In May one of the UK’s largest steelmakers, British Steel, entered insolvency, raising concerns about the industry and its future.
The UK steel industry has faced many challenges and has been in decline for some time, employing just one tenth of what it did back in the 70’s. The UK government continues to address the challenges facing steelmakers, introducing measures to bolster the industry and support those affected by closures.
But what does it mean for our wider economy?
The steel industry is vitally important to the UK’s economy, with a limited number of producers occupying the sector. Each producer makes their own unique type of steel – British Steel for example specialised in rail and construction products – meaning its loss leaves a large void in the landscape, forcing the supply chain abroad in search of materials.
What have the challenges been?
A cauldron of factors has ultimately contributed to British Steels’ downfall, including rising energy prices in the UK, climate change taxes, and competition for overseas producers which has led to weak market demand and higher raw material costs.
Brexit has undoubtedly stalled production too, as contractors await the outcome of Brexit discussions, and what it will mean for imports and exports.
What does the future hold?
The steel making industry and the resources it has available are far more productive now than ever before, meaning less people are needed to produce the same volume of steel. In hand with this goes the boom of the international steel market – and fact that it’s often far more cost effective to relocate production to countries with lower labour costs and lower overheads.
However, at this point it is important to note the shift in the UK’s employment market over the last few decades. Our economy is a service-orientated one, with more people than ever in service-based roles, with less and less manufacturing roles available.
Financial pressures present themselves in many ways. Proactivity is key, and will help businesses adapt to environmental, economic and political changes, ensuring longevity and adaptability.
If you are facing any financial challenges, or would simply like some advice, please do not hesitate to get in touch with a dedicated member of our Business Recovery and Insolvency team today.