Memorandum submitted by the Iron &
Steel Trades Confederation
The steel industry internationally has a higher
proportion of trade union membership among its employees than
any other industry and 26,000 British people, the great majority
of employees in the British steel industry, are members of the
Iron and Steel Trades Confederation. Recently, the union has relaunched
itself as the community union, seeking to represent people in
communities formerly dependent on steel plants and to develop
co-operation with local authorities, schools and other local organisations
in order to buttress respect for community values. The instruments
used include Steel Partnership Training, an organisation established
by the ISTC which contributes unique expertise to the work of
local agencies with responsibilities for retraining and promoting
the employment of people who have lost their jobs as a result
of redundancies in steel.
The world steel industry is characterised by
clear cyclical patterns arising from the low degree of concentration
of production in the sector and the tendency for steel producers
in periods of falling demand to sell at prices sufficient to cover
the heavy fixed costs in the industry, without operating at a
profit or even covering marginal costs. The European Union accounts
for the production of nearly one-fifth of the world's crude steel
production, a proportion greater than that of the US, China, Japan
and the Commonwealth of Independent States, but is not immune
from the pressures arising from cyclical fluctuations. Sharp falls
in demand and prices at a world and European Union level are typical
against a background of chronic overcapacity—amounting to
about 25 per cent in the world and a lower proportion in the European
Union—and a faster rate of increase in capacity than consumption.
In addition, steel prices tend to decline steadily from one cycle
to another, reflecting the impact of constant technical change
and rapid improvement of productivity in nearly all the countries
which produce steel.
PRODUCTIVITY IMPROVEMENT
There is little difference in productivity rates
between the European, best North American and Japanese producers
and it can be said with certainty that the British steel industry
has been fully competitive with the most efficient world producers
since 1982. The most recent information from the International
Iron and Steel Institute suggest that crude steel production per
worker in the United Kingdom exceeds that of the other main European
producers and is at worst on a par with Japanese counterparts
and US employees in the most efficient mills. The longer hours
worked by British steel workers compared with their counterparts
in France and Germany are a factor in the superior per capita
performance. Over the last 20 years productivity in the British
steel industry has increased at an annual rate of 10 per cent—nearly
three times as fast as the rate of improvement in British manufacturing
as a whole. The industry also adds more value per employee than
the car industry, the computer sector, and virtually every other
significant sector of British industry.
One result of maintaining the competitiveness
of the industry has been the significant contribution which the
industry has made to the balance of trade over two decades. About
half of all steel production is exported, three quarters of it
to other European Union countries. The most recent information
for the year to July shows that British steel exports exceeded
imports by 3 per cent despite the impact of the grossly-overvalued
Sterling exchange rate in terms of Euro currencies. This achievement
in raising productivity has been achieved to a greater extent
than in any other steel-producing country in Europe through reducing
employment. The table below shows that Britain experienced the
sharpest fall in employment in steel of all the European Union
countries in the last quarter century and that the Dutch industry
retained three times as many jobs proportionately as the United
Kingdom.
EMPLOYMENT IN THE EU STEEL INDUSTRY, 1974
AND 1999
|
| | Employment, '000s
| 1999 as percentage
of 1974
|
|
| | 1974
| 1999 |
|
|
| Austria | 44
| 12 | 27
|
| Belgium | 69
| 20 | 29
|
| France | 158
| 38 | 24
|
| Germany | 232
| 78 | 34
|
| Italy | 96
| 39 | 41
|
| Luxembourg | 23
| 4 | 17
|
| Netherlands | 25
| 12 | 48
|
| Spain | 89
| 22 | 25
|
| Sweden | 51
| 13 | 26
|
| UK | 194 |
31 | 16
|
| TOTAL | 998
| 280 | 28
|
|
Note: Germany includes former GDR in 1999 but
not in 1974.
Source: International
Iron and Steel Institute.
