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Steel safeguarding approach a huge threat to industry

Posted on 29 Jun 2022 and read 325 times
Steel safeguarding approach a huge threat to industryThousands of manufacturing jobs and tens of companies could still be lost in the domestic supply chain if the Government does not reconsider its approach to steel safeguarding, warns The Confederation of British Metalforming (CBM).

The stark warning comes as the organisation has seen its 200-plus members severely impacted from tariffs designed to protect parts of the UK steel production sector that are currently ill-equipped to meet actual domestic demand.

This means Tier Ones and sub-contractors working in the automotive, aerospace, construction and general engineering sectors have been paying hundreds of thousands of pounds to import their ‘Category 12’ steel — including critical quality and performance bar and section — from European mills, as the quarterly tariff-free quotas are running out within a month.

Recent pleas from the CBM to remove engineering metals under the 7228 code has seen the Government act, almost doubling the available quotas for this category before the 25% tariff kicks in. While this move is welcomed as a small sign of progress, the organisation says it does not go far enough to remove the unnecessary financial cost and injury being felt down the supply chain and raises the very real prospect of lost orders and the spectre of production being moved away from the UK.

Steve Morley, president of the CBM, said: “We acknowledge the substantive increase in the Category 12A quota and welcome the motivation to rebalance an unfair and severely damaging position that has led to it. However, during this quarter the Category 12A quota on imports from Europe exhausted within one month. Doubling that quota will not, therefore, prevent exhaustion, it just pushes it a month further down the line.”

He continued: “This means CBM members will continue to have to operate with a high level of uncertainty and jeopardy. A continuation of this situation over a further two years, will mean continued questions from overseas holding companies about the viability of manufacturing in the UK. Even at reduced levels, tariff costs will continue to injure these businesses unjustifiably.”

The CBM supports a vibrant UK steel industry that delivers world-class performance and quality at a cost that is competitive. Recent investment by British Steel in Scunthorpe is a shot in the arm for the sector, but the organisation says there is a need for other major players in the industry to show the same level of commitment to producing steel in the volumes and specifications required by UK manufacturing.

Mr Morley added: “British steel mills have not been able to supply the Cat 12a materials our members need to support critical domestic and export supply chains, nor are they likely to be able to do so in the near future. So, what exactly are the Government looking to protect? It certainly isn’t UK jobs in downstream metal manufacturing.

“The increase in quotas need to go further and we are therefore requesting that Anne-Marie Trevelyan, the Secretary of State for International Trade, adjusts the level of the Category 12A quota for imports from Europe to 33,000 tonnes per quarter. This is the only solution that will have virtually no effect on UK steelmakers, but, at the same time, will allow our members to import materials when required without the risk of incurring 25% additional costs.

“It will also alleviate damage to downstream British manufacturers, already facing the threats of losing critical contracts, of shedding jobs, or finding their manufacturing operations relocated to the EU or other parts of the world.”

He concluded: “The Government must listen to us. If they do, this will remove the current unnecessary burden that carries a very real threat to thousands of downstream manufacturing jobs, while leaving safeguarding categories in place to protect UK Steel members.”