The recent controversy about the potential closure, by India-headquartered Tata, of the steelworks in Wales (formerly owned by Corus) has revived old memories of when the UK government (ie, the taxpayer) owned steelworks. It was an unhappy episode. The picture of middle-aged men, in “tight-knit communities” (the cliches write themselves) losing their jobs with not much immediate prospect of getting another job (such men are, apparently, incapable of doing this), is politically toxic. (Interestingly, the role that anti-carbon policies, enacted to prevent global warming, have played in hurting such industries isn’t getting all that much attention as far as I can see. Does. Not. Compute.) Never mind that tens of thousands of bank staff (not all “fat cats”) have been given their P45s in recent years – when steelworkers are given the bullet, it has a visceral effect on the public imagination of a kind that is very different. People can easily visualise the value of making steel, used as it is in many modern industrial products; they cannot so easily figure out the worth of people processing interest rate swaps transactions, for example. Also, the bank bailouts of 2008-09 mean that for a new generation of voters, the idea of bailing out a failed set of institutions, while unpleasant, isn’t off-limits. If we must bail out banks, so the argument goes, let’s bail out steel. (Just as, in the US, the same kind of logic was used to justify bailing out GM, shafting GM creditors in the process.)
Momentum is building for the current government to nationalise the steel factories, a prospect that no doubt would have appalled the late Margaret Thatcher. The present Business Secretary, sometimes billed as a future Conservative Party leader, has said that part-nationalisation is an option. One of the arguments used to make the prospect more palatable to people otherwise wary of the whole notion is that Britain needs a core capacity to make steel, because we need to be able to build weapons in times of war, for example. (A similar argument is sometimes used to defend protection for forms of agriculture; the UK imports many foodstuffs but has been vulnerable to blockades and attacks on shipping in previous world wars.)
But if this military-need argument really is as strong as is made out, then there is a case for saying that the most cost-efficient (from the point of view of free market economics and taxpayers’ interests) isn’t nationalisation, or the alternative of just shutting down plants, but a sort of strategic reserve. To some extent, in a free market where there are futures and options markets for commodities such as iron, etc, those much-maligned speculators will hoard steel/other during a market glut and wait for prices to rise before selling, and vice versa. If there is a more pressing military requirement that cannot be easily slotted into this market argument, then a “strategic steel reserve” might be an idea, as the investment advisor and former Comservative Party parliamentary candidate Douglas Hans-Luke says. (I don’t endorse all of his views, I should add.) It is an idea worth considering, and arguably, just as an individual should keep a first aid kit, flashlight, water purifier, set of knives, screwdrivers and fire-lighting items and other emergency tools handy, and learn how to use them, so should a country. It is, arguably, a basic requirement of even a minimal state to have that “emergency toolkit” in the cupboard, just in case. Even better, in a healthy civil society, the public should have these things, and be encouraged to learn how to use and store them. And of course that includes firearms and types of working knives, a subject about which the UK lost the plot years ago. It is, I understand, a crime to carry a Swiss Army knife in your pocket in the UK, for instance. Ironically, such things are made out of high-grade steel from places such as Sweden.
An emergency steel reserve sounds a lot easier to defend than nationalisation, not least because it is rational on its own merits. I’m ready to be convinced otherwise. How about every schoolkid gets taught how to make steel and weld during science class?
Please get your terms right Johnathan, it’s not ‘part-nationalisation‘, that is all so very ‘East German’. Things have moved on from the grey times of the socialist past. It’s ‘co-investing‘. so you see, there’s nothing to lose moneywise, we are all better off making stuff that rusts, and it’s a win-win.
And then there are those Cornish tin mines… Wait, that’s not actually digging up any tin these days, but you can get married there, well we can fix that omission with a bit more ‘co-investing’.
“Co-investing” – a riff on “public-private partnership” and other cant expressions from recent times.
Even in Britain one may carry a Swiss army knife, provided the blade is no longer than three inches.
The law allows that folding knives with blades of three inches or less are not “offensive weapons”. However a brain dead judge ruled that a lock knife, although a folding knife by definition, is somehow not covered by this exemption, which gives our wonderful police another excuse to nick people.
There IS the Japanese approach. Wait, did you say HIGH grade steel?
Landfills are brimming with “durable goods” like Pacific rim/Chinese/and Japanese made appliances, only be sure to remove the paint, and skim off the yucky stuff, before recasting the steel ingots at the foundry. Feel free to “cold roll” at the mills.
If GB needs any extra coal for the process, I understand that the US has BUCKETS of it, yet the largest coal mining interest here is filing for bankruptcy.
Something about “Operation Choke Point” and other “nudges” with auto-pen signatures on them.
As the US pretends to maintain and rebuild our domestic transportation infrastructure, a lot of otherwise “good stuff”, and not-so-good stuff that “unexpectedly” fails to meet the gub’mint/Union Labor “life expectancy projections” needs to be removed at pennies on the dollar.
If someone from the US says “I have a bridge for sale!” Pay attention. Just like the Japanese did when they needed steel for WWII.
But get rid of the paint/pigeon poop, and rust FIRST!
