Thursday, 3 December 2015

Assembly Calls for Steel Industry Support

(Pic : South Wales Argus)
The latest topical Members' Debate in the Senedd takes place amidst growing concerns about a slow down in the global steel market and the influx of cheap, low-grade steel from China.

The Assembly held a debate on this earlier in 2015 (Assembly takes a ride on Heavy Metal) - there'll be no heavy metal puns today as I think I've exhausted them - but this one's all the more timely, with 1,200 jobs directly lost at TATA steel plants in Scotland and Yorkshire in October and around 5,000 jobs at risk in total. Wales has been spared the worst of this so far, although 250 TATA jobs were lost at Llanwern back in August; that's reason enough to be cautious.

Also, the debate comes a fortnight after the deaths of two steelworkers in an accident at the Celsa plant in Cardiff – just a stone's throw from the Assembly buildings.

The motion called for :
  • The Assembly to recognise the importance of the steel industry.
  • The Welsh Government "to do all it can" to support the industry.
  • The UK Government to take action on high energy costs to ensure the industry remains competitive with the rest of Europe.

David Rees AM (Lab, Aberavon) started by expressing condolences to the families of workers killed in Cardiff, which highlight the ongoing dangers of the industry (clip). He hoped the debate will offer further support to trade union campaigns to improve the industry, describing it as an industry of national strategic importance which should be supported by both Welsh and UK governments. Steel employs 30,000 in UK and 8,000 of those are in Wales. There are also 18,000 jobs in the supply chain. As long as global steel use continues to will rise, the industry will enjoy long, productive future.

David said the industry face several urgent challenges. Firstly, a lack of UK support for an industrial strategy, which is key to protecting heavy industry and manufacturing.

Steel is also disadvantaged by : £400million of environmental levies, a strong pound (which makes exporting harder), high energy costs and business rates. Surplus Chinese steel is also being "dumped" in the EU. He welcomed the suspension of of environmental levies in the recent UK spending review, but as it won't be applied until 2017 the impact will be marginal.

Welsh Government can use procurement policy to boost steel and ensure Welsh steel is used in major infrastructure projects like High Speed 2. David cited Oakdale-based General Dynamics who were manufacturing military equipment with imported Swedish steel. He suggested business rates should be brought in line with EU competitors and there should be relaxations for investment in plant and machinery.Shadow Economy Minister, William Graham AM (Con, South Wales East), said a recent fall in international demand and increased global production, particularly in China, has created glut on the market (clip). Academics have questioned the economic viability of UK steel industry, but the Prime Minister said it's "vital". He repeated that environmental levies have been removed for steel and chemical production permanently, and the EU were looking to introduce "anti-dumping" laws.

Mike Hedges AM (Lab, Swansea West) decided to give an impromptu history and chemistry lesson as an ex-employee of the steel industry who worked in research....and clearly had his own steel mishap judging by his collar (clip). Mike emphasised it was beneficial to local economy in terms of contractors and supply chain, as well as being a high wage payer. Steel-making is highly energy intensive, routinely involving temperatures above 1000°C , meaning energy was highly expensive. Mike said this echoed the closure of a number of aluminium plants in Wales due to high energy costs. Welsh steel was "strong on quality", but can't compete on price with likes of China, meaning there was a need to reject imported sub-standard steel.

The bulk of Welsh steel is used in consumer products like Nissan cars, which are manufactured
near Sunderland, as well as white goods like fridges - not infrastructure projects.
(Pic : The Guardian)

Bethan Jenkins AM (Plaid, South Wales West) decided to give her own unnecessary history lesson about a monk and superstitions surrounding falling walls (clip). Despite the over-embellished start, Bethan made an excellent point that the strip metal produced by TATA in Wales is used to make cars and white goods; so encouraging the use of domestic steel in infrastructure projects wouldn't help by itself. There's a need to support domestic production and know who's buying it, describing the Bridgend Ford engine plant's local procurement as "dismal". She called for a greater focus of skills shortages and taking greater responsibility over our own steel industry.

John Griffiths AM (Lab, Newport East) said Newport's steel industry has seen mixed fortunes in recent times, with Liberty Steel expanding and taken on people, accompanied by job losses and mothballing at Llanwern (clip). John said there was a strong future for steel with the right commitment from government; other EU nations understand steel is of strategic economic importance, but there's been little sign of that from Whitehall. Germany, for example, are aiding their steel companies towards greater energy efficiency without being in conflict with state aid rules.

