The announcement in July of 366 more redundancies from Scunthorpe’s steel works, added to earlier layoffs, is causing serious worries in the north Lincolnshire town, Britain’s main steel producer.
The shock announcement came just five months after the steel giant axed 2,500 others nationwide, and raised questions over the future of its plants in Yorkshire and North East Lincolnshire.
Nationalised in 1967, privatised after massive modernisation, the Corus steel company was bought two years ago by the Indian Tata concern, whose main works is at Jamshedpur, India. Priority in hard times will obviously be given to that enterprise.
Jamshedpur produces 7 million tonnes a year, and by 2010 is projected to make 10 million tonnes, thanks to massive investment. The plant is situated next to large coal and iron ore deposits, whereas all Scunthorpe’s coking coal (blast furnace fuel) and iron ore is imported before being shipped by train a further 20 miles to the works. The Yorkshire coalfield supplied the fuel pre-Thatcher.
Scunthorpe works is now running at 50 per cent capacity, i.e. 1.5 million tonnes a year, and the price obtainable for the product is only half what it was pre-credit crunch, so revenue is down by three-quarters. Local people are talking now of the “writing on the wall”.
The Tata group is only 30 per cent “self-owned”, and 70 per cent in hock to the banks. $11.8 billion was borrowed to buy Corus when times looked good. How to repay that now? The expectation is that whatever is needed will be shipped to India – mills, etc – and liquid metal production will cease, perhaps leaving only a rod mill, supplied by foreign “billets” – the 10 metre bars to reduce, to roll down. Eventually there will be nothing.
Shipping costs are now very low. This too is hastening the end of European and north American manufacturing.