Despite this productivity record, gross steel output has
fallen from 20 million tonnes in 1975 to 16.3 million tonnes in
1999 and the indications that crude steel production in 2000 will
fall substantially short of this total and that steel production
in Spain will exceed that of Britain for the first time. The output
of crude steel in other western European countries in the same
period increased. Several different factors contributed to the
contrasting evolutions of the steel industry in Britain on the
one hand and the continental European countries on the other but
the three most significant as it appears to the ISTC are:
— the retention of significant degrees of public
ownership of large and successful steel companies in Austria,
Belgium, France, Germany, Luxembourg, and—until the merger
of Hoogovens with British Steel—the Netherlands. The main
European competitors of Corus, namely Voest Alpine, Arbed, Usinor
and Salzgitter, are all subject to a substantial element of shareholding
by the state;
— the legal and other institutional constraints
prevailing in the continental European countries on the closure
and disposal of undertakings and the provisions requiring employers
to extend substantial entitlements to information and consultation
to their employees.
These two factors together have had the consequences that
the governments of other European Union countries have been ready
at critical times to intervene to protect the public interest
in respect of national strategic interests and to prevent or reduce
the scale of redundancy programmes. National trade union organisations
also have had opportunities to present practical arguments for
maintaining productive capacity and avoiding recourse to collective
redundancies. No doubt, employers have been deterred even from
making attempts to close workplaces because of the need to present
compelling arguments publicly in situations which in Britain would
have resulted in closures and redundancies without the trade unions
and the political authorities having access to the full facts.
They have also contributed to a stronger propensity to make best
use of their workforces and invest in developing skills through
training as well as maintain a high rate of investment in plant
and equipment.
It is noteworthy that the accountability to their employees
and to the public over the long term does not appear to have had
an adverse impact on the capacity of the companies concerned to
cope with the cyclical nature of the steel industry and to operate
profitably in the long term. Voest Alpine, for example, in which
the Austrian state has a 38.8 per cent holding, has been able
to secure its ambitious target of a 12 per cent return on capital
employed in most recent years and has every confidence that the
target will be exceeded this year. Arbed and Usinor are also consistently
profitable, as was Hoogovens before the merger.
SOCIAL IMPACT
The ISTC has commissioned independent analyses of the prospects
for steel production in Britain and changes in labour markets
in steel communities in Britain, the preliminary results of which
have just become available. The data suggest that areas where
steel was or is produced have labour markets characterised by
serious quantitative and qualitative problems of unemployment.
Attendant on these employment problems are high incidences of
family breakdown, drug and alcohol abuse, and health breakdowns,
illustrated in a sympathetic way in the recent films Brassed
Off and The Full Monty. The economic, social and personal
costs of such concentrations of structural and long-term unemployment
are well documented in academic works, notably by Ray Hudson and
Sadler in British Steel Builds the New Teesside? 1984and
Beynon et al in A Tale of Two Industries in 1991.
The conclusion of the research conducted for the ISTC confirmed
that many people had clearly become part of a population that
was unemployable, given current labour market conditions. The
5,000 further job losses which Corus is seeking and other redundancies
in the steel industry will aggravate problems of unemployment
in the communities concerned. The record in the areas suggests
that at best there will be limited re-employment in other industries
of the steel workers who lose their jobs.
CORUS: THE
FIRST YEAR
The British steel industry faces acute short-term problems,
most of them stemming from the over-valuation of sterling against
the euro; as well as well-established long-term trends—notably
the decline of manufacturing industry and the shrinking of the
industrial base—which threaten its future. Corus anticipated
that sterling would lose value against the euro in planning for
2000 and embarked on a programme of expenditure about which the
trade unions at a very early stage expressed deep concern since
it meant the abandonment of the prudent financial policies of
British Steel. Corus paid out £600 million to shareholders
in October 1999. It appropriated unilaterally £863 million
from a surplus in the British Steel Pension Fund and is using
it to reduce its own contributions to the Fund. Pay increases
for all employees represented by the unions barely kept pace with
inflation and were well below the increases in average weekly
earnings in manufacturing as a whole. Despite this the company
had by September accumulated debt of £1.86 billion and its
most pressing problem at present is financing this debt which
is costing the company approaching £1 million daily.
