Steel safeguarding poses threat to manufacturing jobs

2 min read

Companies and jobs are at risk if the government does not reconsider its approach to steel safeguarding, the Confederation of British Metalforming warned today (June 29, 2022).

CBM

The Confederation of British Metalforming (CBM) said it has seen its members severely impacted from tariffs designed to protect parts of the UK steel production sector that are currently struggling to meet domestic demand.

Tier1 companies and sub-contractors to automotive, aerospace, construction and general engineering have been paying hundreds of thousands of pounds to import their ‘Category 12’ steel - including critical quality and performance bar and section - from European mills, as the quarterly tariff-free quotas run down within a month.

Recent pleas from the CBM to remove engineering metals under the 7228 code has seen the government act, almost doubling the available quotas for this category before the 25 per cent tariff is applicable.

Whilst this move is welcomed, it does not go far enough to remove the financial cost felt in the supply chain and raises the prospect of lost orders and production being moved away from the UK.

“We acknowledge the substantive increase in the Category 12A quota and welcome the motivation to rebalance an unfair and severely damaging position that has led to it,” said Steve Morley, President of the CBM.

“However, during this quarter the Category 12A quota on imports from Europe exhausted within one month. Doubling that quota will not, therefore, prevent exhaustion, it just pushes it a month further down the line.”

He continued: “That means CBM members will continue to have to operate with a high level of uncertainty and jeopardy. A continuation of that jeopardy, over a further two years, will mean continued questions from overseas holding companies about the viability of manufacturing in the UK. Even at reduced levels, tariff costs will continue to injure these businesses unjustifiably.”

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British Steel’s recent £80m investment - £48m for a new billet caster at the company’s Scunthorpe site, plus a £32m upgrade at Scunthorpe Rod Mill - is a boost for the sector, but CBM believes other major players need to show the same level of commitment to producing steel in the volumes and specifications required by UK manufacturing.

Morely said: “British steel mills have not been able to supply the Cat 12a materials our members need to support critical domestic and export supply chains, nor are they likely to be able to do so in the near future. So, what exactly are the government looking to protect? It certainly isn’t UK jobs in downstream metal manufacturing.

“The increase in quotas need to go further and we are therefore requesting that Anne-Marie Trevelyan, the secretary of state for international trade, adjusts the level of the Category 12A quota for imports from Europe to 33,000 tonnes per quarter.

“This is the only solution that will have virtually no effect on UK steelmakers, but, at the same time, will allow our members to import materials when required without the risk of incurring 25 per cent additional costs.

“It will also alleviate damage to downstream British manufacturers, already facing the threats of losing critical contracts, of shedding jobs, or finding their manufacturing operations relocated to the EU or other parts of the world.”