Britain needs a core capacity to make steel, because we need to be able to build weapons in times of war
This always tends to assume we’re making Sten guns on metal presses, rather than something with a SUSAT sight on. I don’t believe we are self-sufficient in all raw materials required to make any modern weapon, let alone a ship.
As I recall, the reason the steelworks in Wales is closing is that demand for its product is low. Recycled steel is abundant and cheaper. So in a sense you already have a strategic steel reserve. It’s in the landfills.
Some years ago the US created a “strategic petroleum reserve”, based on essentially the same arguments. We bought a large quantity of crude oil when prices were high, and it is now languishing in underground salt domes or some such place. It turned out to be completely unnecessary (except, of course, for the implicit subsidy to the oil companies, which might have been the real purpose behind it) and an utter waste of money; technological advances have resulted in a glut of oil. I suspect that the same would happen to any “strategic steel reserve” (if it hasn’t already). I would sooner trust astrologers to accurately predict future needs than any government.
“Some bastard sunk our aircraft carriers and blew up our tanks. Quick! Build some new ones before we get overrun. We’ve got plenty of steel in the national steel reserve!”
I believe the process that ended up with the Queen Elizabeth being commissioned in 2014 began in 1997. Of course, in time of war that process would be much quicker.
The amount of steel needed to completely replace all the UK’s military vessels would constitute a very small number of days of output from yhe current UK steel industry. Truth is, these days military hardware is no longer “dreadnought” style heavy ironclad stuff but makes extensive use of lightweight composite materials/alloys – if we were to want a “national reserve”! of steel for military purposes then we should similarly want a national reserve of Boron, Beryllium, Manganese, Titanium, Chromium, Aluminium, Magnesium, Cobalt….
Truth is, the idea’s economic and military poppycock. it’s analogous to the days of wine-lakes and butter-mountains. The steel produced by Tata’s big plants is truly commodity stuff – what economists describe as ‘fungible’ – rather than the high-grade high-tech specialist alloy-steels the UK *should* be producing. Sadly for the likes of Port Talbot, these alloys are produced in small amounts, in facilities that look more like hospital operating-theatres or food-preparation facilities than smoke-and-fire industrial plants.
Chairman Mao’s mobilising the peasants to make iron pots went well and now carbon fibre is increasingly used to make car bodies.
Check out how the Beam Radio system that Britain had to India and Australia was destroyed by politicians who had undersea cables produced in ‘their’ electorates. Optic Fibre is another great boondoggle.
“Even in Britain one may carry a Swiss army knife, provided the blade is no longer than three inches.”
A number of Swiss Army knife models now come with blade locks which makes those version illegal. (Oh, and the lock version is highly recommended — see the new Evolution line for example.)
The law is stupid, of course. The lock doesn’t make the knife offensive in nature, it just makes it less likely to fold back and cut your fingers.
That’s because when you lay off a thousand people in London doesn’t affect the city much as a whole. But heavy industry like steel mills and car plants tend to be in one-horse towns that wither and die when the sole employer (directly or indirectly) leaves. Eventually the former bank staff will find jobs at insurance companies or NGOs without having to uproot the family, whereas the steel workers will have to start a new, more spartan life somewhere else (if they don’t just stay on the dole), leaving very photogenic crumbling school buildings and post offices.
What you need depends on the kind of war you’re fighting. Certainly an Afghanistan-style conflict won’t demand a steel reserve. I don’t think it’s very wise to assume WW II was the last industrial war, though, and even though it wasn’t a very good gun at the time, a Sten gun could be produced with five man hours of labor. It might be exactly the sort of thing you would produce for a war that’s dragging on or going badly enough raw materials are difficult to import.
It should be noted that the Port Talbot steelworks smelts imported iron ore using imported coal. Not so strategic after all.
Losing Port Talbot wouldn’t be the end of steel in the UK anyway. Tata has just sold its Scunthorpe works to a private investor.
Good idea, teaching basic steel production and working. Except for the temps involved (easily achieved and managed these days) it’s dead simple once you get the idea. We’ve been doing it a long time, after all.
But of course the nervous nellies will be horrified.
It’s even easy to smelt aluminum in your back yard. See this.
Dear Mr Pearce
We have a strategic steel reserve: it’s called ‘cars’.
DP
Whah-hey, ‘we’ will now own a 25% stake in in a Steal Plant.
How do I sell my stake? (Or will I get burnt at it?).
A “steal” plant? Typo or snark?
Laird, it imports iron ore and coal, and us British taxpayers steel ourselves as it steals our money.
OK, then, snark it is.
On a more serious note, I understand the need to import iron ore. But I thought the UK was a coal producer. I’ve toured a (closed) coal mine in Scotland. Why is this plant importing coal?
Cost, apparently if you dig coal of out of the ground, it can’t be dug up twice in any sensible way, but no one seems to have told the UK’s coal miners that in the 1980s when they launched their Libyan-backed strike. The UK’s coal mines were nationalised, unionised and not economic, plus there may be carbon taxes to pay too.
The UK still has coal, (especially if you count the 23 trillion tonnes under the North sea), it’s just that it’s expensive to dig it up. Add in the political cost and few companies will go near it.
Of course if fusion is still twenty years away in fifty years time, the cost might well be cheaper. Especially as the global warming nonsense will be well; and truly forgotten by then.