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Capital & Class

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Manufactured in the UK? Special steels, motor vehicles and the


politics of industrial decline
Ray Hudson and David Sadler
Capital & Class 1987 11: 55
DOI: 10.1177/030981688703200105
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Ray Hudson
and David Sadler
Manufactured in the UK?
Special steels, motor vehicles
and the politics of industrial
decline
IN 1983, for the first time in modern history, the UK recorded a
balance of trade deficit in manufactured goods : one symptom of
decline as an industrial nation . This long-running process was
accelerated and intensified after 1979 as a central element of the
Conservative political programme - reduction of the state sector
- intermingled with another, encouragement to the private sector's
rationalisation and internationalisation of production in the search
for profitable investment opportunities . These have combined
with the ravages of recession and a powerful ideological offensive
to create and shape a much-changed political climate and industrial structure . The contours of this are still shifting but many of
its main features are now clearly established .
Creating this structure has been a political process and
coming to terms with it poses a number of questions to do with
political choices . What was in practice apparent before 1979, but
has since become blindingly obvious, is that public ownership, or
nationalisation, Morrisonian style, is an inadequate mechanism
to ensure the rational organisation of production and the protection of jobs and communities . Public corporations under both
Labour and Conservative administrations have danced to the
tune of the international market (see Beynon et al, 1986) . A
political strategy for ownership that was once thought of as a
mechanism for at least partially insulating investment, output
and jobs within the UK from the anarchy of international markets
has in practice become the principal mechanism through which

A study of the crisis


of the special steels
sector in Sheffield
reveals major
weaknesses both in
traditional strategies
for restructuring
such as
nationalisation and
in new ones such as
local economic
strategies . Strategic
choices in the sector
are constrained by
interdependence
with sectors like the
automobile industry
and by the political
and economic
restrictions of the
EEC . Meanwhile
creeping
55
privatisation
continues . The
authors argue that
any alternative
strategy must
operate at each of
these levels to be
effective .

Capital & Class


56

the disciplines of international competition have been restored to


their preeminent place as the steering mechanism within the
British economy . The implication of this for the future of manufacturing industry in the UK is clearly a significant and sensitive
issue .
We seek here to examine this problem through the recent
experience of one crucial branch of manufacturing industry,
special steels production . The UK steel industry was, correctly,
seen as an easy target for the post-1979 Conservative strategy,
and after a three-month strike in 1980 the public sector was
decimated in a fashion soon to be replicated in many other public
corporations . There has always been a private sector of the UK
steel industry . After the formation of the British Steel Corporation
(BSC) in 1967 this was concentrated in special steels production .

The way in which change in the private sector has intermeshed


with that at BsC, especially since 1979, is particularly illustrative
of the changing balance of power between capital and labour,
mediated via the state . On the one hand BSC has sub-contracted
many of its operations to the private sector . On the other, the
private sector has either moved into profitable market areas
vacated by BSC, or bought in to joint ventures with the state
company, in association with investment strategies targetted
both down-stream and overseas .
Special steels producers are historically concentrated in south
Yorkshire . The area has a unique mixture of public and private
steel companies . Employment in steel production slumped from
43,000 in 1979 to 26,000 in 1983, a decline which has led Sheffield
City Counci to question future employment prospects (see Shutt,
1986) . Drawing upon research commissioned by the Department
of Employment and Economic Development of this local authority
(Hudson & Sadler, 1987) our starting point here is to identify
precisely how this cutback came about, as one consequence of
cuts in demand from UK steel consumers (see Sheffield City
Council, 1984) . We consider the implications of prospects in the
major special steels market area, motor vehicle production . Cars,
commercial vehicles and steel are internationally traded commodities, and these politically determined patterns of trade are of
immense significance to the future of UK steel employment . We
therefore examine the experience of special steels production in
three other European countries - Sweden, France and Italy - and
the significance of the European Community for steel production
and trade . We conclude by briefly returning to south Yorkshire,
the question of national and local strategies for manufacturing
industry, and the possibilities for a new politics of production .

Manufactured in the
Steel production in Britain in the post-war period has consistently
teetered on the brink between publicly and privately owned
sectors of manufacturing . Britain's steel industry has been a
central concern to most party political agendas . Partially nationalised under the 1945-51 Labour administration, it was returned
to private ownership by the incoming Conservative government,
only to be partially re-nationalised in 1967 to form the British
Steel Corporation, from which some assets were sold off to the
private sector by the 1970-74 Conservative administration (see
Bryer et al, 1982 ; Ross, 1965 ; McEachern, 1979, 1980) . The
post-1979 Conservative programme has acted selectively once
again to redefine the ownership pattern of the industry . Employment at BSC has been cut from 186,000 to 54,000 whilst whole
market areas have been sold to the private sector through a series
of joint ventures known as the Phoenix companies (see table 1) .
These involve BSC in partnership with international engineering
conglomerates such as GKN and TI, forming hybrid companies as
a prelude to the Conservative party's long-term aim of denationalisation of the remaining core of UK steel . In the process a new
industrial structure has been created which has enabled companies
such as GKN and TI to continue their policy of internationalising
production and moving down-stream in the production chain,
whilst securing for them a supply of steel at their remaining UK
plants . This is how these changes were described by GKN'S
chairman Sir Trevor Holdsworth in his foreword to the company's
annual report for 1985 :
To crystallise the transformation which has taken place in
the composition of the Group's business over the last two
decades, we think it appropriate and timely to propose a
change in the Company name to 'GKN plc' . The names
`Guest', `Keen' and 'Nettlefolds' are historically linked with
businesses in steel, bolts and nuts and fasteners which have
all now ceased to be part of our mainstream strategy ; the
investments which we retain in steel, whilst important, are
in the form of participation in joint ventures . Our principal
business is now the development and manufacture of
component systems and products for the world's vehicle
industries, and our other core activities are in distribution
and industrial services, with a rapidly developing business
in the design and manufacture of defence products .
Whilst companies such as GKN have diversified and invested
overseas, the reorganisation of steel production in the UK since
1979 has not come about as a result of the unaided efforts of the
private sector. In 1985 the House of Commons Public Accounts
Committee examined the first two Phoenix mergers, Allied Steel

UK?

Forging a new
structure of steel
production

57

Capital & Class


58

and Wire and Sheffield Forgemasters (House of Commons, 1985) .


