Aldwarke steel works. Image: Stephen Richards

Steel: bidders and alternatives

In part three of an analysis of the current UK steel crisis, Brian Parkin looks at the latest options touted by the Tories and, regrettably, seriously considered by the steel unions. Whilst conceding that much momentum for resistance has been lost, he argues that the transparently dubious intentions of the private bidders and the incompetence of the government could still prove to be factors in the workers rejecting a solution short of nationalisation.

Tories to the rescue?

With vulture capitalist Greybull’s £1 successful bid for the 2,000 acre and four blast furnace Scunthorpe long products plant on 18 April, it looked as if the rest of the UK steel industry might going to the first bid from a scrap metal dealer. Then a ballot of the Scunthorpe workers with a deal for a pay cut and a pension downgrade was organised by the steel unions. And given no other lead and with Tata insisting on an early sale ‘or else’, the terms were accepted.

This could shortly put Scunthorpe in the hands of an asset-stripping vulture capitalist with no industrial management experience apart from issuing redundancy notices, looting pension funds and walking away afterwards with no liabilities. Furthermore, Greybull’s plans for Scunthorpe include the closure of the four blast furnaces, which given the ‘long products’ dependency on high grade steel for the rolling mills, must cast a cloud over the future of steel making in North Lincolnshire.

This might in some way account for the Tories’ seeming change of heart regarding direct government industrial intervention on 22 April, with a plan which effectively amounted to the part-nationalisation of the steel industry. Arch-Thatcherite free-marketeer Sajid Javid, doubtless under Treasury pressure to avoid a total steel collapse that in terms of state-aided redundancy pay, unemployment benefits, loss of income tax and disposable income might total some £2 million per day, had to be seen to come up with a short-term and low-cost plan.

Thieves falling out

Another explanation might be found in recent comments in The Economist and Financial Times where columnists, appearing to lose faith in the current low wage austerity economic ‘strategy’, have become openly critical of laissez faire hands off economic management bereft of any industrial policy. Also mindful of an EU referendum in which the Cameron/Osborne axis has to be seen to be ‘batting for Britain’, the sight of a strategic industry collapsing whilst EU quotas and tariffs – as were discussed in Brussels on 18 April – could provide some degree of market protection just looks like a dereliction of national duty.

So doing a balancing act that involves the least fiscal cost to the Treasury with a semblance of economic competence has resulted in what Cameron and Javid claim is ‘hands on’ intervention. But the terms of government assistance are at best meagre, with a proposed short-term 25% state holding in the industry intended to stave off closures only for as long as Tata’s patience will last. And according to company statements this will be a matter of weeks, not months.

Unions and Labour

That the speed of the steel crisis and the scale of public concern took the Tories by surprise is obvious. And since then they have been floundering. But a predictable source of surprise is how late and how little the union leaderships and Labour’s front bench response has been. Without one word of criticism of Tata’s record of the ownership of the industry, let alone the very real concerns regarding its management of the British Steel Pension Scheme, they have egged-on steel workers to sacrifice terms and conditions whilst urging the government to find any private buyer regardless.

This effective surrender has left the industry facing a piecemeal fire sale in which capacity critical mass could well be lost, assets down-sized and left to wither for want of investment and the potential power of a moment of a united workforce within a single industry, squandered and lost for ever. That is why the call for the industry to be nationalised and placed in care and maintenance is so important for holding the line. That is, pending a campaign to build resistance that could pose an alternative to the City barrow-boys, who in the absence of any alternative strategy will be welcomed uncritically as the steel industry’s saviours.

Taking a Liberty

In addition to Greybull’s Scunthorpe raid, other bidders have come forward with tentative offers for certain other parts of the industry. Liberty House, an industrial conglomerate with overseas metal production experience, has expressed an interest in most of the present steel industry assets save the blast furnaces, which it says should be replaced by smaller capacity electric-arc furnaces. Such a move – as proposed for Scunthorpe – would result in a large cut in productive capacity with a huge and immediate knock-on impact on jobs.

