The Ministry of Defence (MoD) yesterday announced its intention to nationalise South Yorkshire-based Sheffield Forgemasters International Ltd
(SFIL), a heavy engineering company, allowing the UK Government to refinance the company and secure the supply of components for critical existing and future UK defence programmes. The 215-year-old manufacturer plays a key role in the UK’s nuclear submarine supply chain.
The MoD intends to invest up to £400 million for defence critical plant, equipment and infrastructure into SFIL over the next 10 years to support defence outputs. The acquisition has been assessed as the best value for money for the tax payer due to the company’s unique capabilities and circumstances. The immediate cost of the acquisition is £2.56 million for the entire share capital of the company plus debt assumed.
SFIL is the only available manufacturer with the skills and capability to produce large-scale high-integrity castings and forgings from specialist steels in an integrated facility to the highest standards required for these programmes. Furthermore, SFIL’s ownership will not prevent other UK based manufacturers bidding for MoD contracts, which will continue to be run in an open and fair competition.
While securing defence output is the priority moving forward, the Group will continue to operate in commercial markets with its existing equipment and will also look to exploit opportunities that may arise from the UK Government’s net zero carbon agenda, including the offshore wind and civil nuclear markets.
The MoD has already started working closely with the company to implement best practice governance that will ensure appropriate financial oversight to secure the company’s future success, with the aim eventually to return the business to the private sector.
David Bond, Sheffield Forgemasters CEO, described it as an "important milestone" for the company, South Yorkshire and UK manufacturing as a whole.
He said: “We will still be able to operate on a full commercial portfolio as well as defence. We’ll be a public corporation and what that allows us to do is to get the government to invest in the business on a scale we could never achieve as a private company.”
The Unite union said it had “waited two years” for the news and described it as a “huge sigh of relief” for steel communities.
Steve Turner, assistant general secretary for manufacturing, said: “It brings to an end years of instability for this historic company, but is also a sign that the Government is maybe finally waking up to a crisis of its own making.
“Critical infrastructure industries like steel function better in public hands and advanced economies like our own need to have stable, secure domestic steel production capabilities to protect our national security interests as well as to compete in global markets.”