Its conclusions revealed the extent to which state support had
underpinned re-organisation . In relation to Allied Steel and Wire,
the condition of the transferred GKN assets (plant and machines)
was worse than that of BsC's, and they were worth less than the
book value at which they were traded to the joint venture . Future
financing requirements, under which the joint ventures relied on
BSC, resulted in BSC providing substantial sums of cash in advance
of the Phoenix companies' needs . This favoured the private
sector, relieving them of the need to finance loss-making activities
and doing so on favourable terms . The Committee also concluded
that Sheffield Forgemasters represented no saving on the option
of maintaining existing BSC businesses ; and that Allied Steel and
Wire had cost more to establish than if the existing BSC business
had been maintained .
Alongside the re-introduction of private capital into the steel
industry, and with a similar degree of state support, has gone the
imposition of a series of changed work practices and a new
industrial relations climate . One example is United Merchant
Bar, a Phoenix company owned 75% by Caparo Industries and
25% by BSC . It processes steel at a mill inside the BSC Scunthorpe
works which had been closed down by BSC in 1981 . Here, the
Iron and Steel Trades Confederation signed the first single-union
agreement in any company in which BSC has a stake . The deal
also provides for flexibility between production and maintenance
workers, two-year pay settlements and a no-strike clause . With
the mill operating alongside the rest of BSC's Scunthorpe works,
it comes as no great surprise to learn that management there are
keen to adopt similar practices .
A more draconian management style typifies another Phoenix
venture, Sheffield Forgemasters . Faced with mounting losses at
this company (which produces a number of strategically significant items), and at the instigation of the merchant bank Lazards
and the Bank of England, a new chairman, Mr Kenny, was
appointed from 1 January 1985 . His style was laid down in an
address to senior management on 26 February 1985 . 1 The new
ground-rules were forcibly spelt out . Continuing losses were
unacceptable, he maintained -'the company is not yet in profit
and that is my job and I intend to achieve it within a two-year
span .' Management's aggressive support was to be organised
through a series of weekend conferences, from which `if you
choose to be absent, without good cause, then you may remain in
that situation for the following years' . Job specifications were to
be prepared for each and every member of staff . The new chairman was in no doubt that many employees were superfluous to
his requirements : `I hazard a guess that you will be surprised at

Manufactured in the UK?

how many people are not doing a constructive job or who should
not be on the pay roll .' To hasten the return of the company to
profitability, it was to be re-organised into a number of subsidiary
companies, where profits and losses were more readily identifiable :
Presently, the company is managed on a divisional basis :
this will change as quickly as possible subject to the speed
the lawyers will work . A series of subsidiary companies will
be incorporated . These subsidiary companies will be
independent in terms of management, sales, marketing,
accounting and all the other functions applicable to a
manufacturing company . The local management will be
responsible for the assets under their control . . . Each
managing director with the help of others will be obliged to
report each month in writing on the company for which he is
responsible . . . The purpose of this action is to put the
responsibility where it belongs and no more hiding or
excuses behind the curtains of Head Office .
This restructuring was formally announced in July 1985 and
incorporated changes in the pattern of collective bargaining
arrangements . Ten subsidiary companies each with their own
industrial relations procedures, were to be established, sweeping
away site-based shop steward representation . The two major
sites - Atlas and River Don - were inherited from Firth Brown
and BSc respectively . At the Atlas site five of the new companies
were located but a position of full-time union representative was
to be abolished . ISTC convenor Ronnie Ward recognised the role
played by the new managing director appointed by Mr Kenny :
The first thing he did was to say he doesn't believe in
redundancies, then within weeks he announced two
hundred of what he doesn't believe in . Then he withdrew a
pay offer, terminated the works joint health and safety
committee, and placed two convenors in the `jobs at risk'
category on a redundancy exercise . We approached
management with a request for a replacement part-time
convenor . They said no, and they weren't even interested in
alternative ways of funding the job . It was clear to us then
that this was an attack on the trade union organisation and
not a financial exercise.
After a secret ballot at the Atlas site produced a clear majority
in favour of strike action against these changes, the works came
to a standstill . Taking its tradition of moderation to new extremes,
the ISTC national executive instructed its members to return to
work after indications from the Department of Trade and Industry
that a l Om funding package for the group was being placed in

59

Capital & Class


60

jeopardy . A mass meeting voted overwhelmingly to ignore this


call and it was soon repealed .
The strike hardened when the company posted redundancy
notices and declared that it would only settle on a return to work
when given guarantees on productivity and a working week
extended by two and a half hours for no extra pay . The River Don
site was picketed out during January . It soon became clear that
the (already financially stretched) company was desperate for
money . Industry Minister Peter Morrison emphasised in a letter
to group chairman Mr Kenny, though, that agreed support of
lOm would not be provided `until such time as all the major
facilities of Sheffield Forgemasters are producing at normal levels
of output' . 2 The Conservative government made it only too
apparent that union negotiating rights (which the ISTC but not
the workforce were willing to surrender) were to be minimised,
and even withdrew financial aid until the company settled on
terms which it regarded as acceptable .
A settlement was reached in February 1986, after sixteen
weeks in dispute . Its terms included re-instatement for dismissed
workers and a Joint Consultative Committee across the major
sites, to meet four times a year with management on a paid basis,
and four times a year without pay or management . Pay and
productivity bargaining, though, were to be decentralised to the
new operating companies .
In a very real and immediate sense, the Forgemasters dispute
illustrated the need, possibilities and problems for a new negotiating procedure and trades union organisation within the Phoenix
companies . Those working for companies subsumed within the
new industrial structure are faced with a challenge of reorganisation in the face of a managerial offensive on productivity,
flexibility and pay . This challange has been thrown down against
an inauspicious political backcloth of intense pressure on this
sector of manufacturing in the UK arising from international
competition and the substitution of steel by other materials .
These processes are most clearly evident in the major market for
special steels, the motor vehicle industry .

Special steels and


the motor vehicle
industry

The major special steels producer in the UK is now United


Engineering Steels, a Phoenix company formed in April 1986 by
BSC and GKN with an annual capacity of approximately 2m tonnes .
Its formation climaxed six years of negotiation and followed
closure by the parent companies of steel works at Round Oak in
the West Midlands, jointly owned by BSC with TI, in 1982 ; the
Hadfields works in Sheffield in 1984 (bought out from Lonrho by
BSC and GKN) ; and the BSC Tinsley Park works in Sheffield in

Manufactured in the
1985 . The new company employs 10,000 people at three works in
south Yorkshire and one in north Wales . It is dependent for over
50% of its sales by volume on the motor vehicle industry . Roy
Bishop, ISTC Divisional Officer for south Yorkshire, appreciates
the close relationship between Sheffield steel and the motor
component industry, especially in the West Midlands :
It's only now that people are beginning to realise how closely
connected Sheffield and Birmingham were . Alright, we
used to say Birmingham was the workshop of the world, but
we didn't realise they were using so much of our steel .
This market for special steels has been particularly adversely
affected by recent developments in the motor vehicle industry.
Trading patterns in motor vehicles are indicative of the strength
or weakness of an economy . Japanese global exports, for example,
increased from virtually zero in 1963 to overtake the total of the
four dominant European exporters of the UK, France, West
Germany and Italy in 1980 . By contrast in 1985, the UK's trade
deficit in completed cars and commercial vehicles was 3,200m .
The UK car market is a relatively small one in global terms .
1985 sales amounted to 1 .8 million units against l lm in the USA
and 3 .1m in Japan . Domestic production is further lessened by
import penetration - 58% in the UK against 2% in Japan and 26%
in the USA (table 2) . UK production in 1985 amounted to 1 .05m
units . Motor vehicle production is overwhelmingly an international operation, dominated by a few major multinational
corporations . The UK is strongly integrated into this system of
production and trade, as the recent official opening of the Nissan
factory at Washington emphasised (see Garrahan, 1986) . The
Japanese switch to assembly within Europe and the us presents
new conditions for steel and component producers . Historically
the proportion of components exported from Japan (expressed in
relation to the comparable steel volume exported in cars and
commercial vehicles) has been much lower than that from Europe
and North America . Increased emphasis on overseas assembly
operations by Japanese car manufacturers will tend initially to
increase this proportion . It will decrease again only when and if
local sourcing of vehicle components is introduced .
Within the UK, investigation of the top ten selling cars in
1985 reveals the extent to which cars and components are produced and sourced on an international basis (see table 3) . The
percentage of vehicles imported ranges from nil in the case of the
Austin Metro, Montego and Maestro to 100% of Vauxhall Novas,
64% of Ford Orions, 42% of Ford Escorts, 38% of Ford Fiestas
and Vauxhall Astras, 36% of Vauxhall Cavaliers and 32% of Ford
Sierras . Even the'UK-built' cars incorporate an array of compon-