Peter Black AM (Lib Dem, South Wales West) said steel still has potential to be key player in economic growth (clip). There've been advances in steel quality – it being much stronger and lighter than in the past. VAT charges on alloys need to be addressed, and standards need to be consistent in order to encourage maximum steel use from British plants. He emphasised the need to challenge the high cost of energy in UK. With the industry constantly under threat, government should support the use of domestically-produced steel in capital projects. Peter also supported cutting business rates for plant and machinery, as suggested earlier.

Although great strides have been made in safety, the recent deaths of Mark Sim
and Peter O'Brien underline that steel-making is still a very dangerous job.
(Pic : BBC Wales)

Jenny Rathbone AM (Lab, Cardiff Central) said the attitude of UK Government has been modest (clip). Exemptions from green levies are a small change compared to investments steel companies have already made to make their processes energy efficient. Also, imported steel produces 2-3 times the carbon emissions of locally-produced steel, while steel is also highly recyclable, being able to be reused without losing quality. She encouraged consumer changes, where the public should buy produces that make use of Welsh steel, such as Nissan cars and Heinz beans. Jenny also made the point that TATA are leading research into smart coatings to enable buildings to generate their own energy, meaning the company were an essential part of the Welsh economy.

Lindsay Whittle AM (Plaid, South Wales East) said we owe it to workers to do what we can to save the industry after years of dramatic declines in steel production and employment (see also : Offa's Gap), mirroring scale backs in chemical and metal production generally (clip). 37% of UK steel is produced in Wales and AMs must advocate for it as one of our great industries; he said it makes no sense that TATA-owned Jaguar doesn't use UK steel. Although Wales has largely escaped so far, the Welsh Government should prepare for the worse in terms of job losses, and he said this wasn't a defeatist attitude but purely practical.

Alun Davies AM (Lab, Blaenau Gwent) said that if there were any community that's seen impact of loss of steel industry it's Ebbw Vale (clip). That impact is still with us, not just because of industrial or technical change, but because a government didn't care about those communities (the plant closed under Tony Blair – look up the Mittal Affair too).

He praised the Minister's response to crisis by looking to support the industry; she didn't wait for telephone or letter and responded straight away. Alun said the scale of 5,000 potential job losses in 2 months counts as an "industrial emergency", requiring active intervention in the market by the UK Government. He called for three things : industry protection, support for industry on energy issues and procurement, strategy to grow and maintain the industry.

The 25th anniversary of the closure of the Brymbo steelworks near Wrexham was recently marked,
while Ebbw Vale has still struggled to recover from the closure of its steelworks in 2001.
(Pic : Wrexham County Borough Council)
Keith Davies AM (Lab, Llanelli) made a particularly concise contribution, saying governments across Europe and in the USA are doing something to defend their steel industries, but there's been lack of response from UK Government. He asked why can't they stop Chinese steel dumping or improve the situation on energy when others have? (clip)

Business & Economy Minister, Edwina Hart (Lab, Gower), offered condolences to the families of the steelworkers killed last month. She visited Celsa and said the company are investigating what happened with an inquest now opened (clip).

The UK steel industry is at "a critical point in its history". All sites are suffering, including Port Talbot. Europe is the only area not protected from Chinese steel-dumping, with Newport docks full of Italian, Russian and Chinese steel.

The Welsh Government support using British steel in major infrastructure projects, and has a close relationship with steel industry at ministerial and official level. They're committed to steel industry, and were represented at meetings at both UK and EU level, where the gravity of the situation was made clear.

The Minister said government is "duty bound" to consider where steel is coming from, and she will personally speak to major employers about their use of Welsh steel. The Welsh Government will look at business rates paid by the industry as long as it doesn't conflict with EU Commission state aid rules which the Minister, perhaps surprisingly, said were outdated when it comes to steel.

In reply, Aled Roberts AM (Lib Dem, North Wales) said it wasn't just the steel industry suffering (clip), but the whole manufacturing sector – including the supply chain - citing the recent 25th Anniversary of the Brymbo steelworks closure. He said the Assembly's frustration with the UK Government came across, particularly delays to measures to lessen the impact of energy costs in the spending review.

The motion was agreed unanimously.


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