New Midlands Steel Taskforce calls for energy prices to be cut and help industry in crisis

A Midlands Steel Taskforce was set up this week to hold crisis talks over the future of the industry after Black County based Caparo went into administration.

Business leaders, academics and economists met at Birmingham City University yesterday to thrash out a strategy to support the region's operators dependent on, or connected with, the steel industry.

Talks came after Caparo was plunged into administration this week with 1,700 jobs on the line and following more than 4000 jobs losses in Britain's steel industry over the last month, including Tata Steel – who have a base in Wolverhampton.

Reflecting on this week's demise of Caparo Industries, the Professor of International Political Economy in the University of Wolverhampton's Business School, says: "Over the last 20 years UK manufacturing output has been more or less stagnant. Industry has fallen so far in comparative terms that even in Switzerland they produce nearly three times as much manufacturing output per head as the UK. And its not cuckoo clocks.

"These days they import them from China. They pay for them with the high tech stuff that they sell to that country and the world.

"The crisis in the UK steel industry is part of this problem. Steel production has been cut back in most advanced economies. But the reduction in production here is one of the largest of all. Output is less than half the level of 50 years ago.

"The UK industry began this year with one third of the production of Germany and one half of Italy. It will likely end it with the gap even greater.

"Rich countries can and do produce steel. It should, especially at the high end, be part of a modern high tech complex. But faced with problems the government still seems to believe that the market knows best and nothing can or should be done to control it.

"Ironically earlier this year the Prime Minister was talking up the steel industry as a success story. Caparo presented itself as a company which was not content to rest on its laurels.

"That was one reason why it had close links with the university.

"But once companies like this go, the effect is catastrophic for the workers and those in the supply chain. Successful change requires clusters of firms that are mutually supportive. It needs more than ad hoc survivors of this or that market fluctuation.

"In the absence of support and an industrial policy some of Caparo may be saved. But with support, more of it, and other steel makers, could be saved. This would benefit those who work there and the immediate supply chain. It would benefit the retailers who depend on their spending power.

Further numbers released by the West Midlands Economic Forum show that cuts faced by steel giants like Tata and Caparo mean hundreds of thousands of people working in the Midlands supply chain could be left without jobs.

The meeting was told that 42 companies had registered an interest in taking over part of the Caparo.

Rachael Eade, national head of automotive at Government backed initiative the Business Growth Service, said: "We are working with clients making bids to PWC. We have to get a good relationship with PWC.

"We heard there had been 42 companies which had registered an interest. The interest is there but for Caparo and its employees speed is important.

"There is a lot of work happening out there but we need a point of support and a mechanism to do that little bit of communication."

Halesowen and Rowley Regis MP, James Morris, who attended yesterday's meeting, said: "Clearly it is important to have a plan around the mitigation of energy costs. The UK is part of climate reduction charges but energy costs is an issue we need to resolve and find a way of mitigating, although the Government has spent £50m on mitigating energy costs."

West Midlands MEP Neena Gill added: "I am extremely concerned about the steel sector and the implications for the West Midlands. I believe we are at an historic crossroads.

"Other European countries are not facing a similar situation. It's interesting that France and Germany paid half the cost for energy than in the UK, in the steel sector alone.

We have to overcome the problems, some issues have been related to the strong pound, steel dumping and energy costs.

"There are actions I believe the Government could have taken. This crisis has been developing, it hasn't happened overnight. They could have asked the Commission to explore anti dumping and stop steel being dumped.

"I think the Government hasn't been bold enough and has been too timid in addressing the issues.

"My heart goes out to the hundreds of people who are going to be laid off and their families. We need to know the plan and where they are going to end up."