The British Steel Crisis
Much has been spoken in the press about the reduction and likely closure of the British steel industry. It is headline news because, it is foreign owned, it provides not just a critical supply but also lots of jobs in several areas here in the UK. The social backdrop in respect of the loss of the jobs and the effect on the families directly involved is horrific. Notwithstanding that, there is a supply chain which multiplies that effect so much more, perhaps even ten-fold. This is a sorry and sad state of affairs.
We should never have got this far. Any government or central action will be; • Late • Ineffectual • Lead to compromise
What are the answers: • Nationalise the industry, full state intervention. At what cost? • Find a co-operative to buy the operations involved. How? • Let it close due to poor economic circumstances. Easy but so destructive? • Learn and allow this industry and others to recover, as the government have tried with the banks.
In Germany, during the recession of 2008-2010, their motor industry suffered and looked to lay off part of the skilled workforce. (See my book, Drive Like a Real Entrepreneur page 239-240) With the knowledge that everything is cyclical, the German government stepped in and instead of affording unemployment benefit (per the UK approach) they gave money to the experienced (over 50) workforce to continue in the plant available to train younger workers, keeping the plant maintained and working and not closing. As soon as the demand increased the plant could take the demand, reduce the slack and afford the workers pay. The plant did not shut, the German car industry was saved, their skill base was not thrown away. What a wonderful example to follow.
So the UK government must, despite breaking international or EU rules, protect the British Steel industry as much as it goes, against the lines drawn by a Conservative government.
They should: • Stop the dumping of cheap exports from other countries • Ensure the quality and price of British steel is marketed strongly • Invest in new modern methods of manufacture to reduce costs • Ensure the workforce skill base is retained • Create an exit plan to return the industry to full private ownership
Markets are cyclical. Cheap imports being dumped around the world create an unfair market advantage, which create a truly uncompetitive and unworkable business model. Tata cannot be blamed for their decision it is based on sound economic decision making.
What is to blame is the drift, of not seeing this happening. Allowing foreign investors to buy our utility and basic services so that we are at the ‘beck and call’ of world-wide economic decisions. It will happen time and time again, not just with steel.
If our basic services were to be protected in the market place in the UK and the quality could be sold as being better than most, it can then command a price, being the correct price.
The government must act. It is set to act, but perhaps the wrong way as it has not acted before. You cannot buck the market, who said that?
What must happen is that industries must evolve before coming extinct. Fleet of foot is the order of the day.
Next week I will be discussing how schools can encourage tomorrow's entrepreneurs. In the meantime, have a great week. Please share your comments on this article below and connect with me on: Twitter – Facebook – LinkedIn. For more insight into the behaviour and characteristics of entrepreneurs read Drive Like a Real Entrepreneur.