Select Committee on Trade and Industry Minutes of Evidence

Supplementary memorandum submitted by the Iron and Steel Trades Confederation



  In 1994, two plants of the Avesta company—Degafors in Sweden and Panteg in Wales—were given notice of closure in two years. This period of notice exceeded the requirements of European Union law concerning minimum periods of notice of mass redundancies to be given to employees. Provisions in some other European Union countries—notably the Netherlands and Sweden afford to working people employed in them many more opportunities to challenge proposals for plant closures. Periods of notice are much longer than the provision of the EU directive and in Sweden, as in some other European Union countries—employees and their unions may have proposed closures investigated by impartial independent authorities to determine whether there is a feasible alternative to closure.

  With the help of the Swedish Metalworkers' Union and the TCO—one of the two main Swedish national trade union confederations—the employees of the Degafors plant were able to commission a study by an independent expert who identified ways of increasing the profitability of the Degafors Plant. The expert proposed a plan involving changes in the product lines towards the production of steel long products including billets and other semi-finished goods and identified markets in Korea, Taiwan, and the People's Republic of China. Reluctantly, the central management of Avesta agreed to try out the proposals for a further two-year period and the Swedish plant was quickly restored to profitability, making Swedish K250 million (about £25 million) after one year of the changes. There was no formal commitment to consider alternatives to closure in Panteg and the plant closed in line with the company's initial plan.

  The significance of the differences in law and practice is plainly illustrated in the current controversies over the reductions in manned shifts and redundancies in the Corus Rail plant in Workington. The ISTC proposed that an independent study should be undertaken of the feasibility of the plant being developed to produce longer rail and other steel products and of the possibilities of finding new markets for the Workington plant. The local authorities in Workington offered to pay for the feasibility study but Corus refused to have one undertaken. As the Select Committee will have noted, the company is not prepared to be open about its intentions about the sourcing of Railtrack and other orders it has won, in part at least with the help of the British Government and the ISTC.


  Dutch employees of Corus are protected by a five-year Employment Pact which will remain in force until April 2004. The Employment Pact provides that the company must continue to look to the future with the objective of sustaining a strong position in the steel market and providing maximum job security for its employees. The parties to the Pact are Hoogovens—the partner of British Steel in the merger which took place in October 1999—and FNV Bondgenoten and other Dutch trade union organisations. It provides that in the event of a surplus of employees the company will make maximum efforts to avoid compulsory redundancies and that the parties will make every effort to afford maximum job security for the workforce. The management of each business unit within the Dutch operations of Corus has primary responsibility for relocating and offering options to its employees within and outside the unit. Employees are to be given clear information regarding anticipated surpluses of employment with regard to their departments, their posts, and themselves personally. In contrast British employees of Corus have no similar undertaking that they will not be made redundant compulsorily or that they will be offered the same assistance.

  The basic protection of employment security is bolstered by recognition that sustainable employment is possible only with the dedication and commitment of all employees and that a prerequisite for this is that the company should offer its employees interesting and responsible work and encourage as far as possible initiatives for further development. Human resources plans have to be discussed wth representatives of the employees and it is required that account should be taken of all the factors which are relevant to ensuring an acceptable level of pressure at work. In the UK operations of Corus there are no similar formal undertakings. The ISTC has serious concerns about the impact on safety and health and quality of production of the reduction of employment in Corus of 5,000 people but there was no opportunity to discuss these concerns with the company in advance of the announcements of the cuts. We had no opportunity to propose alternative approaches to tackling the problems confronting Corus which our Dutch colleagues have as a matter of course.

  Under the Employment Pact, the company and the Dutch trade unions agreed to establish a Central Employment Committee who have responsibility for advising on the development of the workforce and proposing solutions to anticipated problems. There is no similar body in the United Kingdom which might give working people here a chance to contribute to resolving human resource issues by agreement and to the stable growth of the company.


  In the experience of the ISTC anti-dumping provisions in United States legislation have been disruptive and damaging to production in Britain and other Western European countries. The only recent case involving a British company arose from a complaint against British steel based on an allegation that it benefited from state subsidies before it was privatised. The World Trade Organisation threw out the complaint but US companies recently made similar complaints against privatised companies in other countries. The record shows that even complaints which have no chance of being upheld are put forward and do have the effect of inhibiting exports to the United States. In 12 cases brought in June 1999 by US steel producers against imports of cold-rolled steel, the defendants were all acquitted and no anti-dumping duties were imposed. However, exports from the 12 countries concerned to the US of cold-rolled steel products fell sharply in 1999 and the figures for this year indicate a continuing low level of imports to the US despite high demand in the first half of the year.

  The passage of the Byrd Amendment by the US Congress in November seems to us to have given US steel producers additional incentive to make allegations of dumping against foreign producers. It provides that the revenue from duties imposed on companies shall be distributed to the steel producers in the United States who make complaints. I understand that the European Commission has recently confirmed that it will raise with the World Trade Organisation the complaint of the European Union that the legislation violates WTO rules.

  Consumption of steel in the United States always exceeds domestic production and there is concern among US importers—who are often themselves also steel producers—that their position should not be undermined by competing US companies who manage to find supplies of imported steel with the desired specifications at a cheaper price than they can produce or import steel. The competition feared is not international in nature but in home markets. It is true that there have been periods in recent years during which employment in the US steel industry fell abruptly but in no such period has the proportion of jobs lost in the United States come close to the loss of 5,000 jobs from the steel industry in the United Kingdom.

4 December 2000

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