Thursday, October 29, 2015

There is no case for keeping steel production open in Redcar




Steel is a commodity. This means that producers must mainly compete on price. As with all commodities there are opportunities to add value on the margin with enhanced products or services for special applications. But the vast majority of steel use is of materials that meet a common specification and are undifferentiated. So any buyer of steel issues tenders and chooses a supplier who offers delivered materials meeting an agreed specification at the lowest price.

In the modern world the trading of commodities is international and even bulky items like steel can be transported over large distances economically. This means that the global market will be dominated by the suppliers with the lowest production costs who can as a result offer the lowest prices. 'Twas ever thus. The decline in textile manufacturing in the UK (for example) was because others in lower labour cost countries could offer lower costs. And with free trade and the removal of tariff barriers there is nothing we could do about it, and didn't.

So is steel production in Redcar (etc.) a lost cause? Almost certainly. Should the British government subsidise British steel to keep plants open? The only instance where this might be justifiable would be if the present steel market conditions were temporary and some sort of bridging arrangement was necessary. The does not appear to be the case.

The closure of the mines in the 1980s was crassly and insensitively handled, but the strategy was right. The UK could not compete with lower cost coal producers and the energy sector was moving away from coal anyway. There is a parallel with the current state of affairs in steel. The U.K. can be a niche producer of added value steel products, but not a competitive producer of commodity steel. So Government's task is not to shore up unviable plants but to find a way of softening the blow for those thrown out of work. It's a tough conclusion but there is no other one.



7 comments:

deeksha said...

this blog is really nice and communicative it is really helpful thanks for sharing those information.

php Training in Chennai

Unknown said...

Well written article
Steel suppliers in the UK

Unknown said...

Nice blog
Modular kitchen in chennai
Modular kitchen chennai
modular kitchen manufacturers in chennai
modular kitchen supplier in chennai

karthick said...

I really enjoyed reading your blog. I found this very useful. Thanks for sharing.
Interior Designers in Chennai
Interior Decorators in Chennai
Best Interior Designers in Chennai
Home Interior designers in Chennai
Modular Kitchen in Chennai

Unknown said...

You have made your points in a smart way. I am impressed with how interesting you have been able to present this content. Thanks for sharing a nice information. Do support us
Best Modular Kitchen Designers In Chennai

saher said...

Good Post, I am a big believer in posting comments on sites to let the blog writers know that they ve added something advantageous to the world wide web.
interior decorators in chennai
Modular kitchen in chennai

saher said...

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
Pooja room interior desingers in chennai
Hotel Interior desingers in chennai
Hospital interior designers in chennai