UK?

61

Capital & Class


62

ents sourced from overseas, including 1 .1 . litre engines from


West Germany and Australia for the Vauxhall Cavalier . The UK
content of British-built cars measured by ex-factory gate prices
ranges from around 95% for the Ford Orion, Escort and Sierra,
down to 50% for the Vauxhall Cavalier and Astra .
It is in this context that Derek Barron, chief executive of
Ford UK, called for strict monitoring of the local content of cars
produced at the Nissan UK plant at the time of its official opening
in September 1986 . He proposed that the rules for cars to qualify
as European-produced should stipulate a minimum 80% ECcontent measured on an ex-works cost basis . Current rules require
a 60% EC-content measured on an ex-factory gate price, defined
to allow all overheads and the company's profit margin to be
included in the calculation . His proposal would effectively disqualify from European-content regulations any company importing engines or transmissions from outside the EC . In a similar
vein motor industry expert Prof Garyl Rhys, in evidence to the
House of Commons Trade and Industry Committee in 1987,
warned that motor assembers' forecasts for an increase in UK car
assembly of 250,000 by 1989 and 475,000 by 1991 should be
treated with caution ; and that UK motor component suppliers
will only benefit from this trend if the vehicles have an 80% UK
content . Only at this level will high technology high value-added
items like engines and gearboxes be UK-sourced . 3
Prospects for the car industry to 1990 are indicated in table
4 . World sales are projected to increase by 3 million units from
1985 but Western Europe is increasingly likely to become a
battleground in the struggle between us and Japanese car companies for supremacy in the world car market, a conflict made
more intense by looming over-capacity in the us and Japanese
companies expanding production bases both there and in the UK .
In 1984 for the first time, Japanese car sales exceeded 10% of the
Western European car market, and in 1985 and 1986 the proportion increased again . Significant exports from South Korea and
Taiwan are also expected by the end of the decade .
The UK motor industry therefore faces an uncertain future,
one which will undoubtedly have dramatic implications for component manufacturers and steel producers . Moreover, a further
series of changes are taking place which will also affect these
companies, relating to the amount and type of steel used in vehicle
construction . Average steel usage per vehicle is a function of three
factors : the relative proportion of different types and sizes of
vehicles in production ; the average weight within each type ; and
the share of steel in the total materials used in construction .
A recent survey by the International Iron and Steel Institute
(tisi, 1983) examined motor vehicle manufacturers' views of

Manufactured in the UK?

likely future trends in the average size and weight of motor cars .
Over the decade 1980-90 the manufacturers predicted decreases
in average weight of 9% in Western Europe, 15% in Japan, 17%
in Latin America and 26% in North America - only there did
manufacturers anticipate continued increased demand for smaller
cars . In other parts of the world the main cause of forecast vehicle
weight reduction was the use of lighter materials .
In the mid to late 1970s the pressure on manufacturers to
increase fuel efficiency was so great that vehicle designers considered substitution of lighter materials for steel even if this
meant increasing overall production costs . Today, with fuel
efficiency less of an urgent issue, cost reduction is generally
regarded as a prerequisite for material substitution . The greatest
physical advantage of steel remains its strength and rigidity for
weight . Aluminium is light and corrosion-resistant and in certain
alloy forms has good strength for weight ratios, but is expensive
and difficult to weld . Its main use has been in the casting of
complex parts where it has substituted for iron and non-ferrous
materials rather than steel . Plastics afford greater design freedom,
are corrosion-resistant and often easy to form . However, in their
unreinforced state they have low strength and poor heat resistance,
which is a handicap in the engine area . In their reinforced form
they have found some body applications .
It is not only plastics which are increasingly competitive
against steel . In 1984 GKN announced the successful completion
of tests on a glass fibre and expoxy resin composite (having
discarded carbon fibre) as an alternative to the production of
conventional steel springs used in commercial vehicles . The new
materials produced 50% weight savings and GKN embarked on a
6 .4m investment programme to instal a new plant at Sankey
near Telford capable of making 500,000 springs a year (for a
world market of some 20m commercial vehicle springs annually) .
Production was so automated that only 100 jobs were created . In
1986 GKN also announced that it was to develop and produce
plastic composite suspension systems for cars, up to 70% lighter
than conventional systems, to be commercially available within
five years .
In reponse steel producers have been active in devising a
range of improved quality steels in an attempt to maintain market
shares . A recent development has been dual-phased steel which
combines excellent formability with high strength . There is also a
marked trend towards increased use of galvanised or coated sheet
to offer better corrosion resistance from lighter panels . Increased
sales of four-wheel drive vehicles also raise requirements for
high-grade steel due to the greater engineering involved .
When asked by the iisi in 1983, European manufacturers

