A New Chapter in British Steel
It’s finally happened. British Steel is now under Chinese ownership, with the sale to
Jingye Group finalised on 9th March.This arrangement, which included the
company’s Dutch assets, has apparently saved more than 3,000 jobsin
Scunthorpe and Teesside and should help in the drive to modernise the towns'
steelworks.Jingye reportedly offered £50m to acquire the
company after it collapsed and was placed under the control of the UK
Insolvency Service last year. It has pledged this month to invest around £1.2bn
over the next decade on upgrades to plants and machinery.
At Alexander Steel we’re often asked for our
views on various takeover proposals. As experienced steel stockholders in Liverpool, we’ve seen a lot of change in the industry. Obviously, since British
Steel was the second-largest steelmaker in the country, this manoeuvre has huge
implications. In many ways it’s good news for our friends in the North-East, as
they've been making iron and steel in Scunthorpe for a staggering 150 years
now. It would have been heart-breaking to see that go; it’s a one-industry town
and when the steelworks are lagging, the entire community notices.
As long-running Liverpool steel fabricators, we’re a bit distanced from the day-to-day goings on in these old
industrial heartlands (120 miles to our east), but we still feel a certain
connection to our colleagues in the sector. Until recently it looked as if the acquisition
might be called off, since the French government regards the plant in Hayange as
a vital national asset (it provides track for the country's railways) and was
preparing to veto the sale. Now it has happened and unions are praising the
final deal, which includes the sites in Lackenby and Skinningrove, as a big win
for the industry.
It's tough to say if Jingye will
succeed where others have failed to secure a bright future for British Steel. However, at Alexander
Steel we always welcome any serious attempt at reinvigorating the UK steel
industry – even if that involves rival companies. British Steel could definitely turn out to
be one of the beneficiaries of HS2, which will require around 170 tonnes of
long product rail and switch. There’s no reason why Scunthorpe cannot produce
that –the alternative of purchasing raw materials from overseas would involve
an unappetising 30% increase in supply chain costs.
There’s no doubt that Jingye’s modernisation plans sound incredibly
ambitious. We’re a lot more confident about the industry’s future now compared
to the 2016 low point of British Steel’s sale by Tata for £1 to the private equity firm Greybull
Capital.Above all, a
detailed plan of action is firmly in place and the funds are there to support
it. We’re always happy to talk to clients and the press about the fortunes and
challenges facing the industry, so if you’d like to hear the insights of
long-time steel stockholders in Liverpool (also known as the top Liverpool
steel fabricators), then give us a call.
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