The UK steel industry needs to employ electric arc furnace technology and use as feedstock the large domestic scrap surplus in order to revive its flagging fortunes, according to steel industry consultant Rod Beddows.

Sections producer Caparo Industries appears to be the latest UK steel firm that has run into trouble after it entered administration on Monday (see related story). This comes after SSI UK on Teeside went into liquidation two weeks ago and Tata Steel is reported to be shedding another 1,200 jobs at its Scunthorpe and Lanarkshire sites after the firm mothballed earlier this year its Llanwern strip mill. Celsa in South Wales, meanwhile, is said to be under pressure from banks.

“This at a time when ‘infrastructure’ is the new economic war cry to go along with ