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SteelWeek
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Monday, July 16, 1079
British Steel Will Lay Off Twelve Thousand
jgy /?qy Hodson
In a crash plan to cut output from old and high-cost
plants, British Steel wants to close more than two million
annual tonnes of iron- and steelmaking capacity.
The unions were told last week of schemes to run down
and eventually close its steelworks at Shotton, North
Wales (which feeds modern finishing mills for flat
products) and Corby, in the Midlands (which makes steel
for tubes mills).
Union leaders were horrified. British Steel claims that
the closures would slim down its work force by some
12,000 jobs and save i80 million per year. Bill Sirs,
secretary of the Iron and Steel Trades Confederation,
blew up when he discussed the plan with industry secretary Sir Keith Joseph. Sirs claims the new closures could
cost more than 20,000 jobs in the steel industry.
British Steel is expected to unveil a new strategy for the
1980s to get back into profit quickly. It lost £309 million
last year and has been told to settle for running a smaller
business.
After Corby and Shotton, more proposals for closures
are expected. Consett, a plant making iron and steel on
the northeast coast of Britain is also threatened; other
plants at risk include the old blast furnaces at
Scunthorpe, Lincolnshire, and several smaller works.
If the corporation persuades the unions to accept
drastic cuts it is likely to settle for an annual output of
some 15 million tonnes per year compared with a current
17-18 million tonnes.
As reported last week, unprofitable export business is to be ditched by British Steel. Instead, the
corporation will try to win back business in the home
market from imports which are now running at 20
percent of supply.
The new plans propose closing both Shotton blast
furnaces by next spring, bringing to an end 90 years of
steelmaking at the former John Summers Works,
nationalized 10 years ago.
No specific timetable has been spelled out for the
Corby closure. That will depend upon the rate at which
the production of cheaper steel can be built up at the new
British Steel plants at Ravenscraig, Scotland, and
Redcar, Teesside.
Meanwhile, the government will give special assistance
to the Shotton area to generate alternative work, making
it a special development area. That is the highest
category of aid for a British industrial black spot.
British Steel has been forced into this urgent closures
program by three factors. They are: 1) gloomy future
market prospects; 2) the insistence of the Conservative
government that British Steel makes a profit next year
after losing L\ million per day for five years; and 3) the
anxiety of the board of British Steel to show that it still
has some control of the business and can manage with
vigor. A deep division among British Steel top management was revealed this month when the board rejected
plans by Sir Charles Villiers, chairman, to impose a new
anagement structure of his own.
V
ANO THER REVISION IN D YING QUOTAS
The phased elimination of U.S. specialty steel
import quotas, announced last month, is being revised to alleviate disruption in the tool steel and
stainless bar market, the Special Trade Representative's office said Friday.
When the new quota system went into effect June
14, the previous "basket quotas" grouping the
European Community countries under one quota,
and smaller exporting nations in another category,
while allowing Sweden, Japan and Canada their own
separate categories for most specialty steel products,
was scrapped. This system, which caused many
countries in basket quotas to place their products
in bonded warehouses in the U.S. to await the race
to get their products in at the onset of each new
quota period, was replaced by global quotas. The
assumption was that global quotas would allow inventories to be whittled down and provide a more
equitable system of market sharing in each bimonthly quota period before all quotas end next
February.
But, "there was more inventory out there than
we thought," said Karen Alleman at the trade
office. Quotas in tool and bar were quickly filled by
countries formerly in the basket category getting in
their steel before other countries. "We received a
number of complaints from American consumers,
especially of Canadian and Swedish specialty
steel," Alleman said in explaining the decision to
scrap the tool and bar global quotas.
Under the old system, countries like Japan,
Canada and Sweden with their own quotas could
parcel out equitable shares of the allowed American market to their own specialty steel companies.
They did not have to place their products in bonded
warehouses in the U.S. as did others.
But with the start of the phase-out program, the
global quotas filled up quickly, and suppliers from
Canada and Sweden especially were shut out.
Under the latest revision, the level of imports will
rise as they had been designed to do, but new country quotas have been established, effective June 18.?
In addition, during the period June 18 to August,
13, suppliers are allowed to "borrow" from their
quotas from the remainder of the quota program.
In effect, the bimonthly quota periods on tool and
bar have been eliminated.