Hundreds of downstream manufacturers will still be hit hard by the new steel safeguarding measures being introduced tomorrow – despite a slight softening by ministers.
This is the urgent message from the Confederation of British Metalforming (CBM), who represent the interests of more than 75,000 employees at 200 companies involved in the production of fasteners, forgings, sheet metalwork and cold rolled products.
CBM President Steve Morley, a veteran of the automotive sector, has welcomed improvements on the original proposal, but insisted there is still work to do to protect UK output and jobs.
Having canvassed his members, he believes several of the quotas still don’t reflect what is required by critical suppliers to the aerospace, auto, construction, defence, energy and medical sectors.
“We are pleased the government listened to us and increased some of the quotas – this will alleviate some immediate short-term pain, but the bigger picture is still very worrying for firms.
“The key challenge now is to make sure the product scope reflects what we can actually make in the UK. Nuances of some grades of steel mean that they aren’t available domestically, so companies then have to source overseas to meet their production requirements.
Speaking from a manufacturer’s perspective, Tim Jewitt, Director of Footprint, one of the UK's oldest hand tool manufacturers, explained: “We’re all for supporting UK Steel and I think you’d struggle to find a manufacturer that says otherwise. However, as a downstream manufacturer we must call out the ‘insanity’ of these steel safeguarding measures introduced by ministers, who have no grasp of operational reality.
“To impose steel tariffs whilst two of the UK’s mills are currently closed feels like a backward step. We must stop pretending we’re the EU or the US with a large number of steel mills, who can make a wide variety of the hundreds, possibly thousands, of grades of steel in hundreds of different shapes, sizes and specifications.
“We can count the number of mills in the UK on one hand, and they make a fraction of the steel grades used by downstream users here.
“This means a lot of manufacturers, including ourselves, will not be able to buy the steel we need domestically, yet are going to be financially penalised when we buy it from overseas.”
“In my opinion there has been a complete dereliction of duty by the powers that be. They could quite easily have mapped out the steel requirements of the supply chain vs. what steel is actually made here, before putting in draconian measures.
“Phasing in the tariffs as UK steel production came onboard would have helped us all in a fair way. Instead, we have a policy that throws most downstream users of steel under the bus by making it more difficult to bring steel into the UK that isn't made here, whilst also allowing part finished steel products to come in tariff free - pretty much a pincer move on UK manufacturers by our own government.
Steve Morley expanded on the problems that steel users are facing: “These new measures will simply pile on unnecessary costs and disruption for both downstream firms and the major OEMs and primes. We could genuinely see some of our biggest companies make the decision to move their operations overseas to avoid the financial implications of trying to protect a domestic steel industry that can’t make what UK firms need.”
The CBM believes Cat 14 and Cat 27 are two of the biggest concerns for industry, two vitally important grades of steel that are used in precision component manufacture for many of the world’s most important parts.
It is widely acknowledged that manufacturers need up to 2.5 times the increased quota just to meet current market requirements, let alone any additional material required for the elusive ‘growth’ government is chasing.
“Ministers say they’re going to review things in twelve months, but I can tell you now the damage will already be done if they leave it that long,” explained Steve.
“We are urging them to monitor the impact of these changes on a monthly, if not weekly basis and we are going to continue to lobby for that all-important ‘backstop’.”
He continued: “What we mean by this is some exemption of tariffs if UK mills fail to produce the grades and volumes that they have ‘promised’ and on which the quotas were based to meet downstream supply chain demands.”
Having worked in operations most of his life, Steve believes the required jump in domestic production capacity from 30% to 50% of the UK’s total steel requirements is one hell of a leap and certainly won’t be achieved anytime soon.
“Everyone connected with the sector believes there will be a shortfall, and we can’t afford to sleepwalk into this situation. The CBM has requested production KPIs from the steel producers on their production performance to ensure the capacity promised is being met.
“If this request isn’t granted, we will instead monitor the situation through our members. The backstop is intended to give thousands of companies a fallback plan to ensure they can maintain production if volumes don’t materialise.”