The impact of the euro exchange rate was offset for the first
half of the year by a favourable US dollar exchange rate, enabling
British producers to purchase iron ore and coal advantageously
compared to competitors in the Eurozone. The response of steel
companies in Britain and the main company—Corus in particular—to
the decline in revenue from its export sales and the threat to
its market share in the United Kingdom from artificially cheap
imports produced by companies operating in the Eurozone has been
to aim to reduce its workforce in Britain by nearly 5,000 people,
equivalent to 14 per cent of its employees.
In December 1999, the company announced the closure of the
Shelton section mill. On 19 May, Corus announced that it intended
to reduce the number of manned shifts at the only railway track
plant in Britain, in Workington, with the loss of 168 jobs from
a workforce of 400. The ISTC and the other trade unions representing
employees at Corus Rail in Workington are convinced that production
at this level of activity is not sustainable for long. The treatment
of its employees at the Corus Rail plant in Workington illustrates
many of the weaknesses in the approach and policies of Corus which
have contributed to its present difficulties. The episode is described
in detail below.
The three announcements threatening the biggest reductions
in employment in the company affecting 4,200 people were made
on Fridays in June and July. In September, the company announced
that it aimed to cut a further 210 jobs from the strip businesses.
The trade unions representing working people in the Corus plants
concerned had at best only a few hours' advance notice of the
broad nature of the announcements and had no practicable opportunity
to present alternative proposals to the company to avoid job losses.
They were given no opportunity to consult their branches in the
plants affected about the proposed cuts.
The ISTC regards these proposals as an ill-considered response
to a short-term problem which is likely to impair seriously the
capacity of the company to compete successfully and to be profitable
in the long term. Even in the short term the proposals are likely
to have a most damaging impact on morale and jeopardise the improvement
of productivity. The company has resorted to cuts of experienced
employees in response to the cash difficulties, concentrating
its response to the cost problems on employment which accounted
for only 18 per cent of overall costs. It is difficult to make
precise comparisons but it is very likely that Corus employment
costs in Britain are lower than those of steel producers in other
Western European countries. The trade unions have grave concerns
about safety among employees. Seven fatal accidents in the company
worldwide in the last 15 months—four of them in England
in the last year—is an appalling record which needs to be
addressed most urgently.
The ISTC has repeatedly impressed on senior manages of Corus
that its methods for dealing with its proposals for redundancies
do not reflect even the minimal standards of respect due to its
employees and are even more offensive in the light of the treatment
extended to its Dutch employees giving them a real say in resisting
cuts of 590 jobs at the Ijmuiden long products facility. The ISTC
is resisting vigorously these proposals and has made it clear
that it will back members with industrial action if necessary
if any attempt is made to:
— permit any diminution of protection against accidents
in Corus establishments;
— impose compulsory redundancies;
— increase resort to the use of sub-contracted employment.
The proposed employment cuts in the opinion of the ISTC jeopardise
the ability of the company to produce the quantity and quality
of steel products which the European market demands. The announcements
in October of further cuts in the strip businesses less than three
months after the announcements of June and July brought further
demoralisation to the entire workforce in Europe. In the view
of the ISTC, they call into question the capacity of the company
to maintain market share in the United Kingdom The major shifts
in the company's assessment of market conditions over a very short
period further eroded confidence in its judgement.
INVESTMENT
The continuing competitiveness of the British steel industry
is dependent on a high level of investment in developing human
resources and new plant and equipment incorporating technological
advances. Since the merger Corus has shown a reluctance to commit
resources to its operations in Britain. Despite the financial
difficulties it has developed its downstream activities by purchasing
or acquiring significant shares in existing plant in France, Canada,
the Netherlands, Germany, Hungary and the United States. It has
invested in a joint venture in China to produce large extruded
aluminium sections, in a new sheet steel plant at Ijmuiden, and
is engaged in negotiation for a 31 per cent share in a further
joint venture with Huta Katowice in Poland to produce long products.
In contrast, the Workington plant was denied investment which
would have enabled it to produce longer rail lengths and the company
only decided to commit resources provisionally to the refurbishment
of the main blast-furnace at Llanwern after a determined campaign
by the ISTC and other unions, the First Secretary of the Welsh
Assembly and other political and community leaders.
