Could Chinese Firm Rescue British Steel?
Construction companies that work with materials such as steel frames in Sussex will be interested to find out about the future of the steel industry in the UK, particularly the news that the sector could be rescued by a Chinese company after a tumultuous year.
British Steel went into liquidation in May 2019, and has been kept in operation by the Official Receiver since then, which has helped to support more than 24,000 jobs in its supply chain.
However, a permanent solution is required to secure the future of British Steel, and this could be achieved by China’s Jingye Group, which has agreed in principle to buy the firm for £70 million.
BBC News reported that the steel maker from south-west Beijing intends to invest in the business in order to become a big player in the industry itself.
It is thought that British Steel will add ‘long products’, such as construction girders, steel wire, and railway tracks to Jingye Group’s portfolio.
Director-general of industry lobby group UK Steel Gareth Stace spoke to BBC Radio 4’s Today about the acquisition, saying: "Actually British Steel makes rail, high-quality rail and heavy sections, i.e. girders, which Jingye doesn't make. [So it] not only increases the amount of different products that Jingye could make but also, much more importantly, secures a foothold in the UK."
He added that this investment was “really welcome”, not only saving 4,000 British workers at the Scunthorpe and Teeside sites from unemployment, but also helping 20,000 others in the supply chain that would be affected if British Steel closed for good.
"Jingye are looking to make significant investment, are in for the longer term and therefore it isn't about keeping this site going for a year or two or a couple of years. To me, what I understand about the company, it's about looking to the future, so we're not going to be back in here in three years, five years, in ten years' time,” Mr Stace commented.
For Jingye Group to ensure problems do not occur to their acquisition like it did with British Steel, it intends to make changes to the sites.
According to the BBC, this involves cutting costs, and at the same time it wants to increase production at Scunthorpe from 2.5 million tonnes a year to over three million.
Businesses that have historically used British Steel for its materials might be concerned about how this latest development would affect them.
Indeed, thanks to the government providing the Official Receiver to enable British Steel to continue to trade, it had been able to fulfil its current and future order book from the date of its compulsory liquidation on May 22nd.
At the time, it released an official statement to assist those that may have been affected, saying: “As a supplier to, or customer of, BSL we appreciate this must be a worrying time for you and your business. To respond to this, Make UK (the nation’s leading manufacturers association) is leading a supply chain group – alongside the Government’s British Steel Support Group made up of local MPs, business organisations, trade unions and local business leaders – to map the supply chain and provide direction to relevant advice.”
Now that Jingye Group is anticipated to take over British Steel, those in the supply chain are likely to be able to continue their trade as they previously had done.