“It won’t be the last time we see this kind of catastrophe unless we act fast,” say the founder of JML Group
Source: O Palsson via Flickr
The situation at Tata Steel is a tragedy on a national scale. If the company closes all its UK operations, more than 15,000 jobs will be lost immediately. Not to mention the jobs of countless thousands of suppliers. The human cost alone is terrifying.
But what’s happening right now is just the latest sign of a problem that goes much deeper than a single company or a single industry. And it won’t be the last time we see this kind of catastrophe unless we act fast.
I sincerely hope that the steelworks in Port Talbot and operations elsewhere can be saved, although that now seems unlikely. But we’re starting to get used to this kind of news. It’s a recurring theme. Over the last few decades our industrial heartlands have been gutted; our once-proud manufacturing heritage lies in ruin; industrial skills have been lost possibly forever, and generations of people have been placed on the scrapheap.
This is a national trend. The proportion of our national income coming from manufacturing has been in terminal decline since the late 70s. This is because successive governments in the UK — not only Conservative, but Labour too — have let this country price itself out of the market. As foreign investors have flocked into the City of London to buy shares and properties – too many of which are now standing empty, may I add — the value of the pound has soared.
Manufacturing can’t survive our overpriced currency
The value of the pound has been pushed up and up by the financial and property sectors in London at the expense of most other industries in the rest of the UK, but especially manufacturing. We have slipped quietly into an era where the economy is managed to the advantage of a small number of people living in a few streets in London.
The soaring pound has made it too expensive for British manufacturers to produce goods in this country at a competitive price. Yes, thankfully there are still many high-quality advanced UK manufacturers. But these companies can only support a limited number of jobs, and they tend disproportionately to employ people with top-quality engineering and science degrees at that.
This has left a whole swathe of people who used to be employed in relatively low tech trades such as plastics moulding, fabrication and assembly without any chance of relevant employment.
UK steel production is another fine British industry which will fall by the wayside because of our politicians’ infatuation with the highly skilled services sector, and their seeming disregard for the industrial working classes.
Energy prices and an obsession with services
Of course, energy prices also play their part. Although prices may have settled slightly over the last few months on the back of the decline in oil prices, this is only a dip from historically high rates in 2014. Unsurprisingly, according to the Financial Times, more than 90% of manufacturing companies consider it a ‘business critical’ issue.
Prices in the UK for energy run ahead of most other countries in the world. Again we are priced out of the market when compared to elsewhere. Why? The situation is complex, but it is clear that the cost of regulation and green taxes play a significant role.
The manufacturing industry, again, has been a silent victim of the political establishment’s infatuation with services. Manufacturing companies have been seen as an easy target for taxes which they cannot really afford to pay. It appears that governments have embraced the idea that UK manufacturing is outdated and outmoded, destined to go the way of the dodo. So why not take as much money from this source as possible before they finally go all the way under?
The EU problem
The European Union also plays its own unique role. Research conducted by Business for Britain last year found that up to 9 per cent of costs on energy bills for industrial companies were due to EU rules. These are costs that the UK has literally no power to change, putting 1.5 million jobs at risk. Even more worryingly is that the proportion of energy costs due to the EU are expected to rise to as much as 16 per cent by 2030.
The potential closure of Tata Steel is devastating. But, sadly, this is simply the most prominent case. UK manufacturers have been silently slipping away into extinction for decades.
It’s getting harder to argue against the theory that while the government entices banks to set up their operations in London, plays court to special interest groups, fawns over China and bolsters the middle-class white-collar vote, they don’t care while the industrial heart of the country withers and dies..