It appears to the ISTC that the short-term problem of the
sterling-euro exchange rate is leading Corus to take investment
decisions which will have the long-term consequence of reducing
the capacity of the British steel industry to produce and to compete.
CORUS RAIL,
WORKINGTON
The cuts at Workington epitomise the short-sightedness of
Corus, the lack of political awareness, and the inadequacy of
the company's respect for its employees. The Workington plant
is renowned for the quality and safety record of the rail it has
been rolling for more than a century. It produces the heavier
60 kg UICA high quality rail which is less prone to breaking than
lighter rail. It continues to export to a wide range of countries
though recently foreign demand for railway products has fallen.
Despite that fall in the market, Corus purchased in October 1999
the Hayange plant of Sogerail at a cost of £83 million and
had to spend a further £19 million to adapt the plant to
its needs. This expenditure contributed to the massive debt now
afflicting Corus when a much smaller investment in Workington
would have enabled the company to produce rail lengths in excess
of 36 metres at the Workington Rail plant and serve the substantial
and growing British market for rail products. For it was plain
before the Secretary of State for the Environment, Transport and
the Regions made his announcement of the massive 10-year programme
of investment to restore the rail infrastructure that the Government
needed to intervene to restore the decayed national infrastructure,
the constantly failing London Underground, and other elements
of the national transport infrastructure. It was clear that it
would allocate substantial resources to the transport system and
would create large-scale new demand for rail and other railway
goods among other steel products.
Employees at the Corus plant in Workington were on a four-day
week and the plant badly needed to secure the renewal of a five-year
contract to supply Railtrack. The ISTC first raised in October
1999 with senior Corus managers the opportunities for the company
and the Workington plant in particular which the programme would
open and returned to the point on several subsequent occasions.
No response was forthcoming from Corus. From March, the ISTC worked
hard through representations to Ministers to assist Corus obtain
a large share of the Railtrack order and Corus did win a substantial
part of the Railtrack order.
However, the company on 19 May announced that the Workington
plant would be placed on a five manned shift working basis and
that 168 jobs would be cut from the workforce. The Corus statement
gave three reasons for reducing the manned shifts to five at Workington:
the continued strength of sterling which makes the export business
less viable; the declining trend in world demand for rail
products; and Workington's inability to roll rail in excess of
40 metres to meet the increasing demand from European customers
for longer rolled rail products.
The announcement came as a deep shock to the workforce and
was a source of profound dissatisfaction to the trade unions who
were under the impression that the success of Corus in winning
a big share would enable the company to increase the number of
manned shifts worked from six; At a meeting with senior trade
union representatives in May the company refused to give information
about how much of the order would be produced in Workington. The
ISTC representatives said that they could not understand the commercial
reasons for not using the Workington facility to the full. They
pointed out that the Railtrack order was not an export order.
The pound had been losing value against the euro and the cost—estimated
at £40 per tonne—of transporting steel from Hayange,
which unlike Workington has no port, to Britain made a big difference
to the relative costs of producing in the two countries. The costs
of production in Workington would be even cheaper relatively once
sterling returned to a sustainable rate of exchange with the euro.
The trade unions also pointed out to Corus that national
British strategic interests were at stake. The Ladbroke Grove
rail disaster in September 1999 had suggested that the rail infrastructure
had been allowed to deteriorate to the extent that public safety
could not be guaranteed and it seemed likely even then that there
would be a surge in demand for railway track and other railway
products which Corus would be well placed to meet from Workington.
The recent disaster at Hatfield has pointed to the need for the
more frequent renewal of track. The strategic supply of rail might
be interrupted by events over which the company and the British
Government have no control, such as a sudden surge in demand for
rail in France, a blockage of the Channel Tunnel, or large-scale
industrial or political unrest. There is no other producer of
rail in the United Kingdom; the present level of working there
is not sustainable; and the nation will become dependent on rail
supplies from other European countries if Workington is allowed
to run down and be closed.
