Chinese buyout marks new chapter in British Steel history

British Steel, which makes high-margin, long steel products used in construction and rail, would give Jingye access to European infrastructure market. (AFP)
Updated 13 November 2019

Chinese buyout marks new chapter in British Steel history

  • UK Steel calls it ‘positive news’ for the steelmaking industry

LONDON: A Chinese buyout marks a new chapter in the tumultuous history of steelmaking in the UK, which has been characterized by nationalization, privatizations and recurring crises.

Despite having an economy dominated by the services sector, steelmaking retains a special place in British hearts, where it is an enduring symbol of a bygone golden industrial age.

That explains the huge interest in Monday’s announcement of a buyout of British Steel by China’s Jingye, which made national headlines even with an election campaign in full swing.

The takeover should be a breath of fresh air for some 4,000 British Steel employees, most of whom work at the Scunthorpe site in northern England.

Professional body UK Steel called it “positive news for British Steel and its workers,” assessing it would go toward “delivering a sustainable future” for the industry.

Jingye for its part has promised to invest £1.2 billion (€1.4 billion, $1.5 billion) over the next decade, without elaborating on how it will turn around the loss-making firm.

FASTFACTS

•China’s Jingye has promised to invest $1.5 billion over the next decade.

•The takeover is seen as a breath of fresh air for some 4,000 British Steel employees.

•British Steel has its roots as far back as the Industrial Revolution but took shape in 1967.

“It’s not a huge investment,” said Jonathan Owens, director of the business and management program at Salford University, and a former worker at British Steel.

“My worry would be that it is only a short-term investment. Are they just buying the knowledge of the high-quality steel production that goes on at Scunthorpe?”

So far Jingye has only said it would keep on as many employees as possible, without committing to a figure, and said cost-cutting would be necessary. It is difficult to say if the Chinese group will succeed where others have failed to ensure a future for British Steel, which is responsible for one-third of the country’s production.

British Steel has its roots as far back as the Industrial Revolution but took shape in 1967 when the Labour government nationalized the industry, which at the time employed nearly 270,000 people.

The 1980s were painful, as global demand declined and steel plants turned loss-making. A series of strikes saw the Conservative government under the “Iron Lady” Margaret Thatcher privatize the firm in 1988. That signaled the start of a long decline that involved deep cuts in the workforce, the closure of sites and the loss of the company’s name before Tata Steel bought it in 2007.

In 2016, the investment fund Greybull Capital bought part of its activities for a symbolic one pound.

Greybull Capital brought back the name British Steel for its long steel products business, mainly in rail and construction, hoping to make it a European leader. But the dream did not become a reality and it went bust in May this year.

The slump again reflected difficulties in the sector, which now employs no more than about 32,000 people and has been hit by fierce competition from China and uncertainty over Brexit cutting demand from European clients.

The relaunch of British Steel, which is the second-biggest steelmaker in the country, will face as much scrutiny as the future of Tata Steel, which currently holds the top spot.

The Indian giant has revealed little of its plans for the UK since the recent failure of a tie-up between its European business and Germany’s Thyssenkrupp, prompting fears for the future of Tata’s Port Talbot plant in south Wales.

Port Talbot employs some 4,000 of Tata’s 8,000 employees in Britain.

A third business is still trying to make its mark, the Liberty House group of the British-Indian tycoon Sanjeev Gupta.

He has quietly built up his portfolio, notably by buying out steelmaking firms in former industrial areas, and is reported to be interested in some British Steel assets.

Another potential investor is the government, although under the ruling Conservatives it has been quieter on big industrial issues in recent years.


China's aviation regulator raised concerns with Boeing on 737 MAX design changes

Updated 12 December 2019

China's aviation regulator raised concerns with Boeing on 737 MAX design changes

  • China is reviewing the airworthiness of the plane
  • China was first country to ground plane in March

BEIJING: China’s aviation regulator raised “important concerns” with Boeing Co. on the reliability and security of design changes to the grounded 737 MAX, it said on Thursday, but declined to comment on when the plane might fly again in China.
China is reviewing the airworthiness of the plane based on proposed changes to software and flight control systems according to a bilateral agreement with the United States, Civil Aviation Administration of China (CAAC) spokesman Liu Luxu told reporters at a monthly briefing.
He reiterated that for the plane to resume flights in China, it needed to be re-certified, pilots needed comprehensive and effective training to restore confidence in the model and the causes of two crashes that killed 346 people needed to be investigated with effective measures put in place to prevent another one.
China was the first country to ground the 737 MAX after the second crash in Ethiopia in March and had set up a task force to review design changes to the aircraft that Boeing had submitted.
The US Federal Aviation Administration (FAA) will not allow the 737 MAX to resume flying before the end of 2019, its chief, Steve Dickson, said on Wednesday.
Once the FAA approves the reintroduction into service, the 737 MAX can operate in the United States, but individual regulators could keep the planes grounded in other countries until they complete their own reviews.
“Due to the trade war, the jury is still out on when China would reintroduce the aircraft,” said Rob Morris, Global Head of Consultancy at Ascend by Cirium.
Chinese airlines had 97 737 MAX jets in operation before the global grounding, the most of any country, according to Cirium Fleets Analyzer.