Hundreds of downstream manufacturers will still be hit hard by the new steel safeguarding measures being introduced – 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.
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.
Steve Morley, President, Confederation of British Metalforming (CBM)
“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.
“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 12 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.
While the Confederation of British Metalforming thanked the government for listening, it still feels a plan that is workable for all is required. Steve concluded: “This has to be a workable plan for downstream metal users otherwise it will just be a stay of execution, which helps nobody.”
UK Steel Director-General, Gareth Stace added: “We thank trade officials at the Department for Business and Trade for their extensive work to secure UK steelmakers the maximum possible access to the EU quotas. However, there is further work to be done by the government as UK-EU reset talks continue.
“Securing wider export access for certain high value steel products will be critical for the long-term viability and profitability of the UK steel sector. The UK and EU are interdependent markets, and we hope both sides will take a reasonable view of each other’s needs as discussions take place over the coming months. UK Steel and our members stand ready to assist the government in this task.”
Original article by CBM – Confederation of British Metalforming (CBM) warns steel quotas are just a stay of execution