The Workington local authority offered to pay for an independent
feasibility study of the scope for development of the plant and
possible sources of financial help and the ISTC pressed the company
to accept the offer but again the company refused. It was also
unwilling to provide to the trade unions with members in the plant
the information which the unions had requested and to enter discussions
with the Government about ways in which the vast public expenditure
increase on the rail and other transport infrastructure might
be deployed in the years ahead to the advantage of the company
and the national interest. A little consideration of the record
of the ISTC in similar situations to Workington would have showed
you that we have made a significant difference, for example at
Avesta in Sheffield.
Public resources are still available in West Cumbria and
with them the opportunity to develop the capacity at Workington.
This had been audited independently and found to meet the highest
quality safety and quality specifications. The trade union representatives
did not receive a reply to their question whether the track from
Hayange met all the ultrasonic testing requirements for the European
market which Workington has proved that it satisfied.
In the view of the trade unions, the company had not taken
account either of the human and social consequences for its employees,
their families and the whole community in West Cumbria dependent
on the Corus plant. Unemployment in the West Cumbria region was
already above the national average and there was an urgent need
for action and resources to attract new investment and to create
new jobs in the region. The company has missed chances for discussing
ways of coping with the immediate production and financial problems
and of equipping the company to compete most effectively and to
maximise profitability in the long term. It is losing skilled
and experienced people and is demoralising the employees who remain.
The ISTC remains ready to find ways with the company and the public
authorities to maintain the plant at a level of operation which
would be profitable long into the future.
The ISTC renews its call to Corus to accept the offer by
the Cumbrian authorities to undertake an independent feasibility
study about the potential for developing the Corus Rail plant
in Workington in the light of recent tragic developments which
have underlined the need for replacement of rail in the national
system. The programme of redundancies should be halted at once.
OUTLOOK
It is not lost on ISTC members that the way they are being
treated is much less respectful of their interests and dignity
than the manner in which the rights of their Dutch counterparts
are guaranteed. This has been harmful to morale. In the view of
the ISTC, the cuts and the impact has rendered Corus ill-equipped
to meet the production and quality requirements of customers in
the long term.
In other respects the economic and industrial environment
in Western Europe remains positive for manufacturing and for steel.
Corus in the UK has to contend with exceptional problems because
of the unsustainable value of sterling but the company has been
able to make recent price increases stick. The company led the
way in Europe in September in increasing prices for sections and
wire rod and the increases are being accepted. There are other
areas of strong demand for steel products and domestic demand
in countries like Russia, the Ukraine, Korea, and other nations
is increasing and reducing the danger that cheap supplies will
be available for export to Western Europe. Prices in Asia are
stabilising. There are all good reasons for believing that European
demand and prices will begin to rise again in the New Year and
that the recent surrender of capacity in Britain by Corus may
be exposed. In the event that sterling does lose value substantially
against the euro Corus will be extremely competitive but may not
have the human resources to take advantage of its competitive
edge.
CHALLENGES OUTSIDE
THE CONTROL
OF THE
INDUSTRY
The ISTC recognises that the ability of Corus and other steel
producers in Britain to do much about the overvaluation of sterling
and the narrowing industrial base but the Executive Council is
convinced that the company could have acted to ease the problems
confronting it. In meetings with the Chief Executives and other
senior Corus representatives the ISTC has called on Corus leaders
to:
— declare publicly full support for the British
accession to the single European currency at a sustainable exchange
rate. The company has acknowledged that it needs to be able to
plan investment and commercial policies against a background of
stable exchange rates yet it has not taken this elementary and
essential next step.
— Corus should lobby the Government publicly and
strenuously about the damage the unsustainable exchange rate is
causing to Corus and to British manufacturing generally. The Government
has shown itself to be readily open to the influence of other
multinational companies but Corus does not have the ear of Cabinet
ministers and does not appear to have tried hard to win it.
— Corus should use the problems facing the industry
to enlist public support. Instead the company chose to phase the
employment cuts in June and July to minimise the public outcry
which so clearly played a part in the Rover crisis earlier this
year in saving production and jobs through engaging the undivided
attention of Cabinet ministers. The scale of job losses in Corus
stands to be just as serious as at Longbridge but it has not created
strong pressure for Government help and has been reported to have
turned down assistance.
