Question: why, as a successful engineering firm whose factory is located in the shadow of the Port Talbot steel works, do we bother to go all the way to China and Vietnam to source the specialist steels we need to make our products? Answer: mainly because the steel produced locally is of insufficient quality to meet our customers’ specifications. It follows that, if we are unable to compete with our rivals on a technical level, we will go out of business. Law of the jungle – it’s as simple as that.
Giving world-leading engineering companies like Rolls-Royce a helping hand is one thing, but why is Labour’s newly-appointed Shadow Business Secretary, Ed Miliband, using the smokescreen (gravy train?) of the Coronavirus crisis to demand that the Government bails out the UK’s steel industry? Heaven knows billions of pounds of State and private cash have been pumped into this industry down the years and it’s never really solved the problem. Recently, it’s been suggested that Tata, the country’s largest steel producer, alone could need a cash injection of up to £500m to survive.
In an interview with the FT newspaper, Mr Miliband makes the case for the Government possibly taking equity stakes in the businesses it supports, rather than just forking out taxpayers’ money in the form of loans that are seldom, if ever, repaid. However, such a step would only make sense in the real world of commerce if the rescue package also involved taking some measure of control over output. Strings should be attached.
Saving jobs is frequently used as a lever to extract money from the state. It is a powerful argument, but the quality of what is produced also has to be addressed. The two should go hand-in-hand because companies like ours – customers of the steel industry, which operate in a highly competitive and technical market – have to have confidence in the ongoing quality and security of supply. We have a duty to our employees and other stakeholders to survive, too.
So, I would like to see Government supporting businesses and sectors that are trying to build a future. I am opposed – particularly in the current climate – to propping up businesses that are technically inadequate, rooted in the past and just happen to be useful to cite as a case study for political expediency.