Steel Industry
7th July 2009
Dr. Hywel Francis (Aberavon) (Lab): I congratulate my right hon. Friend on securing this debate, and on his outstanding and sterling work in defending the steel industry, particularly in his constituency of Rotherham. He makes an important point about Government intervention, but does he agree that the Welsh Assembly Government and their ProAct scheme, which resulted from discussions, particularly with the steel union community of which he and I are members, has made a significant difference? Does he agree that it should be rolled out in England as well?
Mr. MacShane: I fully agree with my hon. Friend. The scheme shows the devolved Government in Wales working well. Perhaps I should have put it on the record when I began speaking that I am a member of the trade union community.
The position of the steel industry is as it has always been: steel is the canary in the coal mine of global capitalism. Whenever a crisis is about to break, steel is hit hardest and early. Steel stocks are sold but not renewed, orders do not come in and the steel companies panic. Their answer is always the same: cut down on staff even though labour costs are a small part of total steel production costs.
We are dealing with Corus, which is part of the Indian conglomerate, Tata Steel. I know Tata from my work as an international trade union official. It is a caring company that has always sought to look after its employees, which is why
I supported its takeover of Corus, just as I supported the merger of British Steel with the Dutch company. I argued in the 1990s for the newly privatised British Steel to seek European and global partners, but British Steel’s parochial and provincial leadership after privatisation was poor and without any strategic vision.
Tata is a successful, profitable company. Its turnover for the financial year 2009 was $29 billion, up $3 billion from its turnover of $25.8 billion in the financial year 2008. That was on a smaller tonnage of steel delivered: 28.54 million tonnes in the financial year 2009 compared with 31.68 million tonnes in 2008. One can actually make money out of steel while producing less, if the prices are right and there is enough demand.
Tata’s profit before tax this year was $2.13 billion dollars. We are not talking about a bankrupt or cash-strapped company. Corus figures in Europe were also strong: turnover increased in the financial year 2008-09 to $21.4 billion, with higher prices offsetting lower output.
The men whose jobs have been lost in two major Corus cost-cutting exercises in the past 18 months have contributed to the survivability of the company and its continuing strong profits. It is sad that it appears that the only way the good ship Corus can stay afloat is by throwing overboard or sinking its hard-working and loyal employees. My first demand today is for Corus to accept its duty of care to the steelworkers who deliver profits for its shareholders and large salaries for its executives.
I welcome the fact that the furnaces at Rotherham and Stocksbridge have not been shut down. The British Chambers of Commerce report today that the worst of the recession may be over. Insha’Allah—let us hope so. The stocks of steel and cars that have been waiting to be sold are now being sold, thanks to the scrappage scheme.
The most important policy objective that this or any Government could follow is to maintain demand. Corus says that the best help it could have is stimulation of demand. The leaders of the world’s steel community at the OECD steel committee meeting in Paris on 8 and 9 June noted that the best help that steel can have is continued Government stimulus aimed at long-term growth. In that regard, the constant attacks by the Conservative party and the right-wing press on the Government’s demand-side policies are deeply damaging to the future of steel. The right response to an economic recession is not to stop spending but to maintain investment programmes. Minimising debt, as called for by Opposition spokesmen, the BBC and other conservative forces in Britain, would be a one-way road to fewer steel and other jobs.
