. It now has the only operating blast furnaces carrying out primary steel manufacture, and its strip mills produce over 3.5 million tonnes of high quality finished steel per year. Smaller independent plants in Newport (Liberty Steel) and Cardiff (Celsa Steel) provide specialist products and together the Welsh Steel industry has annual revenues of around £4 billion.

The Future (& Brexit)

European steel producers (including Wales) simply cannot compete against China, and so the the European Union has placed protective tariffs to prevent dumping of low cost imports which would destroy the remaining European steel industry.

Tata announced in 2017 that they wanted to merge the business with German manufacturer Thyssen Krupps, but that deal fell through due to uncertainties over Brexit, and the immediate future is not clear.

If the UK adopts a no-deal or WTO Brexit, we will immediately lose the protection of European tariffs and unless appropriate alternative arrangements are made our steel industry risks closing overnight with massive job losses – 6,000 immediate redundancies with an estimated 18,000 additional losses in related businesses. Nobody should be under any illusions about alternatively competing for global markets – they already belong to China. But we can at least maintain our position within European markets – so long as we are inside the tariff barrier in one form or another.

Gwlad has deliberately not taken sides in the Brexit debate/debacle, which continues to be bickered and squabbled by our overpaid and underperforming representatives at Westminster, without an end in sight.

But we care strongly about Wales’ future and we must ensure that our world-class steel industry survives the political career paths and ego trips of Britain’s so-called leaders in London. It is time that our Politicians in Cardiff Bay made their voices heard and stood up for the Welsh Steel industry – before it is lost forever.

One thought on “The Rise and Fall of the WELSH Steel Industry

  1. It was NOT concerns over Brexit that prevented the Thyssen Krupps and Tata merger. It was the European Commission.

    They blocked it over competition concerns. They considered that it would create and monopolised market within the EU as Tata also have a steelworks at Ijmuiden in the Netherlands and currently compete with Thyssen Krupps within the European single market.

    What the landscape will look like after Brexit is still unknown. It is possible that Tata Wales could be separated off, either stand alone, or purchased as an individual unit by Thyssen Krupps (or others) without EU restriction.

    As a producer outside the EU, an offshore unit with access to global markets and not tied to EU resiprosity there are opportunities, but it would be a major adjustment. It depends on maintaining a global embargo against Chinese dumping.

    In 2018 the total UK steel exports to EU28 was 3620kt and to the rest of the world 4635kt, 42% of which is made from scratch at Port Talbot.

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