Following failed attempts to get a ยฃ30 million government loan, British Steel was placed into โcompulsory liquidationโ on May 22, putting some 4,200 jobs there and 20,000 related positions at risk. Despite the official designation, the company notes at its website that it โcontinues to trade as normal.โ
Per multiple news reports, British Steel had sought further loans from the British government to remain afloat, but did not get it. Instead, the businessโwhich was bought in 2016 for one pound by investment firm Greybull Capitalโwas placed in liquidation. A government statement said there was no other option, as it โwould be unlawful to provide a guarantee or loan to British Steel on the terms of any proposals that the company or any other party has made,โ said Business Secretary Greg Clark.
At its website, British Steel, whichย has a product range that includes wire rod,ย notes that work continues under the oversight ofย the Official Receiver โwhilst a sales process is undertaken to find a new owner for our business.โ Further, the companyโs subsidiaries including British Steel France Rail SAS, FN Steel BV, Redcar Bulk Terminal, The Steel Company of Ireland Limited, TSP Projects Limited and TSP Engineering Limited โare not in insolvency and are continuing to trade as normal.โ
Reports said that making steel profitably is particularly difficult in Britain, where steelmakers pay some of the highest green taxes and energy costs in the world and are saddled with high labor costs and business rates. However, a dominant matter remains the continuing uncertainty surrounding Britainโs planned departure from the EU. โTheย whole manufacturing sector is crying out for certainty over Brexit, unable to plan the trading relationship it will have with its biggest market. We can only state again the need to avoid a no-deal scenario at all costs,โ said a statement from UK Steel.
Jonathan Owens, supply chain and logistics expert at the University of Salford Business School, said that British Steel had been struggling in a very competitive market and that a new government loan may only have delayed the inevitable failure of the company.
In December 2018, the European Commissionย suspended the access of British Steel to an EU program for carbon offset credits (ETS) that allowed U.K. exporters to get offset credits, citing the failure of Brexit. The U.K. government provided a large bridge loan to keep British Steel solvent, but uncertainty has hurt orders from outside the U.K. as overseas customers do not know what tariffs will apply. British Steel needs the additional funds to enable it to continue until a Brexit deal passes that can provide customers confidence as to what will happen.
Per a report in The Guardian, in 1971 the British steel industry employed 323,000 people, and that same number is now estimated at 31,900. At press time, dozens of potential buyers for British Steel have been identified.