Another potential bidder, particularly with reference to Port Talbot, is local boy made good Sir Terry Matthews, a Neath born ‘self-made’ billionaire who has been named as a potential backer for a Management Buy-Out (MBO) of the South Wales plants. This MBO appears at least to be partly democratic in that it would give part ownership and a decisive role in day to day operations to the managers (and other steel workers) who are currently running the plants.

But of all of the rotten offers to ‘save’ the steel industry, the South Wales MBO is by far the worst. For its working capital it would require workers to invest in up to £20,000 in either personal savings or credit raised loans. It is this kind of MBO which was touted around the coalfields prior to the 1999 coal privatisation when would-be privateers attempted to coax miners into investing their redundancy money in colliery rescue bids in which the entire risk would reside with the workforce whilst the scheme ‘geniuses’ could walk away Scot-free in the event of an inevitable failure. Thankfully the National Union of Mineworkers (NUM), although unable to save the pits from closure, was able to dissuade miners from such bogus schemes.

So if there is one issue on which the steel unions can be seen to do at least one thing right, it will be to urge steelworkers from taking the burden of risk in what is little better than a scam from which the big private backers will be able to walk away spotless. At the same time it is important that Neath Port Talbot county borough council, although initially supportive of the MBO, is persuaded into putting their efforts into a local campaign for the steel industry as a whole to be nationalised as well as urging steel workers and their families to consider alternative action should Tata announce any pre-emptive closure plans.

Getting united

An initial strength of the 1984-85 miners strike was the refusal from the start by the NUM to accept the trading off of one pit’s closure against another. This meant from the beginning that the union was seen to be fighting for every miner’s job. But in the case of the 2016 steel crisis there is no such unifying vision about what resistance should be built upon. And 31 years on from the miners strike, the negative and mistaken lessons of defeat now inform much of the mood of union leaders and workers alike when facing closure and job losses.

But the current steel crisis began with an industry wide mood that UK steel was set to be the victim of insurmountable market forces and that ‘rationalisations’ and further closures were inevitable. This has meant that steel workers in Scunthorpe have felt separated from their mates in South Wales and that workers in steel mills have been persuaded to think that their downstream and processing plant is being held back by ‘uneconomic’ blast furnace sites.

For those trade union leaders after a quiet life, all of this was a blessing in the sense that although absolved of any responsibility for organising a fight, government ministers were also flattering their ego’s by urging them to become part of their solution.

Although we have said from the beginning that the fumbling and hesitations forced upon an inept and callous government represented the winning of vital time, it now has to be said that with the sense of crisis slipping away and without any decisive breakthrough in terms of action, time is definitely not on our side. The recent plethora of seemingly serious and interested would-be buyers combined with the continued passivity of the official unions – and with it the reciprocal passivity of a Labour leadership that won’t be seen to break with the unions – has meant the Tories have been able to wriggle off the hook.

Post-crisis steel?

Despite the shark infested pool in which steel workers now find themselves it is quite possible that some kind of medium volume steel industry could survive. But on the terms presently available from the Tories and their flyboy chums, it will be a much lower pay and insecure industry and, for workers in later age, one of being dependant on a much reduced pension income. That is one alternative.

On the other hand, a fight now could defend existing capacity, existing jobs as well as safeguard the industry pension scheme. An alternative in various forms of action is not however possible in a vacuum in which the fundamental component of neoliberalism and the pre-eminence of the market remain. What the UK steel crisis shows is that no matter how hard workers work and no matter how vital their production, as long as short-term gain overrides the need to plan production and as long as production itself is subordinated to accumulation and profit, then workers, their families and communities will be rendered as commodities within the ever-ailing capitalist project.

A fight to save UK steel jobs would be a small but long-overdue step in rejecting that narrative. It would not be a fight in isolation as thousands of workers could be organised around a beacon of resistance And it could be a step in asking how such vital products can both be made and used in ways that serve social need. That is the other alternative.