Why the Steel Industry Is in Crisis

The steel industry was once a symbol of industrial might and national pride—the beating heart of Britain’s Industrial Revolution. At its peak, the UK was the world’s fifth-largest steel producer, with towns like Scunthorpe and Port Talbot flourishing around the sector. However, today the UK steel industry stands at a critical crossroads, facing challenges that threaten not only thousands of jobs but the very foundation of domestic steelmaking.

Understanding the Reasons for Decline

• Structural decline: UK steel production has fallen 73% since 1990, even as overall UK manufacturing has grown by 60%.
• High energy costs: Electricity prices are around 50% higher than in France or Germany, undermining competitiveness.
• Global overcapacity: The rise of China as a steel superpower has upended the global market, with Chinese producers now accounting for 27 of the top 50 steel companies worldwide, flooding international markets with cheap steel.
• Tariff shocks: US tariffs (e.g., Trump’s 25%) dealt further blows to UK exporters, who sent £400 million worth of steel to the US in 2023.
• Underinvestment: Many UK facilities remain reliant on outdated, carbon-intensive methods. Investment in greener, more efficient alternatives—such as electric arc furnaces or hydrogen steelmaking—has lagged behind global competitors.

Why Scunthorpe Matters

Scunthorpe, in North Lincolnshire, is one of the last industrial heartlands still dependent on steel. It’s home to 3,500 jobs, with steelmaking accounting for 4% of local employment. If the Scunthorpe blast furnaces close, the UK would become the only G20 nation without the capability to produce steel from raw materials—impacting defence, infrastructure, and energy projects.

Local areas like Scunthorpe and Neath Port Talbot are among the last steel-reliant regions in the UK, and job losses in these communities pose major socio-economic risks.

Nationalisation: A Lifeline or a Stopgap?

The UK government’s decision to nationalise British Steel signals that steel is viewed as a strategically vital sector, not just economically but geopolitically—for supply chain resilience, defence, and infrastructure. Yet, can nationalisation reverse the tide of global disadvantage? Success will likely depend on:

• Investment in decarbonised production (e.g., electric arc furnaces, green hydrogen).
• Energy cost reform to level the playing field with European peers.
• A long-term industrial strategy supporting domestic steel use (such as public procurement in green infrastructure and defence).

Does UK Steel Have a Long-Term Future?

A sustainable future for UK steel is possible but only if government and industry:

• Treat steel as a national strategic asset.
• Transition to low-carbon production methods.
• Mitigate cost disparities with European competitors.
• Leverage post-Brexit freedoms to shape procurement and trade policy in favour of domestic steel.

For long-term success, these actions must coincide with:

• Massive investment in decarbonised production, such as electric arc furnaces and green hydrogen.
• Reform of energy pricing to reduce the cost gap with European competitors.
• Industrial policy support, including procurement rules favouring UK-made steel in public projects.
• Alignment with climate goals, positioning the UK as a leader in green steel and sustainable manufacturing.

Brief Summary

Steel remains critical to the UK’s economic and strategic future. It is essential for transport infrastructure, offshore wind farms, electric vehicles, and national defence. Rescuing the sector requires more than short-term bailouts; it calls for a bold industrial strategy that balances economic competitiveness with climate commitments. Decisive action now could preserve—and reinvent—a vital industry for the 21st century.

A Brief History of Steel in the UK

Steel’s story in Britain stretches back nearly 4,000 years to the Iron Age, when it revolutionised tools and weaponry as a stronger, more reliable alternative to bronze. In 1856, Henry Bessemer introduced a method using oxygen to reduce carbon in iron, making steel production faster and cheaper—ushering in the modern steel era.

During the 19th century, the UK led world steel production, with Sheffield earning the nickname “Steel City.” The Bessemer and Open Hearth processes cut costs and boosted output. However, by the late 1800s, global competition—especially from the U.S.—began to erode the UK’s dominance.

In recent decades, cheap imports from China and limited government support have further challenged UK steel. Major producers like Tata Steel have cut thousands of jobs, pushing the sector into deeper uncertainty. Steel has also shaped British estates, with wrought iron railings becoming popular during the Victorian era for elegance and security.

Types of Steel

• Carbon Steel – The most common type, used in general construction.
• Alloy Steel – Contains elements like nickel or chromium for added strength and durability.
• Stainless Steel – Highly corrosion-resistant; ideal for medical and food-related applications.
• Tool Steel – Extremely durable; used in cutting and drilling equipment.

Despite current challenges, steel remains a cornerstone of modern industry and heritage in the UK. Bold action now can ensure its continued role in powering the nation’s future.

workersofengland.co.uk | Independent Workers Trade Union