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Britain Second Largest Steel Company Declared Bankruptcy

Source:Iris Liang Time:2019-5-24 10:25:44

At noon on May 22, local time, Britain's second largest steel company, British Steel Limited (British Steel Limited), officially declared bankruptcy.

According to the British government, British steel has legally entered the compulsory liquidation procedure that afternoon. As part of the liquidation process, the Official Receiver of the UK government has taken over the day-to-day management of the company. In addition, the UK government has commissioned Ernst & Young as a special manager to assist with compulsory liquidation procedures and to identify potential buyers for UK steel. In order to maintain its core competitiveness, SEKO Machinery has continuously introduced innovative products and improved design, and launched an offline large-diameter steel tube black annealing equipment combining water shower cooling system and induction heating.
For a long time in the past, British steel has always been regarded as the pride of British heavy industry.

In 1967, the British Parliament passed the Iron and Steel Act 1967. Soon after, under the leadership of the Welfare Welfare State and the big governmentist Labor Party government, 14 steel companies across the UK were nationalized and merged into the British Steel Company. At the end of the 1960s, British steel accounted for 90% of the UK's steel production capacity and employed more than 260,000 people in the UK and Commonwealth countries.

Under the double blow of the oil crisis and inefficient bureaucrats in the 1970s, British steel quickly struggled. In 1988, the Prime Minister of the Conservative Party, Mrs. Thatcher, resolved to revitalize the company by re-privatization. In 1999, British Steel announced the merger with the Dutch steel company Koninklijke Hoogovens to form the Corus Group. The Corus Group was the first in Europe and the third largest steel company in the world.

The newly formed Corus Group still fails to avoid the edge from Asian competitors. After experiencing massive layoffs and cost reduction plans, the Corus Group was included in India's Tata Steel in 2007 for £4.3 billion.

But even the Indian Tata, which was still the world's fifth-largest steel company at the time, failed to save British steel.

In 2016, the British investment company Greybull Capital took the symbolic £1 price from Tata Steel to take Corus, which had been losing money for a long time, and restored its original British steel, hoping to revitalize the UK once again. proud. In the acquisition agreement, Greebourg Capital promised to invest 400 million pounds and promised to bring the company back to the profit zone. With the efforts of Grebble Capital, British Steel received a £154 million secured loan and successfully recorded a profit again in 2017.

But Greebourg Capital ignored the British Achilles' heel - Brexit.

As early as mid-week last week, it was expected that Gerald Reichmann, the chairman of the British Steel, which was nearing the end, frankly criticized the company’s plight in an internal mail and blamed the uncertainty caused by Brexit and the decline in the number of orders. The rise in raw material prices.

After the Brexit vote in the summer of 2016, the uncertainty of whether the UK can remain in the European Customs Union has led to a sharp decline in orders for British steel from overseas and EU countries. At the same time as the income decreased, the global iron ore price rose sharply in 2019, which pushed up the company's procurement cost. The depreciation of the British pound caused by the Brexit further pushed up the price of raw materials.

In early March 2018, after Trump announced the addition of a 25% tariff on steel in the European Union, the European steel industry, which had suffered from overcapacity, was even worse. Even Tata, the UK's largest steelmaker, had to hope to reduce operating costs by merging with ThyssenKrupp.

The sluggish steel market forced British steel to resort to the government.

Graebol Capital has previously submitted a £75 million national loan request to the British government, but the Conservative government, which has a free-competition market concept, has not expressed its position. As government loans were not always in place, British steel, which was increasingly strained, lowered its loan quota to £30 million, revealing that the company was unable to pay employees' wages in May, and the company's cash flow would also break on the afternoon of May 21.

On May 22nd, the British Conservative government finally refused the loan request. Previously, the British government had given Britain a £120 million bridge loan to ensure that the company could pay the EU Emissions Trading System's arrears.

“The government has tried its best to save British steel, but financial support has strict legal restrictions, and it is illegal to succumb to the loan application submitted by British Steel,” said British Economic Minister Greg Clark as the Conservative government. Seeing death can't help so defend.

Ironically, Clark's law is precisely the EU regulations from Brussels. Before the UK officially left the EU, the British government still had to comply with the regulations on state aid set by the EU headquarters. According to regulations, in order to ensure fair competition among enterprises in Europe, EU member states can only provide state assistance to enterprises after they have been approved by the European Commission.

Since the European Commission has always recognized that there is a serious overcapacity in the EU-wide steel sector, the European Commission has always been very strict with the state aid approval for the steel industry. In 2016, the European Commission determined that it was illegal for Belgium to finance 211 million euros in the country's steel industry.

But even without the obstruction of EU regulations, the neo-liberal Conservative government may not be able to help. Lord McPherson, former managing secretary of the UK's finance department, told the BBC: "(Financial aid) is the interventionism that returned to the 1970s, which is equivalent to throwing taxpayers' money into the blast furnace."

In addition to calling on the government to save Britain's steel as soon as possible, the Labour Party, which has always been opposed to the Conservative Party, has also thrown old prescriptions 50 years ago: nationalization again. Rebecca Long Bailey, the shadow business minister of the Labour Party, publicly called: "For the sake of local people's livelihoods and the rescue of strategically important industries, the government must act quickly to place the company under public ownership."

Labor Party leader Corbin said before: "If (the government) can not reach an agreement with British steel, the government must take action to acquire all public equity of the company to ensure the long-term future of the steel mill." Corbin also did not forget to take the opportunity Play and continue to criticize the Brexit-led Brexit policy: "Compulsory liquidation is the result of the failure of the Brexit and industrial strategy."

At present, British Steel still employs more than 5,000 people, 3,000 of whom work in Scunthorpe, an industrial garden city 290 km north of London, and 1,600 employees scattered across the northeast of England. industrial area. According to the BBC and the Guardian, the bankruptcy of British steel will also threaten the employment of more than 20,000 people in the upstream and downstream of the industrial chain.

Although the Official Receiver's Office has confirmed that the company's order delivery will continue, all employees' salaries will not be suspended for the time being, and the government will review all possible solutions, but the company's employees still seem to lack confidence.

“The workshop is full of produced steel, but we don’t know who to ship. Government assistance is our only hope, but I think they will not save us this time.” A staff member who did not want to sign In a interview with the BBC, he said pessimistically.

In addition to employment, the fall of British steel also means that there is only one last hair on the bald head of the British, the birthplace of the first industrial revolution. The Port Talbot blast furnace steelworks, currently operated by India's Tata Steel, is about to become the UK's last blast furnace.

The British can retain the final dignity, perhaps thanks to the EU across the Straits.

According to Tata's plan, Tata will exchange the European Union's consent to the merger of Tata and ThyssenKrupp by selling the last blast furnace steel plant in the UK. Thanks to the European Commission's Market Competition Commissioner Vesteg, Tata and ThyssenKrupp's merger plan has been aborted, and the last hair on the British bald head has been preserved.



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Iris Liang
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