63

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64

expected the share of all steel in vehicle weight to fall by 5-10%


over the decade to 1990, but with the share of high-strength steels
in vehicle weight rising from 5-7% to 7-18% (without taking into
account any reduction in the average weight of motor cars) .
Plastics and aluminium were expected to gain whilst there were
divergent views on the future for iron castings . Specific areas of
likely substitution included car bodies (plastic), bumpers (plastic
with high strength steel for support and brackets), fuel tanks
(plastic or aluminium), truck cabs (aluminium or reinforced
plastic), engine components (plastic or ceramics), and springs
and prop-shafts (plastic and carbon-fibre) .
These developments will have dramatic ramifications for
the UK motor component industry . Most analysts agree that the
single biggest future trend will be for the expansion of Japanese
component manufacturers into Western Europe and the USA,
partly as a consequence of local content regulations . In this
process there will be great pressure exerted upon UK-based
components suppliersby Japanese and established motor manufacturers alike to increase quality and reduce costs, or face the
prospect of losing market share .
Many Japanese component suppliers have already followed
the Japanese vehicle manufacturers into establishing US production bases . Within the UK the Nissan plant has also already led to
a number of such projects . TI Silencers has established a joint
venture with Nihon Radiator to supply exhaust systems . Hoover
Universal and Ikeda Bussan (a Nissan subsidiary) have formed
another to produce seats . Another effect of increasing Japanese
participation has been the adoption by European and us producers
of Japanese production philosophies and systems (see Sayer,
1986) . Ford, for example, is introducing Statistical Process Control, a defect prevention system adopted from Japan, and vetting
all its prospective suppliers as described by Ray Morgan, Chief
Buyer at Ford UK :
Ford will look critically at all its suppliers to check on their
commitment to Statistical Process Control . Not all suppliers
will meet the stringent requirements and, as a result, there
will be a reduction in the number of suppliers . However,
Ford will develop and maintain long-term relationships
with suppliers who can demonstrate that they are in
complete control of their processing, which will be to the
long-term advantage of the remaining suppliers and Ford
Motor Company . 4
Component suppliers in Japan itself are organised in a quite
unique fashion . The eleven major vehicle assembers stand at the
top of a closely integrated pyramid of suppliers accounting for

Manufactured in the

UK?
65

75% by value of all parts used . One of the larger assemblers has
168 primary suppliers, which depend upon 5,500 secondary
sub-contractors, which in turn depend upon 36,000 tertiary
sub-contractors . These, collectively, are the companies now being
encouraged to start overseas production . At the same time their
internationalisation has opened up the prospect of a (limited)
number of joint ventures within Japan by European companies .
SKF of Sweden, for example, established such a venture in 1986
with Koyo Seiko to produce and sell automotive bearings in
Japan . The main shareholder in Koyo Seiko, with a stake of 20%
is Toyota, Japan's largest car manufacturer . Similarly, GKN has
established a company with Mitsubishi Steel Manufacturing to
sell in Japan new composite springs for commercial vehicles
manufactured at GKN Sankey, with the further option of introducing production in Japan later .
The UK motor component industry has been slow to recognise
these trends . The major components suppliers include Lucas,
Chloride, AE, Smith Industries, Armstrong Equipment, Jonas
Woodhead and Unipart . Mr Alan Morris, formerly product
planning manager at Ford, has commented that `many of them
seem to be just sitting around waiting to go out of business' . 5
Whether or not these companies do go out of business (taking
with them more jobs in the UK steel industry if they do) is
dependent upon a number of political decisions to do with the
international production and trade of motor vehicles, components
and steel . In other European countries different production and
trade policies have been adopted towards special steels, sometimes
with contrasting results .
Since the onset of recession in 1974 crude steel production has
fallen generally in the major industrialised countries, whilst in
the global market over-supply has become increasingly apparent
as developing countries continue to expand their steel producing
capacity . Over this period, though, total special steels production
has tended to rise as individual steel companies have restructured
and moved into higher value-added products . This process is not
confined to the industrialised economies - some newlyindustrialising countries such as Brazil and Spain have also been
increasing their special steels output . In the UK, as table 5 shows,
alloy steel production has slumped dramatically in comparison
with other countries . Marginal growth in stainless steel output
has not been sufficient to compensate for this decline . Combining
alloy and stainless steel output in the period 1975-84, the UK was
overtaken by countries as diverse as Brazil, Italy, Spain and
Sweden . This is sharply indicative of the UK's changed position
in the international political and economic order following a
C 6 C

32-E

International
trends in the
production of
special steels

Capital & Class


66

decade of exceptional decline within a stagnant global economy .


Another indication of the UK's new role in the international
geography of production is in the pattern of trade in scrap metal,
the basic raw material for most special steel producers . In late
1979 the government lifted (but did not abolish) the quota and
licensing system that had governed scrap exports for nearly
twenty years . During the late 1970s more than 90% of scrap
handled by British merchants was sold inside the country . Since
then the rise of the scrap merchant as exporter has almost exactly
paralleled the decline of the UK steel industry and the rise of
foreign producers, especially in Spain . Between 1979 and 1982
the amount of Spanish steel produced in electric arc furnaces rose
by 20% to 6 .7m tonnes . The producers needed more scrap, but
the two traditional European exporters, West Germany and
France, were tied to Italian plants in the Brescia region . Britain's
big four merchants, 600 Group, Bird Group, Coopers (Metals)
and Mayer Newman, filled the gap . They spent lOm equipping
deep-water berths at Tilbury, Cardiff and Liverpool with scraphandling equipment and in 1983, for the first time, UK exports of
scrap (at 3 .8m tonnes) exceeded home sales of 2 .9m tonnes . Over
3m tonnes of the exports were to state-subsidised Spanish steel
producers .
Whilst Britain exports the remains of industrial contraction
as raw material to Spanish steel works, other European countries
have followed different poliices for their special steel industries .
The extent to which Sweden has rationalised its steel industry
provides an exceptionally clear illustration of the opportunities
and problems in the special steels sector . Although total steel
capacity is relatively small, at around 5 million tonnes annually,
an unusually large proportion (around 30%) is of special grades,
making the country's evolving special steel producers among the
major European competitors . Retrenchment and reorganisation
throughout the industry began well before most European steelmakers recognised the depth and severity of the steel crisis . The
single largest move, which cleared the way for rationalisation in
the special end of the industry, came in 1978 when the ordinary
steel producers merged to form Svengst Stal . The Swedish government took a half share in the new company . By 1982 it had cut
employment by a fifth to 14,000 and capacity by a quarter to 3 .1
million tonnes . Losses of SKr 2 .4bn between 1978 and 1982 were
turned into small but increasing profits thereafter .
Rationalisation in special steels has been concentrated in
three product areas . By the mid-1970s the country's three leading
tool steel producers had come together to form Uddeholm Tooling, the world's third biggest company in the sector after VEW of
Austria and Thyssen of West Germany . In 1982 the high-speed

