Trade unions have said a government-backed support package for Sheffield Forgemasters demonstrates that ministers can do more to support Britain’s embattled steel industry.
Manufacturing group Rolls-Royce, defence contractor BAE Systems and military services firm Babcock International have agreed to underwrite about £30m of bank loans to the steelmaker. They have done so as industrial stakeholders in Submarine Enterprise Partners, which runs the programme for replacing Britain’s nuclear submarine fleet.
The Ministry of Defence brokered the loan guarantee at the end of last year to safeguard Sheffield Forgemasters, according to Sky News. The 211-year-old company, which makes parts for the submarines carrying Trident nuclear weapons, has come under financial pressure due to the crisis afflicting Britain’s steel industry.
Trade unions have said a government-backed support package for Sheffield Forgemasters demonstrates that ministers can do more to support Britain’s embattled steel industry.
Manufacturing group Rolls-Royce, defence contractor BAE Systems and military services firm Babcock International have agreed to underwrite about £30m of bank loans to the steelmaker. They have done so as industrial stakeholders in Submarine Enterprise Partners, which runs the programme for replacing Britain’s nuclear submarine fleet.
The Ministry of Defence brokered the loan guarantee at the end of last year to safeguard Sheffield Forgemasters, according to Sky News. The 211-year-old company, which makes parts for the submarines carrying Trident nuclear weapons, has come under financial pressure due to the crisis afflicting Britain’s steel industry.
The government, which has been criticised for a weak response to the steel sector’s woes, stepped in to negotiate a deal because it was concerned about the prospect of a Chinese-backed steelmaker investing in Sheffield Forgemasters. EU rules on state aid for companies would have prevented the government providing support directly.
Roy Rickhuss, general secretary of Community, Britain’s biggest steelworkers’ union, said: “By helping to broker this deal, the MoD has shown that government can indeed play a role in helping the industry survive. The government should now go further and develop a full industrial strategy which seeks not to simply manage decline.
“This is a small step in the right direction for the UK steel industry. The fact that companies like BAE, Babcock and Rolls-Royce have guaranteed this loan for Sheffield Forgemasters is further evidence of just how important steel is to the whole manufacturing sector, particularly the defence industry.”
Sheffield Forgemasters announced plans last week to cut up to 100 staff from its 800-strong workforce, as it reported its first ever loss. The company blamed tumbling steel prices and high energy costs for the loss of £9.4m in the 18 months to the end of 2014. The same factors, exacerbated by China dumping cheap steel on global markers, have cost thousands of jobs across the UK steel sector in recent months.
The MoD declined to confirm that ministers had intervened to encourage support for Sheffield Forgemasters. A spokesperson said: “The responsibility for managing the submarine supply chain rests with the main suppliers.”
The steel industry and unions have criticised the government’s response to the crisis, which threatens thousands more jobs in the industry and the wider economy. After initially claiming there was little they could do about falling prices and EU restrictions, ministers have pledged to reduce energy costs and to encourage the purchase of UK steel for big projects.
Graham Honeyman, Sheffield Forgemasters’ chief executive, said last week there was more the government could do to support the sector. He declined to comment on the company’s financing arrangements on Friday.
Tony Burke, assistant general secretary for manufacturing at Unite, Britain’s biggest union, said: “The thousands of workers, who depend on Forgemasters in some way for their job will rest a bit easier today, but we are still deeply concerned about the plight of the UK steel sector. We say to the government, yet again, take a lead from these businesses and invest in our steel makers.”
Babcock, the engineering consultant, said it worked closely with suppliers such as Sheffield Forgemasters to ensure continuity for customers. BAE and Rolls Royce declined to comment.
Source: The Guardian / Sean Farell
