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|Posted on April 1, 2016 at 4:09 PM||comments ()|
The fate of 15,000 workers in the British steel industry depend on whether there is a buyer for the U.K. plants of Tata Steel Europe Ltd, headquartered at Millbank, London.
Their most recent available accounts, for 2015, indicate a sobering picture. From profits in 2012, the trend thereafter seems to have been losses each year, from about £300 million in 2013, going upto £820million in 2014, to £1.8 billion for 2015. (I just had a look at those figures, out of curiousity. Anyone really interested in the business will have to obtain verified figures which they can rely on.)
These figures tell a sad picture of steel price becoming totally 'unworkable', with more and more subsidized exports from China. Some figures suggest that the dumping of subsidized steel by China, selling below production costs, has snowballed, destroying the local markets, and causing ISS the Thai company, then Caparo, a long-established specialist dealer, and now Tata to the brink of bankruptcy.
Although the 2015 figures indicate some cash reserves, it is probable that the figures for 2016 may (or may not) show an empty account and huge outstanding liabilities. That seems to be the overwhelming reason the Tata board has decided to put the company up for sale. Of course there will be other reasons, you would have to ask them.
I read in the press that the Port Talbot plant in South Wales are losing £1million a day. From past history, the company seems to be losing about £600 million a year. So who could possibly buy it?
Prime Minister David Cameron has ruled out nationalisation. Could he instead encourage some financier to buy the business for the meantime, with some kind of support, to keep the company operational until such time as a buyer is found? Who could buy it? I suppose you can rule out China, their own steel producers seem to be shutting shop. Who needs steel at the moment? Could it be Syria, for the huge infrastructure rebuild they need, or perhaps Afghanistan? The European Union will have to be generous and help them out, with easy financing, and, more importantly, peace agreements, so the good works could be started to the benefit of their populations. Could Saudi Arabia or Qatar be interested to buy a stake, in the interests of helping their fellow Arab brothers' economies' rebuild requirements? Some Russian oligarch I imagine may have been interested (or could still be interested?) although the Rouble exchange rate is not very favourable....So who? It will have to be some entrepreneur from some nation whose exchange rate vis.a.vis the Pound has not deteriorated much. That will indicate a natural strength, and a good prospect that the deal would be favoured from such a solid party.
For the local market, if the British government were to introduce tariffs on steel imports from China, that may help to balance the picture and make British steel the purchase of choice. Once tariffs are introduced, a buyer may emerge from some of the huge construction developers in London, who are expanding neighbourhood after neighbourhood. The mandarins at Millbank may not have to look very far.
For the long term, it would be a very sound idea to save the British steel industry. The next cycle of growth worldwide will ensure the price starts to stabilise, and stocks start to be used up. China cannot forever and a day produce steel cheaply, their own workers are seeking better wages. It is about time the worldwide economic Recovery started to gather pace, and take us all to a period of renewed Prosperity. Such a time I pray is not far away.
"Be of good cheer; the Lord shall not forsake you." That is the inspiration I have received this instant, thinking about the 15,000 Tata Steel workers.
Praying for the help of our Lord and Saviour, Jesus the Christ. Amen.