Manufactured in the

steel producers joined forces as Klosters Speedsteel, a world


leader with an annual output of some 15,000 tonnes and a 20%
share of the European market . And in 1984 the four stainless
steel companies merged to form two units, eliminating overlapping production . Under the restructuring plan Avesta paid
SKr 230m each to Uddeholm and Fagersta to leave the sector,
concentrating into one company European market shares of 40%
in stainless welded tubes and 30-35% in stainless strip and hotrolled plate . Sandvik created a wholly-owned subsidiary, Sandvik
Steel, to specialise in production of seamless tubes, strip and
wire . The Swedish government agreed to provide some SKr
460m in special financing to cover the agreements, mainly in the
form of loan write-off, whilst the financial costs of laying off some
1,500 workers because of capacity closures were borne between
Avesta and Sandvik . The restructured industry maintained a
capacity of some 200,000-250,00 tonnes of stainless steel production a year, almost entirely for export to Europe .
The stainless steel merger in many senses completed a reorganisation of the industry into discrete product areas each
controlled by major producers . Ball and roller bearing production
was concentrated throughout this period at SKF, whose low alloy
special steel division, a market leader in bearing steel, produced
some 400,000 tonnes in 1982 . So successful were the new ventures,
hoever, that they were soon to fall foul of Sweden's position
within the international system of trade . During 1983 the 1 .2
million tonnes they produced included more than three quarters
of total Swedish steel exports (by value) . With the proportion of
special steels output to ordinary grades more than double the EC
average, Sweden was clearly heavily dependent upon export
markets . These countries' own producers were themselves rationalising and seeking a degree of protection from competition .
During 1984 Swedish producers were forced to agree to reduce
exports of tool steel to the USA by some 20% . Later the same year
West German steelmakers made it clear that they too were considering a complaint, following a 27% rise in imports of Swedish
steel of all grades during 1983, to some 450,000 tonnes . And in
October 1986 a group of us special steel companies filed antidumping petitions against Avesta and Sandvik - the fifth such
action against Avesta in a ten-month period . The very success of
Swedish steel producers' rationalisation in enhancing their competitiveness in the world market made them a target of international trade restrictions .
Partly in response the Swedish steel industry began to internationalise production . In early 1985 Uddeholm announced its
intention to take a 20% stake in a new, 15m dollar special steels
plant near Pittsburgh in the USA . Later in the same year SKF

UK?

67

Capital & Class


68

formed a new operational division for roller bearings in North


America, with the intention of expanding in the us market from
the production base there . And in 1986 SKF Steel was merged
with Ovako of Finland to form one of the biggest special steel
producers in Europe with a workforce of 7,000, an annual production of about 1 .2 million tonnes, and a guaranteed market in
bearing steel swith the SKF parent .
In many ways, then, Sweden illustrates several typical
responses to economic change from a relatively small, advanced
economy where there is a strong state commitment to maintaining
a presence in the crucial special steels sector-early rationalisation
and investment in higher technology at the cost of some job
losses, dependence upon continued exports, and internationalisation of production because of a threat to those export markets .
Restructuring in the French steel industry has followed a pattern
more similar to the UK in its complicated manoeuvres between
public and private sectors . First special steels production was
re-organised, then later parts of the down-stream engineering
company of Creusot-Loire passed into the public sector, which
subsequently continued its path of contraction .
Reconstruction of the special steel side of the two major
public sector steel producers, Usinor and Sacilor, was announced
in April 1984 . The long product interests of the two companies
were merged to form Unimetal, whilst the engineering steels
interests were merged to form Ascometal, with sales of the latter
running at about Fr 5 .5bn on an output of 1 .8 million tonnes a
year . Formation of Ascometal was designed to help reduce surplus
capacity, estimated to be about 50%, and to reduce losses of Fr
lbn in the previous year . In the long-product venture, the steelworks at Neuves-Maison and most of the oxygen steelmaking
capacity at Longwy were to be closed and each replaced with an
electric arc plant . Both joint ventures were in the majority control
of Sacilor . The two parent companies also retained some special
steel capacity of their own . Usinor held two subsidiaries, which
were later merged to form Usinor-Chatillon . Sacilor controlled
stainless steel and high-alloy production in its subsidiaries, one of
which was acquired from Creusot-Loire in 1983 .
It was with regard to Creusot-Loire that a number of downstream developments emerged . Late in 1983 the heavily lossmaking company announced plans to lay off 4,000 workers,
having already sold most of its steel-making businesses to Sacilor
and Usinor . In April 1984 Creusot-Loire also sought either to
shed its two remaining steel subsidiaries, employing 2,600, or to
receive similar aid for them as given to the state-owned steel
groups .
The Belgian and Luxembourg holdings which dominated

Manufactured in the UK?


the parent company, Schneider, were unwilling to invest further .
By June no agreement was reached on a rescue package and
Creusot-Loire asked to be placed into official receivership, the
largest business failure in French history . Usinor and Framatome,
the French nuclear reactor company, absorbed the energy, steel
and armaments activities of the failed company, which employed
10,000 of the total workforce of 26,000 . Effectively, international
capital in the form of the Schneider group achieved its objective
of pulling out of unprofitable steel production in France, the
burden being taken over by the French public sector companies
for the time being at least . Schneider was left free to concentrate
on more profitable engineering activities, while redundant French
workers and the French state in various ways picked up the bill .
Nor is the decline of the French steel industry completed yet . In
1986, for the first time, a joint chairman was appointed to Sacilor
and Usinor . In November he outlined plans for a further cut in
the joint workforce of 20,000, or almost a third, during 1987 .
The third example is of a country which has seen relatively
little in the way of steel capacity closures . Restructuring in the
Italian steel industry only occurred belatedly in response to
continued European Community pressure . The Italian industry
is divided between the large, state-owned coastal plants run by
Finsider, and the hundred or more private sector, smaller producers concentrated around Brescia in NW Italy . The first major
production cuts were imposed by Finsider in 1982 as the large
Bagnoli steelworks in Naples was virtually shut down . In June
1983 the EC demanded even greater cuts, amounting to 5 .8m
tonnes by 1985, of which 4 .8m should fall in the public sector . A
Finsider plan to cut capacity by 3 .8 million tonnes envisaged the
private sector doubling its share of the allotted capacity closure to
2 million tonnes .
The private sector was not so keen on this increased cutback
and several companies proposed an alternative under which they
would take over and operate part of Finsider's Cornigliano works,
using the crude iron and steel production facilities to make billets
for sale to the private sector, saving 1,500 of the 5,000 jobs under
threat . In December 1984, however, the private sector steel
companies informed the government that Finsider's asking price
of L350bn for handing over the plant was too high, and pulled
out . Finsider went ahead with the project on its own .
By the end of 1985 a clear shape had emerged to the ownership of the steel industry, with Finsider concentrating on flat
products and the private sector on long products . Privatisation
continued as a pressing issue and re-emerged in June 1986 with
fresh proposals for the Cornigliano works . Its operation by Cogea,
a subsidiary of Finsider, produced 300,000 tonnes of bloom and

69

Capital & Class


70

billet the preceding year, with capacity expected to increase


through the installation of two continuous casting machines to 1
million tonnes a year . The private sector viewed it as a cheaper
source of semi-finished steel of acceptable quality for further
processing, and a consortium of private steelmakers was in negotiation over its purchase . Italian observers saw this as a potential
model for privatising large parts of the country's steel industry,
creating a new set of industrial blocs across the old public/private
sector divide and utilisng oxygen-steel-making technology to
produce special grades of steel . Such negotiations offer important
indicators to the rest of the European steel industry as one way of
partially resolving the crisis in bulk steel-making - effectively, by
transferring it to the `special' steels sector .
All three countries - Sweden, France and Italy - have
suffered from the effects of recession and have re-organised steel
production of all grades . This has involved both public and
private sectors . They have all been more successful than the UK
in creating the conditions for growth in demand . Their output of
alloy and special steels grew over the period 1975-84 whilst that in
the UK fell . Here, there has been a reorganisation of domestic
steel production through the Phoenix companies but no attempt
to take account of the links with steel-consuming industries like
motor vehicles . At the same time steel consumption in the UK has
declined dramatically through the effects of domestic collapse
and investment overseas . The examples of Sweden, France and
Italy also demonstrate that whilst there are limits to what can be
achieved by sector-specific industrial policies, and ultimately any
national strategy for steel production is heavily constrained
without some consideration of inter-industry linkages . A further
constraining influence on national government policy to industries
like steel is the presence of the European Community .
European
Community steel
policies

