The mothballing of Corus’ Teesside Cast Products plant last Friday is being viewed as another indication that manufacturing must innovate and move beyond traditional industries to survive.
The government gave little assurance to the 1,600 employees of the mothballed plant in Redcar, Teesside that their old steel jobs would be coming back.
Instead, business secretary Lord Mandelson announced a plan to turn the Teesside community – which has specialised in iron and steelmaking for 150 years – into a hub for low-carbon and advanced manufacturing.
The ambitious strategy – backed by a £60m government and regional development agency fund – is aimed at giving the UK a boost in a sector that lower-wage economies cannot compete in. It also recognises that the traditional polluting processes involved with steel making do not fit in with the government’s vision for the UK’s future green economy.
The government and regional agency One North East foresees the Tees Valley Industrial Programme, as the fund is called, eventually creating up to 10,000 jobs manufacturing green products such as offshore wind turbines or enzyme-derived chemicals. It is hoped these jobs could benefit unemployed Teesside workers, which could eventually be more than 10,000 as an indirect result of the mothballed Corus plant.
Still, there is the question of how transferable the skills of a veteran steel worker will be in the chemical processing or turbine manufacturing business.
Ian Williams, director of business and industry for One North East, said his agency is confident the current skills set in the Tees Valley will be a ‘good match’ for the new industry jobs being promoted.
‘There will be some retraining and there will be some additional competencies that will be required but we would anticipate that in any new industry we create,’ he added. ‘I can’t see a situation where the skills we may be losing, if the mothballing can’t be overturned, can’t be replaced in these new industries.’
Williams said the entire north east is well placed for taking advantage of the offshore wind turbine industry, which has the potential to expand as the UK tries to reach 2020 carbon reduction goals.
‘If you look at the significant number of turbines that will go up in the North Sea over the next decade, there is a massive opportunity there for advanced manufacturing,’ he added.
Williams said the Tees Valley is particularly well placed for manufacturing and distributing turbines because of its large plots of open land and the River Tees’ navigable waters.
In addition to developing turbine manufacturing businesses, the Tees Valley Industrial Programme funds will be used to help the region’s current process industry run more efficiently and productively, relying on new feedstock. Williams said plants will need to be re-engineered so they can run on feedstocks such as enzymes or by-products from municipal waste or recycled plastics.
While Tata Steel, which owns Corus, has expressed intentions to sell the Teesside plant, there is a widely held belief that the plant is unlikely to produce any steel products again. UK steel production has been diminishing for decades. According to Ian Rodgers, director of UK Steel, the particular problem with Corus’ Teesside plant did not begin until 2003.
Under the threat of closure, Rodgers said Teesside Cast Products began concentrating on the production of a semi-finished steel called slab. A deal was struck with consortium of four companies to buy 80 per cent of its product. When the recession began and the world price for slab fell, he added, those consortium companies found they could buy semi-finished steel cheaper on the open market and reneged on their deal. Following this loss, Corus announced in May last year it would mothball the plant.
Rodgers said the Teesside plant will unlikely reopen and produce slab again because the UK simply does not need it. Corus, he added, already has slab-producing facilities in South Wales and the Netherlands capable of meeting any demand.
Rodgers suggested the plant could potentially be sold to a manufacturer willing to make other types of steel. However, he added, this will require significant upfront investment in rolling mills.
Williams recommended such an investment would more likely receive returns in new industries. ‘The UK has to compete on a global stage and we’re not competing on labour rate,’ he said. ‘We need to create a more diverse economy and we need to create jobs that are sustainable and add value.’
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