Steel industry on the brink of collapse: 32,000 jobs under threat  

Steel industry on the brink of collapse: 32,000 jobs under threat as demand plummets by 50%

The steel industry is racing to secure support from the Government as plunging demand leaves it on the brink of collapse. 

Companies are worried that measures announced so far to help workers and keep businesses afloat during the coronavirus pandemic may not apply to them. 

And with orders starting to fall, representatives have warned that a crisis could quickly become ‘terminal’ and put 32,000 jobs at risk. 

Companies are planning for demand to sink by as much as 50 per cent in the coming weeks. 

Steel firms are worried that measures announced so far to help workers and keep businesses afloat during the coronavirus pandemic may not apply to them

The temporary shutdown of car factories and many construction companies opting to close sites to keep workers safe will deal a hammer blow to steel suppliers. 

Orders have already begun to dry up but the industry is bracing for work to dive sharply in the coming weeks. 

This is because it can take time for orders to pass up the supply chain. In a briefing document, industry body UK Steel warned: ‘The coronavirus pandemic will make a challenging set of circumstances terminal if the Government is unable to put the right business support measures in place. 

‘The steel sector does not have the buffer of preceding ‘boom years’ that it did in advance of the financial crisis.’ 

A source told the Mail that the industry has managed to speak to officials but was ‘unsure’ of whether or not the talks have filtered through to ministers, who will ultimately make any decisions on support. 

The source said: ‘The Government has been talking about other matters publicly this week – it’s possible that it just hasn’t got round to industry yet. 

‘When we speak to officials we know that they’ve heard us, but whether it’s filtered through to ministers yet we can’t be sure.’ 

32,000 jobs under threat as demand plummets by 50 per cent Steel industry on the brink of collapse UK Steel has asked the Government for a range of measures to help prop up the industry, including suspending state aid rules if necessary, providing loans, deferment of tax payments, support to cover late payments by customers and help with energy costs. 

UK Steel spokesman Richard Warren said the number one concern for companies in the immediate future will be running out of cash. 

Firms have huge fixed costs for running plants and, for the time being, paying workers. Steel companies would usually adapt to a drop in demand by bringing in reduced shift patterns rather than letting staff go.

The industry is concerned that if it follows this route – which sources say it would prefer to do because it means they can react faster to a subsequent pick up in demand – firms may not qualify for the Government retention scheme. 

That is because the scheme pledges to pay 80 per cent of furloughed workers’ wages up to £2,500 a month, but these steel workers would not be officially furloughed. 

And steel companies would not be covered by any of the Government’s business loans, which require firms to have an investment rating far higher than steel groups have been able to secure for several years. 

Steelworkers’ union Community has called for primary steel workers to be given key worker status so they could carry on. 

Primary steel workers include those working at sites with blast furnaces at Port Talbot and Scunthorpe. A worst-case scenario could see primary steel producers mothballing one or more of their blast furnaces – an immense and costly undertaking that is difficult to undo. 

UK Steel has insisted that a support scheme should be put in place to cover the costs of mothballing and restarting blast furnaces. 

The source also said that a possibility could be for the industry to secure a ‘tailored agreement’ like airlines are seeking. 

The Government spent almost £300million keeping British Steel afloat until it was rescued by Chinese group Jingye earlier this month. 

Matt Ball, spokesman for Community, said: ‘What they did at British Steel was a good example of ensuring the continuity of the business. 

‘There’s no way that if they were doing this as recently as a couple of months ago, the Government could not do it again now.’

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