From the foundation of the European Coal and Steel Community


in 1951 there has been a European element to state policy towards
steel production . More recently steel is unique amongst manufacturing industries to the extent of regulation and control
exercised by the European Community . As the crisis deepened,
EC crude steel production slumped from 156mt in 1974 to 125mt
the following year, recovered unevenly to 140mt in 1979, collapsed
again to 128mt in 1980 and fell lower still to 109mt in 1983 . In
response to the first slump the Commission of the EC imposed a
series of minimum prices . More drastically, since 1980 steel
producers in the EC have been constrained by a system of controls
on production imposed following the declaration by the Commission of `manifest crisis' in the industry . This in itself is an
indication of the severity of the problem . Even during a similar

Manufactured in the
crisis in the coal industry in the 1960s, no such measures were
taken . Not surprisingly, the imposition of production quotas
under the powers of the Commission has proved among the most
contentious aspects of the past few years of steel's continuing
decline . It has served to strain already fraught relations between
steel companies, member state governments and the Commission .
Originally the measures were scheduled to terminate in 1985 .
That they are still partially in force illustrates both the continuing
problems in steel production, and the negotiation of a number of
compromises between the (sometimes reluctant) partners . These
are essential in understanding the context for the future of the UK
steel industry .
Under the terms of the crisis regime, state support for steel
companies has been permitted only in the context of specific
restructuring plans aimed at reducing capacity and restoring
profitability . In theory this gives the Commission the power to
determine the capacity level of individual steel companies, to
back up its allocation of production quotas for each quarter . It
can levy fines on any company which exceeds these quotas . In
practice this power is mediated by the role of respective national
governments . Competing national interests and the trade-offs
which governents are prepared to make with regard to other
issues have been significant influences on the distribution of steel
closures within the EC .
These moves have been made against a background of continuing, even worsening problems of over-capacity in the
European steel industry . In July 1985 the Commission called for
a further 27m tonnes of crude steel capacity to be cut by the end
of the decade . 6 In October 1986 it re-evaluated even these objectives and concluded that `there is still a structural imbalance
between supply and demand and, in view of the restructuring
already undertaken, it might be necessary to introduce changes
in the configuration of the industry going well beyond the envisaged capacity reductions' . 7
Under these circumstances it proved impossible to end the
quota system after 1985, as originally inteded . The European
Commission is keen to push through a phasing-out of controls as
`proof that its system of regulation is satisfactorily resolving the
crisis in the industry . The West German government, which had
initially opposed introduction of the quota system, emerged in
favour of its continuation . To remove quotas, it argued, would
invite a price-war with the state-subsidised competitors pitched
against the big, private, West German steel companies . Other
countries are more concerned to secure an increase in their quota
within the existing system . At the end of October 1985 therefore
temporary agreement was reached in the form of a classic com-

UK?

71

Capital & Class

72

promise, under which subsidies were only permitted to help


plant closures in two specified ways ; some products, accounting
for 15% of the output of products under control were removed
from the quota system ; and two flexibilities were introduced to
the method of allocating quotas .
During 1986 negotiations continued over the structure of
the steel quota regime from 1987 onwards . Initial Commission
proposals published in September envisaged scrapping quotas
from another 20% of the industry's output, reducing the proportion of products subject to control to 45% . Four categories were
identified where deregulation was possible, and the Commission's
desire to discontinue the whole quota system from the end of
1987 was reconfirmed .
The proposal was unpopular with the big integrated steel
producers and in November their association, Eurofer, put forward an alternative plan which entailed continuation of the
existing quota regime until the middle of 1987 and replacement
by an unspecified system of controls from 1 July 1987 to 1990 .
During this period its members would close a further 11 .9m
tonnes of surplus capacity . The plan called also for the creation of
a social fund financed by the EC to compensate regions hit by steel
closures . Quotas announced in December for the first quarter of
1987 only excluded two product categories and for most products
were set at very low levels, reflecting both continuing pressures
of over-capacity and the seriousness with which the Commission
was considering the alternative plan from Eurofer.
In March 1987 further reductions were offered by Eurofer,
amounting in total to 15 .3m tonnes of capacity . Crucially, the
plan offered no cuts in the hot-rolled production of coil where
over-capacity is greatest and state assistance most obvious . The
scheme was dismissed as inadequate by the Commission, and the
steel producers were given more time to offer still further cutbacks .
The current situation is further complicated by the recent
accession of new members to the Community . The most significant steel producer is Spain, which produced 14 .2m tonnes in
1985 against just l .Omt in Greece and 0 .7mt in Portugal . The
Spanish steel industry is currently in the midst of a restructuring
plan started much later than those undertaken in the rest of the
Community . It is due to be completed by the end of 1988 . The
Spanish government has sought to emphasise that until consumption of steel per head of population within Spain increases
to nearer the Community average, the steel industry will continue
its current export drive - but `Spanish exports during the next
three to four years will be directed to a considerable extent
towards other non-Community countries' . The aim should be a

Manufactured in the
zero trade balance with the rest of the Community during 1986,
but `this balance should be positive for Spain in 1990' . 8 In other
words Spain is keen to ensure an export market for its steel
industry both within and outside the Community .
There is a further aspect to the EC steel quota regime, one
which has received relatively little attention to date . In 1980 the
West German government only agreed to the quota system provided certain special steels were exempted from the proposals .
Since then quotas have been applied to particular products regardless of the quality of steel . Recently, though, the Commission has
recognised a need to take account of steel grade as well as product
form in its regulation of the European industry . In 1985 it noted
that `the refinement of manufacturing technology in melting
shops and rolling mills that has taken place over the last few years
has made it possible to obtain "ordinary" steels very similar to,
but not as expensive as, "special" steels' . 9 Because the division
between ordinary and special steels is becoming hazier, the crisis
in bulk steel will be transmitted to the special steels sector . The
Commission report concluded that `analysis of the capacities in
the principal subsectrs of the special steel industry shows indeed
a certain risk of over-capacity in the coming years .'
This imposition of quotas since 1980 on the basis of product
rather than grade has left companies free to move up-market into
special steels production in the search for greater sales and profit .
In other words existing special steels producers have been
squeezed from two directions in that competitors are emerging
from amongst the regulated bulk steel producers whilst their
market is not regulated on a basis which gives respect to the grade
of steel they produce . As the quota system limps on after 1985 the
Commission has only just begun to recognise this problem .
It is important to recognise also that the EC could pursue
alternative policies towards steel . Even the most cursory comparison of EC policies towards agriculture and steel unambiguously
confirms this . There is a glaring contrast between its policies to
cut back steel production and employment with scant regard for
the strategic economic and localised social costs of doing so, and
its policies to prop up employment and sustain over-production
in agriculture at virtually any cost . Over 70% of all Community
spending is on agriculture, mostly to pay for surplus food mountains and lakes . While we would not wish to defend the irrationality of the CAP, the enormous difference between policy positions
towards agriculture and steel does emphasise the importance of
political choices in shaping patterns of production and trade .
Why not an EC policy to sustain production and jobs in steel?

uK?

