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    Tdwm's Avatar
    Tdwm Posts: 2, Reputation: 1
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    #1

    Apr 25, 2016, 04:18 PM
    Port Talbot Steel
    On the current struggle of Port Talbot steelworks, and the crisis of British Steel -while closure seems to be looming that would bring economic downturn to a whole region, let alone the domsetic industry, there have been a number of solutions on offer.

    My question is, if the buyout consortium is seeking to convert the steelworks to recycling scrap steel (which is claimed to have lower demand than fresh-forged steel), but fresh production is has purely lost profitability due to Chinese steel, would it not be economically viable to lease the plant to the consortium for a medium-term lease to produce scrap steel until perhaps the Chinese operation slows, or is tarriffed by the EU, at which point steel production could again be profitable, as opposed to losing the plant perminantly and damning the area and the industry to recession?

    Apologies for the long-winded structure; any opinions and facts would be greatly appreciated (steel price trends, views on Chinese steel production and EU tariffs) most welcome
    talaniman's Avatar
    talaniman Posts: 53,994, Reputation: 10852
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    #2

    Apr 25, 2016, 08:55 PM
    You may be interested in this news article.

    Steel crisis: Port Talbot boss to launch Tata UK buyout - BBC News

    Chinese or no, old steel facilities are on the way out. Downsizing and closings have been the norm for American steel producers for years now, leaving many ghost towns in their wake, that were boom towns in their day.

    Same with the coal miners who supplied the raw materials for Big Steel, new technology has replaced all but a handful of miners. Don't know about the UK, I think they import much of their raw materials, but here the economic transition from all those lost job is challenging to say the least.
    Tdwm's Avatar
    Tdwm Posts: 2, Reputation: 1
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    #3

    Apr 25, 2016, 11:52 PM
    I have read the article; many thanks for the reply.

    I suspect that the reality is closer to what has happened in the US, as Britain moves away from the primary/secondary sector. Being as Financial services makes up 12% of our GDP, it's not hard to imagine that employment focus has moved away from things like steel production, meaning that wages are not competative in comparison with the tertiary sector.

    Our coal mining was put to an end by Margaret Thatcher, and the very last operation ceased in 2015, so I'd imagine most of our coal probably comes from Germany, who I believe are still very big producers.

    The thing is, British Steel has been nationalised and privatised a number of times - bought out by labour goverments in times of struggle like these, and as steel prices have fluctuated over the years it becomes profitable and is sold of by conservative governments (at least twice), so I'd be reluctant to write off hopes of a profitable industry simply because of Big Steel, as things may change in the future?
    talaniman's Avatar
    talaniman Posts: 53,994, Reputation: 10852
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    #4

    Apr 26, 2016, 04:51 AM
    The trend has been in smaller, more specialized operations as opposed to sprawling start to finish facilities, and nobody really wants the dirty air pollution blocking the skies anymore from any dirty industry. Further China subsidizes all its industries not just steel, but are hard pressed to develop new technologies to clean it's own air, or cut it's manufacturing costs, so while giant enough to dominate most markets with sheer volume they cannot sustain the growing push back of their dumping at cheap costs products on the global markets.

    Everybody is feeling the effects of globalization as competition has shifted from the big national centers to widespread international ones driven mostly by cheap labor. Until global labor costs stabilize and get consistently equal across the world expect more ghost towns and streamlined operations as a result of chasing that much sought after cheap labor.

    I doubt any degree of tariffs and fines will stop countries from dumping or flooding the markets with their products, as long as the global price of labor remains low, and markets can be easily manipulated and currencies artificially inflated. All these accounting schemes wreck local traditional economies because old revenue streams are destroyed for newer ones that can dry up at anytime, as supplies out paces demand we have a glut that destroys the integrity of prices in many sectors of industry on a global scale.

    It's way out of balance. That may be great for a few investors, but lousy for ordinary people everywhere.

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