BFBEnergyPaper

MetalsTOTAL UK EMPLOYMENT471,000 in 2012 56 (foundry sector employs around 62,000employees). 57THE STATE OF THE SECTORMetal, along with plastics and materials accounted for 2.0per cent of UK GVA (gross value added) in 2011 (an outputof £28 billion). 58 In 2013 alone metals accounted for £18.4billion of UK exports with around 30,000 companies inthe UK metals sector (80 per cent of foundries are SME’s.) 59Output of metal products has recently fallen (see Figure 10)however there has been a slight recovery in recent years.PROBLEMS FACING THE SECTORThe metal sector has been described by commentators as“a sector where closures and redundancies had becomethe norm in northern England” (the greatest concentrationof jobs in the metal industry are located in Yorkshire,Humberside and the West Midlands). 60 High energy bills,coupled with the economic downturn have hurt theEuropean steel industry. In a wide-ranging report by EEF in2012 it was reported that ArcelorMittal had permanentlyhalted iron and steelmaking at its Liège (Belgium) andFlorange (France) plants, mothballed steelmaking plantin Schifflange (Luxembourg) and a plate mill in Galati(Romania) and had halted its rolling mills at Schifflange andRodange. Riva’s Taranto plant (Italy), the largest steel plant inthe EU, was only operating at 70 per cent capacity. Beltramehas also announced the permanent closure of rollingmills in Belgium, Luxembourg and Italy, together with themothballing of its steel plant in Turin. Mechel is mothballingits Romanian operations.In the UK, Tata Steel’s Scunthorpe works is only operatingtwo of its four blast furnaces, while output from its PortTalbot blast furnaces has been temporarily cut back. Theclosure of the Thamesteel Sheerness plant also removedcapacity from the market. 61There have been numerous factors which have been citedas the reasons behind this recent decline. Trade bodies haveraised concerns about the recent lack of demand from theEU27 with Eurofer warning about the impact (see Figure11). This lack of demand is almost certainly down in partto the recent recession and on-going crisis with the SingleCurrency. 62However, despite this concerning trend in the EU, thereremains very strong demand from third countries, especiallyChina, with Figure 12 showing that output is slowlyincreasing since the dip in 2008. 63THE IMPACT OF HIGH ENERGY BILLSWhile the economic downturn has certainly had an impacton the steel and aluminium industry, leading industrialfigures have warned that high energy costs are alsothreatening their firms. ArcelorMittal, the world’s largest steelmaking company has been vocal in raising their concerns,According to the CEO, Lakshmi Mittal, “the huge cost gap[between Europe and the US] is threatening Europe’s energyintensive industries” and has described the EU’s policiesas being “punishing”. 64 These fears are not just confined tothe UK; Wolfgang Eder, chief executive of Voestalpine, theAustrian steel company, has warned that “the exodus hasstarted in the chemical, automotive and steel industries.If Europe doesn’t change course, that process will accelerateand at some point not be reversible”. 65 Following a EuropeanCourt Decision in April 2010 that the power plant is subjectto the Large Combustion Plant Directive (despite theprotests of the UK Government) Rio Tinto Alcan’s aluminiumsmelter in Lynemouth closed in March 2012.56 Government figures put together employment figures for manydifferent industries, making it very hard to separate the exact numberof employees for any given industry (example found at ). As a result Trade Body figuresor Trade Union sources, supported by academic research were used tocalculate employee numbers of each individual sector.57 Unite: the Union, Steel, metals and foundry sector overview, found at58 BIS, Industrial Strategy: UK sector analysis, September 2012, p.10, foundat 59 Department for Business Innovation and Skills, BIS Economics PaperNo.18: Industrial strategy: Sector analysis, September 2012, found at and Unite: theUnion, found at 60 C. Tighe and A. Bounds, “UK Steel furnaces roar back into life”, FinancialTimes, 13 May 2012, found at 61, 62, 63 EEF and UK Steel, Steel Market Report: November 2012, foundat 64 L. Mittal, “Rewrite energy policy and re-industrialise Europe”, FinancialTimes, 20 January 2014, found at 65 C. Bryant, “High European energy prices drive BMW to US”, FinancialTimes, 27 May 2013, found at 26