73

Capital & Class


74 Conclusions

Such a policy could be borne of a radical re-appraisal of the


politics of steel production . Amongst those who have experienced
the changes of privatisation from BSC, there is general recognition
that nationalisation was far from perfect . This often takes the
form of criticism of the structure of BSC . One man put it like this :
A Labour government might re-nationalise United
Engineering Steels, but with my experience of BSC I don't
want to see it . It became one big bureaucratic structure full
of empire builders . I wouldn't like to go back to that . We
enjoyed the benefits, but we ended up with the crumbs .
Sentiments which are shared by this man from Sheffield Forgemasters, who worked previously at Firth Browns in the private
sector :
If steel was re-nationalised it should never go to the same
sort of management that ran it previously . Nor should it be
run on the same scale as in the past . You would have to have
a holding organisation, but each plant should be allowed to
perform individually, and people shouldn't be anonymous .
People running it should be local people dependent upon
keeping the business in the locality . Rather than go back to
the old situation, it's better left in private hands . I'd much
rather see a business run more efficiently, even if people
work harder, so that there's more job security .
Comments such as this are a cutting indictment of the past
and pose acute problems to the formulation of an alternative
strategy for steel production . All the more so since grass-roots
trades union organisation is starting from a long way back in the
new steel companies . Gone are the gestures to consultation such
as BSC's worker directors of the 1970s (see Bank & Jones, 1977 ;
Brannen et al, 1976) . In their place has come a new management
style, likened by one seasoned shop steward to an earlier era :
The difference between the '70s and now is that the people
you were dealing with then were bastards, but they had
integrity . Now they've got nothing . You've got shop
stewards now who've got experience of what it's like not to
be consulted . The situation is like what we had in the 1950s .
What's horrifying about it is when somebody at the top sets
a climate that reaches into every corner .
The 1980 strike at BSC exacerbated divisions between steelworkers in the private and public sectors (as they were then
constituted) which have posed some longer-term problems for
trades union organisation . The same man commented on these in
relation to Sheffield Forgemasters :

Manufactured in the UK?


75
Apart from the damage the strike caused in the public
sector, there was the rift with the private sector . I held a
meeting to try to get our people not to cross BSC picket lines,
and I haven't been more unpopular in all my years as a
convenor . I was probably more unpopular even than
management . It was such a shock to met. A couple of lads
came to see me, and said the feeling's not against you, it's
against those lads in BSC . And that gave us tremendous
problems when Sheffield Forgemasters was formed .
To some extent these problems were resolved at Sheffield
Forgemasters during the 1985/86 dispute . As this evolved the
works committees from the two sites came together and gradually
developed a stronger organisation . The nagging suspicion remains, though, that neither nationalisation as represented by
BSC, nor the attitude of current management in the private sector
(which increasingly resembles that at BSC), represent adequate
means of safeguarding employment, still less form an adequate
basis for a national steel policy .
One way out of this impasse is seen in terms of a call for more
local control, for decentralised operation of some kind of newlyreconstituted public-sector company . The effects of such a
development would depend upon the broader political-economic
context in which it occurred and the issues that it would have to
confront are too often left unspoken . The roots of the crisis of the
UK special steels industry, and of much other manufacturing
activity, lie in the international character of production and trade .
Any political strategy for production must recognise the implications of this . While there undoubtedly is scope for local authorities
such as Sheffield to devise their own economic development
programmes in an attempt to guarantee the future of employment
in `their' areas, these cannot substitute for national strategies
towards key sectors such as special steels . Indeed, if local authority
strategies are to avoid becoming one more mechanism for dividing
the labour movement via inter-area competition for investment
and jobs, there must be a sensible political determination of the
relationships between national and local policies . It is difficult to
avoid the conclusion that most local authority strategies to date
have and continue to perform such a divisive role . Acknowledging
this is crucial in evaluating the policy stance of local authorities .
Within Sheffield City Council, efforts are being made to
overcome such problems . The research reported here, for example, was commissioned in an attempt to continue the work of
the Department of Employment and Economic Development in
stimulating and informing debate on and understanding of the
processes of change within Sheffield's economy, amongst those

Capital & Class

76

most affected by them - in this case, workers in steel and related


industries . This is all the more vital in the context of the marketled changes in prospect in sectors such as steel and motor vehicles,
and continuing attacks on basic trade union rights . It is necessary
too to demonstrate that decline in areas such as the Lower Don
Valley, Sheffield's former steel heartland, is not inevitable, but
rather the result of conscious political choices . All the more so as
the city faces the possible prospect of continuing decline :
The old Sheffield - city of steel and heavy engineering cannot be built again . The turnaround from steel city to
service city has taken a generation . It is a long term
structural change which the recession has reinforced . . .
The outlook is still bleak . Manufacturing firms continue to
shed over 200 jobs each month . If this trend continues with
no reinvestment, the manufacturing sector could disappear
completely by the year 2010 .
That is what colours debates about manufcturing in Sheffield .

Such fears were expressed in the local authority's outline of


its Employment Plan (Sheffield City Council, 1987), building on
an earlier `Jobs Audit' which demonstrated the significance of
council employment to the local economy (see Clark et al, 1986
for a summary) . Both are clear that local economic strategies
depend upon a favourable political climate which allows the
sensible co-determination of policies at national and local levels,
worked out in consultation with those employed in industries
such as steel and motor vehicles .
We have seen how national strategies are fatally flawed
without recognition of inter-industry and inter-national production linkages . The contrast between government policies and the
business strategy of companies like GKN could not be sharper . A
national framework enabling more flexible and decentralised
decision making poses questions about the capacity of the UK to
manage a national economy (Radice, 1984) and about the allocation of power within the state . But within all this, as we have
argued elsewhere (Beynon et al, 1986), it is important not to lose
sight of the relations between state and society through the
politics of production . Assisting the rationalisation of capital can
exacerbate current problems for localities such as Sheffield . We
have tried to point to some of the souces of these problems for one
branch of manufacturing . Seriously addressing them via an alternative strategy requires stepping back, in a sense, to question the
purpose of production . It is certainly difficult to do so in the face
of a radically transformed industrial and political structure in
Britain - but it is not an impossible task and one that needs to be
kept on the agenda .

Manufactured in the UK?