— Corus should take the trade unions into its confidence
and make common cause with them in approaches to the Chancellor
and other senior ministers. So far the company has shown reluctance
to discuss with the unions ways of maximising influence through
co-ordinating representations and through bringing other influences
to bear on the Government.
GOVERNMENT RESPONSIBILITIES
The steel industry in Britain is a strategic resource crucial
not only to the national infrastructure but also to the defence
sector and manufacturing generally. In the absence of a domestic
steel industry the relatively heavy cost of transporting steel
into the United Kingdom would raise costs of goods and many services
throughout British industry. Britain needs an efficient and profitable
steel sector based in the United Kingdom.
The most acute difficulty in the external environment affecting
the British steel industry at present is the gross overvaluation
of sterling in relation to the euro. At the end of October the
pound sterling was worth deutsche marks 3.36. This represents
a 10 per cent appreciation in 12 months and 20 per cent since
the euro was launched in January 1999. It is at least 20 per cent
above the rate which would give British steel and other manufacturing
a reasonable change to compete with producers in the Eurozone.
The Chancellor of the Exchequer, the Secretary of State for Trade
and Industry and other ministers have been ready to meet ISTC
representatives to discuss in depth the euro exchange rate and
other aspects of the economic environment in which the steel industry
operates and of British economic, industrial and financial policies
bearing on the difficulties being experienced in the industry.
The Chancellor may have been influenced by ISTC representations
in early May when he began to talk up the euro, pointing out that
the economic fundamentals—rates of economic growth, control
of inflation, and public expenditure—all favoured the appreciation
of the euro currencies against sterling and the US dollar. Other
ministers at about the same time made public statements about
the need to advance the debate concerning British accession to
European economic and monetary union, and about British interest
rates having reached their peak for the time being.
The value of sterling fell sharply in the next few weeks
from DM 3.46 to DM 3.07 but it has gradually regained value since
making British exports of steel yield less revenue and putting
home markets in jeopardy to competition from foreign producers
whose costs of production appear lower as a result of sterling's
appreciation. This is eroding the market share in the United Kingdom
of Corus and other companies producing steel in Britain and making
it very difficult for them to retain export markets, especially
for strip products. The ISTC very much shares the view of the
Select Committee that the euro-sterling exchange rate is essentially
a problem for Britain alone: manufacturers in the Eurozone are
enjoying a massive competitive advantage because of the persistence
of the undervaluation of the euro and they have no pressing reason
to want to see a correction.
EMPLOYMENT
The ISTC recognises the considerable achievement of the Government
in creating an environment in which there are more than one million
new jobs, unemployment is at its lowest rate for two decades,
and significant progress has been made in tackling long-term unemployment.
It views with deep concern, however, the sharp decline of employment
in manufacturing in Britain and considers that the potential for
fast economic growth is being surrendered and the prospect of
restoring balance in visible trade seriously diminished. The ISTC
also takes the view that the concentration of steel plants in
the north of England and Wales is aggravating inequalities at
the root of educational, health, and other disadvantages suffered
by the people in those parts of the United Kingdom.
The ISTC calls on the Secretary of State for Trade and Industry
to reactivate the Iron and Steel Employees' Re-Adaptation Scheme
to help steel workers who lose their jobs to acquire skills and
aptitudes helpful to them in finding new employment.
MONETARY POLICY
COMMITTEE
With the Select Committee the ISTC favours adjustment of
the role of the Monetary Policy Committee. The short-term interest
rate decisions of the committee aimed at an inflation target are
damaging seriously British manufacturing. It should be noted too
that the MPC have consistently missed the inflation target by
as much as 20 per cent since the inflation rate has been held
at about 2 per cent most months. In the view of the ISTC the Government
should
— require that the MPC take account of the pernicious
impact on manufacturing of their contribution to sustaining a
grossly overvalued Sterling exchange rate with the euro;
— adjust the composition of the committee to switch
their focus from the needs and prejudices of the City and the
South East of England to the needs of working people in the steel
and other manufacturing industries, who despite having improved
productivity at rates unapproached in other sectors and have exercised
moderation in pay claims, are losing jobs because of the committee's
misjudgements and City focus.
