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Steel jobs 'can be saved by tech'

BBC News BBC News 15/04/2016 By Roger Harrabin
A worker inside a Chinese steel factory © Reuters A worker inside a Chinese steel factory

The UK steel industry is doomed unless it embraces cutting-edge technology, a Cambridge professor has warned.

Steelworkers: Thousands of jobs are at risk in south Wales if the steelworks closes © Getty Images Thousands of jobs are at risk in south Wales if the steelworks closes

Prof Julian Allwood said the only way to save steel jobs was to make high-value products for industries in which the UK leads the world.

Copenhagen wind turbines: Denmark's wind turbine industry has created hundreds of jobs © Getty Images Denmark's wind turbine industry has created hundreds of jobs

New methods could scrub impurities from recycled steel to make products for the aerospace and car industries, he said.

It comes as efforts are being made to save thousands of jobs at Tata Steel's Port Talbot steel plant in south Wales.

The announcement by the Indian company that it is to sell its UK business is the latest blow to an industry which has seen a succession of job cuts.

New steel

Prof Allwood said current plans for the steel industry did not go far enough, because they did not utilise the latest technology.

In his six-year study on the steel sector, the predicament of the industry appears stark.

"The global steel industry today has more capacity for making steel from iron ore than it will ever need again," he said.

"On average, products made with steel last 35 to 40 years, and around 90% of all used steel is collected. This is easy because it's magnetic.

"The supply of steel collected from goods at the end of their life therefore lags the supply of new steel by about 40 years."

UK steel crisis

What's going wrong with Britain's steel industry?

Who might buy Tata in Port Talbot?

Is China to blame for steel woes?

Prof Allwood said the steel market would continue to grow - but all future demand growth could be met by recycling the existing stock of steel.

And it was, therefore, futile for the UK to attempt to compete against low-wage economies for mass market steel.

Reducing industrial electricity costs in Britain would help, but only a little, he said, and the UK should instead concentrate on recycled steel.

That is what is proposed by Sanjeev Gupta, the entrepreneur who has expressed interest in turning the Port Talbot works into a recycling plant.

But Prof Allwood said that plan did not go far enough, because most scrap metal contained impurities that made it suitable for only low-value products, such as steel reinforcing bars, which were subject to heavy international competition.

It would be far better, he said, to harness science to make pure hi-tech steel that met the needs of the UK's leading industries.

"UK taxpayers will have to bear costs of Tata Steel's decision to close the Port Talbot plant," he said.

"If the existing operations are to be sold, taxpayers must subsidise the purchase without the guarantee of a long-term national gain.

"If the plants are closed, the loss of jobs, income and livelihoods will reverberate throughout the UK steel supply chain.

"Instead, the strategy presented here enables taxpayers to invest in a long-term structural transformation.

"This would allow UK innovation ahead of any other large player."

'Common sense'

While many will applaud his analysis, some will ask how this theoretical model can be translated into real equipment and jobs - especially as the UK does not have an industrial strategy that would encourage this sort of thing.

Prof Allwood pointed towards the Danish wind industry as an example of successful government strategy to create jobs with a new product.

The steel transformation in the UK could be funded by a long-term loan from the government, which will have to bear the costs one way or another.

It would involve many of the current jobs being saved, but workers would need to retrain.

Prof Allwood said the hi-tech transformation had not happened yet because low margins in the European steel industry had squeezed investment - and China did not have the stock of old steel to make it relevant yet.

He said it might take three to five years to develop the technologies needed to transform the industry.

It would be estimated to cost £1-2bn, which he said was good value compared with the social costs of shutting the industry.

Dr Sarah Green, a metallurgist from Lancaster University, said: "It's common sense to maximise recycling efficacy in the UK steel materials cycle.

"Whether this alone will generate sufficient economic activity on a suitable timescale to offer a substitute for the current steelmaking sector is something that I am less certain of."

Gareth Stace, of UK Steel, told BBC News: "We don't agree that there won't be a new need for virgin steel - we think we need more capacity.

"But we welcome this report - especially the recognition that the steel sector has been starved of investment in technology because of the crisis we have been in for years.

"There are steelmakers in the UK that make world class steel, but we are desperate for more investment."

Another expert also called for more research.

"The task is getting harder at the moment because impurities from copper get greater the more wiring there is in cars," said Prof Sridhar Seetharaman, chair in low carbon materials technology at the University of Warwick.

"Britain could lead the way by government supporting funding in this."

@rharrabin

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