Last week’s UK vote to leave the EU left the global steel industry scratching its head as it tried to assess the consequences. But UK steel industry workers who voted for a UK exit from the EU – ‘Brexiteers’ — despite the warnings may now be looking back ruefully at their ‘out’ votes. For if, pre-vote, it could be said that opinions for and against were in a rough equilibrium, the post-vote landscape looks distinctly one-sided, with positives hard to spot.
Yesterday, the Tata Steel board ended months of speculation and arm-twisting when it rejected a proposed restructuring plan for its UK strip products arm, effectively voting to exit the UK industry for good. Tata is already in talks with Greybull Capital to sell its UK long products business, while fellow Indian firm Liberty Group last week agreed to pick up two Scottish plate mills in a move that casts Liberty as a saviour and the Scottish government as a better government than Westminster, because it seems to have fought harder to protect local steelworkers.
Announcing the decision yesterday, Tata’s board unanimously deemed the restructuring plan “unaffordable”, with heavy funding and significant capital commitments required in both the long and short term, while the assumptions behind it were considered to be “inherently very risky” and the “likelihood of delivery highly uncertain”. And amid continuing global overcapacity and intense competition, the logic of Tata’s decision to pull the plug on its UK steel assets is indeed hard to fault. Continue reading