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Key issues
Despite one of the grimmest years yet for UK manufacturing, the UK steel industry scored some remarkable successes in 1999.|
UK value added per employee: 1999 
GVA per employee (£s). Constant 1995 prices
Source: Business Strategies Ltd |
According to economics consultancy Business Strategies, steel's gross added value per employee broke £60,000 to more than double the UK average and almost twice that of the computer and related activities sector. Such efficiency gains are now an almost constant feature of our annual performance. However, the industry has not been able to take full benefit from its improved performance. Alongside the strong Pound, which hammered home market prices and is cutting members' revenues by some £60 million a month on the export sales they make, energy prices have remained uncompetitively high. UK government policyIn July, electricity pool prices hit an extraordinary £122 per MWh and averaged over £50 per MWh for the month. Government, despite intensive lobbying, refused to cap prices at the new entrant cost of £20 per MWh. This has been exceedingly disappointing for our members. Some had to interrupt production schedules rather than take that hit on the bottom line. |
We are working for the redesign of the UK electricity market which should be implemented under the Utilities Bill. To improve the UK's energy markets and achieve internationally competitive prices for customers, we are pushing for Ofgem to take on new duties and responsibilities.
The Government is fully into its environment programme, including making good on its Climate Change commitments under Kyoto. I certainly would not quarrel with the Government's objectives. Indeed, I was pleased to lead the industry's delegation into the start of negotiations with the Deputy Prime Minister in March.
However, we feel that this is a badly designed tax, probably due to its shared environmental and social aims. The question at issue is whether the UK's steel companies will be hamstrung by an additional tax to our foreign competitors' advantage.
We need to get a higher profile for manufacturing and a better understanding of our customers' significance to the UK economy. The steel supply chain could apply considerable leverage in this area, if it acted in concert.
International trade
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UK, USA & Japan: Exports per capita 
Unit: £ per capita
Sources: IMF, DTI, ONS |
We are committed to free and fair trade. Given our export performance, how could it be otherwise? But there are serious obstacles. Comparing US and European reaction to the surge in imports early in the year is instructive. In the US, steel producers were successful in getting unfair trade measures introduced, of which only one was against the UK. In Europe meanwhile, although unfair trade complaints were brought against the most injurious imports, relief was slow in coming, and met with political resistance from the EU and the UK Government. On this basis, we think that it would be sensible for the WTO's Millennium Round - should one eventually be launched - to pursue greater harmonisation of the way trade laws are applied around the world. |
In the shorter term, as a practical measure, we support moves for an improved dialogue inside the OECD between governments and their steel producers, to help resolve trade difficulties before they develop into full blown trade disputes.
In this tough year, I have been inspired when walking the floor at member company premises to find so many people totally committed to what they are doing for their companies and customers. That shows that we are on the right track.
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© UK Steel Association,
1999
email:
webmaster@uksteel.org.uk
Last updated: 15th December 1999