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Skills deficit warning over steel crisis

Tata steel construction

A recruitment firm for the steel industry has warned that unless the current uncertaintly about the ownership of Tata Steel UK is resolved, there could be a massive skills deficit.

The warning comes as the UK and Welsh governments outline a support package for potential buyers of Tata Steel UK, including the possibility of it taking a 25% stake in the business. Tata Steel announced its intention to sell its UK arm last month and now the government is offering any buyer a support package worth hundreds of millions of pounds. The British and Welsh governments are acting to prevent the closure of Port Talbot steelworks in Wales, and other facilities in England.

The government said financial support would be tailored to the buyers’ specific needs, however it is expected to be largely through the provision of debt financing. Alternative financing including convertible debt would also be considered and the government has offered to take a stake of up to 25% in the business.

Construction recruiter Randstad Construction Property & Engineering carried out a snap poll of specialist engineers and construction workers. It shows that 94% support government help, a third (35%) saying they would support tariffs on foreign steel imports and 31% saying they supported a buy-British policy for all publically funded projects.

Randstad managing director Owen Goodhead said: “Today the price of steel is low because of an error of oversupply on the other side of the world. If that was a permanent factor, we might need to think twice about trying to compete. It is not. But as a result we are talking about permanently shutting down our own centres of global engineering expertise.

“A whole ecosystem of specialist firms is dependent on the expertise that comes with a flourishing steel industry, just as many of them are also dependent on a sustainable source of steel itself. Our economy in 10 years’ time will depend on the support for talent and ambition we can offer workers now – as employers and at all levels of government. The British economy of the 2020s will barely remember the latest blips and eddies of last week’s steel price. Will cheap steel be available from elsewhere in 2026? And more importantly – will the engineering jobs, the strategic defence contractors, the rail workers or the much-needed construction capacity be here in a decade’s time, if Britain jettisons its industrial heartland in 2016?

“Competing with a fundamentally better competitor is a bad idea – but throwing in the towel after a couple of hard knocks is just as shameful. Against unfair and aggressive competition, dumping steel in European markets at a loss, there is space for a constructive and proportionate response.”

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