THE EURO
EXCHANGE RATE
The ISTC has urged the Government to use the many instruments
at its disposal to restore a sustainable exchange rate with the
euro. In particular the Government should:
— have regard to the disruptive consequences for
the world economy of a sudden and steep decline in the value of
sterling and the US dollar and promote co-ordinated action by
the US, Japan and the European Union government and financial
authorities to gradually move exchange rates into line with economic
realities and competitiveness;
— demonstrate a readiness to intervene directly
to buy Euro-denominated bonds to boost the euro. Such interventions
would carry little risk even in the short term because of the
patent undervaluation of the euro in terms of sterling;
— acknowledge clearly that long-term protection
against the economy being swamped by international financial speculation
lies in eventual full economic and monetary union within the EU
and giving a strong lead to a public campaign for a yes vote in
the referendum on the issue.
ENERGY PRICES
AND PROTECTING
THE ENVIRONMENT
The ISTC has raised with the Government on numerous occasions
the need to eliminate the disadvantage which producers of steel
in Britain are under from being compelled to pay higher prices
for energy than European competitors. The ISTC welcomes the coming
into effect of new trading arrangements in 2001 but notes that
they are unlikely to eliminate the full difference in electricity
costs which favours those competitors. The ISTC asks the government:
— to review the operation of the new trading arrangements
at an early stage and take action at national and EU levels to
ensure that British steel producers' competitiveness is no longer
seriously impaired by unjustifiably high energy costs.
The ISTC welcomed the budgetary measures taken by the Government
to minimise the adverse impact of the Climate Change Levy on the
production of steel in the United Kingdom. The present regime
holds out the prospect of enabling the United Kingdom to fulfil
its obligations under the Kyoto Protocol without putting energy-intensive
manufacturing at an additional competitive disadvantage. However,
little progress seems to have been made in other European Union
countries to achieve the Kyoto targets.
The ISTC has asked the Government to look again at the application
of the Levy to ensure that the energy-saving recycling of steel
through electric arc furnace production is encouraged and not
deterred. The ISTC shares the concern of the UK Steel Association
about the decline in the proportion of EAF steelmaking in Britain
in contrast to the experience of all other EU countries which
produce steel. The ISTC calls on the Government to ensure that:
— the measures taken in other EU countries do not
put steel producers in those countries at an advantage;
— the Climate Change Levy is applied in ways which
do not put EAF steelmaking at a disadvantage nationally or in
relation to other European producers.
INFORMATION AND
CONSULTATION RIGHTS
The ISTC has asked the Government to accept that some British
based multinational companies are not voluntarily extending to
their employees basic rights to information and consultation.
The ISTC ask again that the Government should legislate to
ensure that:
— British employees in multinational companies are
enabled to practise the same rights to information and consultation
as their counterparts in other EU countries;
— Britain is no longer the country in the EU in
which it is easiest to dismiss working people.
INDUSTRIAL POLICY
The experience of the ISTC is dealing with the proposed run
down of the rail plant at Workington revealed a disturbing unwillingness
on the part of the Government to discuss with the companies and
the trade unions concerned ways in which it might use its purchasing
power and influence to benefit British manufacturing. Corus was
transferring production of a strategic requirement out of UK control
and the Government was announcing a 10-year £80 billion programme
to develop the national transport infrastructure yet the Government
gave no recognition that its plans might be developed in ways
which would enable the country to retain a strategic asset, give
practical support to the hard-pressed steel industry, and promote
well-paid jobs in an area of high unemployment. The ISTC also
reminded the Government that the cost of restoring the railway
system would be substantially increased if it became necessary
to import rail—at an estimated additional cost of £40
per tonne.
The ISTC is convinced that the Government should seek to
ensure that the massive expenditure on transport is deployed to
assist the track production facilities in Workington and other
parts of the manufacturing at this critical time when the gross
overvaluation of Sterling in Euro terms—sustained by the
current economic policy of the Government—is fast eroding
its base in this country.
It would be a grave failure to protect national strategic
interests if the plant at Workington was allowed to close.
1 November 2000
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