1.
Chairman's address to the senior management of Sheffield Forgemasters at Sheffield on Tuesday 26 February 1985 .
2.
Quoted in Financial Times, 9 January 1986 .
3.
Quoted in Financial Times, 14 May 1987 .
4 . Rotherham and Wolverhampton Review, house journal of United
Engineering Steels, August 1986 .
5.
Quoted in Financial Times, 16 August 1985 .
6.
General Objectives Steel 1990 COM(85) 450, 31 July 1985 .
Report from the Commission to the Council on the General Objec7.
tives Steel 1990 COM(86) 515, 7 October 1986 .
8.
General Objectives Steel 1990 : position of the Spanish and Portuguese authorities COM(85) 774, 18 December 1985 .
9.
General Objectives Steel 1990 .

Notes

Bank, J . & Jones, K . (1977) Worker directors speak . Gower, Farnborough .


Beynon, H ., Hudson, R . & Sadler, D . (1986) `Nationalised industries
and the destruction of communities : some evidence from north east
England', Capital & Class 29, 27-57 .
Brannen, P ., Batstone, E ., Fatchett, D . & White, P . (1976) The worker
directors . Hutchinson, London .
Bryer, R .A ., Brignall, T .J . & Maunders, A .R . (1982) Accounting for

References

British Steel. Gower, Aldershot .


Clark, N ., Critchley, R ., Hall, D ., Kline, R . & Whitfield, D . (1986)
`The Sheffield Council Jobs Audit - why and how?' Local Economy
1(4),3-21 .
Garrahan, P . (1986) `Nissan in the north east of England', Capital &
Class 27, 5-13 .
House of Commons (1985) Control and Monitoring of investment by British
Steel Corporation in private sector companies - the Phoenix operations.
Public Accounts Committee, London .
Hudson, R . & Sadler, D . (1987) Special steels in south Yorkshire, the UK
and Europe . Report to Sheffield City Council . Copy available from
Department of Employment and Economic Development, Pinstone
Street, Sheffield .
International Iron and Steel Institute (1983) Steel and the automotive
sector . Brussels .
McEachern, D . (1979) `Parry government and the class interest of capital :
conflict over the steel industry 1945-70', Capital & Class 8, 125-43 .
McEachern, D . (1980) A class against itself. power and the nationalisation
of the British steel industry . Cambridge University Press, Cambridge .
NEDO (1986) Steel: the world market and the UK steel industry . London .
Radice, H . (1984) `The national economy - a Keynesian myth?' Capital
& Class 22, 111-40 .
Ross, G .W . (1965) The nationalisation of steel : one step forward, two steps
back? Macgibbon and Kee, London .
Sayer, A . (1986) `New developments in manufacturing : the just-in-time
system', Capital & Class 30, 43-72 .
Sheffield City Council (1984) Steel in crisis : alternatives to government
policy and the decline in South Yorkshire's steel industry .
Sheffield City Council (1987) Working it out - an outline employment plan
for Sheffield.
Shutt, J . (1986) Industrial decline in Sheffield : where will we be in 1990?
Department of Employment and Economic Development, Sheffield
City Council .

77

Table

BSC joint

ventures with the private sector -the Phoenix schemes

Company

Shareholdings

Products

Allied Steel and Wire Ltd


(formed 1981)

50%Bsc

Wire rod, reinforcing


bar and light sections and
wire

50%GKN
(BSC also has

68% of preference shares)

Sheffield Forgemasters Ltd


(formed 1982)

50%Bsc
50% Johnson

British Bright Bar Ltd


(formed 1983)

Bsc

Seamless Tubes Ltd


(formed 1984)

BSC 75%
TI 25%

Seamless tube

Cold Drawn Tubes Ltd


(formed 1984)

Bsc 25%
TI 75%

Cold drawn seamless


tube

United Merchant Bar Ltd


(formed 1984)

Bsc 25%

Light sections

United Engineerings Steels Ltd


(from April 1986)

BSC 50%

Source :

NEDO,

1986

Forgings

Firth Brown
(BSC also holds 50% of 13% unsecured loan stock)
40%
Bright Bar
40%
(Bsc also holds floating rate subordinated loan notes 1993 -43%)
GKN

Camparo 75%
(BSC also holds 100% of unsecured loan stock)
GKN 50%

Engineering steels
Closed die forgings

Table 2 Home produced market share of selected countries' car sales, 1985

USA

Japan
West Germany
UK

France
Italy

Total market
m units

Domestic production

imports

11 .0

74
98
69
42
63
60

26
2
31
58
37
40

3 .1
2 .4
1 .8
1 .8
1 .7

Source : Financial Times, 20 February 1 986

9
Table 3

Imports and UK content often top-selling British cars

il
11

t UK content of
British-built units $Components of UK-built crs by country of origin

Model

*Total
UK sales

Percentage
imported

Ford Escort

125,571

41 .96

85

1 .3, 1 .6 all diesel engines ; manual gearboxes, bodies, interiors .


Other : 1 .1 engines (Spain) ; automatic gearboxes (France) ; fuel injection (W . Germany)

Vauxhall
Cavalier

110,621

35 .88

47 .5

UK: glass, wheels, tyres, paint, steering wheels, soft trim, minor engine parts (e.g .
filters), steel for bodies
Other : 1 .6, 1 .8 engines, estate car panels (Australia); 1 .3 engine (W . Germany) ;
manual gearboxes (Japan), automatics (France)

Ford Fiesta

103,874

38 .35

62 .1

UK: 1 .3, 1 .6 engines ; bodies and interiors


Other : 1 .1 engines (Spain), all transmissions (France)

Austin/
MG Metro

100,143

Nil

97

UK:

Ford Sierra

83,807

32 .43

74 .47

UK :

Austin/
MG Montego

61,463

Nil

95

UK : all except gearboxes-1 .3, 1 .6 from WV (W . Germany), 2 litre Honda (Japan),


sunroof mechanism (W . Germany)

Vauxhall Astra

60,656

38

52 .5

Same as Cavalier, except bodies pressed in

Ford Orion

53,761

63 .58

83 .2

As Escort, but Spanish-built 1 .1 engine omitted from range

Vauxhall Nova

52,924

N/A

N/A

Austin/
MG Maestro

47,947

95

As Montego, except glass sourced from Belgium

100
Nil

UK:

all except glass (Belgium), oil coolers (us), and alternators (France)

bodies, most engines, gearboxes, interiors, rear axles


Other : 2 .8V6 engines, gearboxes (W . Germany), 2 .3 diesels (France)

UK

*First nine months .


tMeasured by ex-factory gate prices, including all overheads .
$There are some UK parts on imported vehicles, e .g . Ford UK is the sole source of supply for all Escort diesel engines .
Source : Financial Times, 26 October 1985

Et
f''2

n
A
N
N

n
n

Table 4 Forecast car production and sales to 1990

1980

millions
1985

1990

World sales

28 .8

31 .9

34 .9

Western Europe : sales


production

10 .1
10 .3

10 .6
11 .2

11 .5
12 .3

North America : sales


production

9 .9
7 .2

12 .2
9 .3

12 .9
8 .8

Japan : sales
production

2 .9
7 .0

3 .1
7 .6

3 .4
8 .1

Source : DRI World Automotive Report, 1 986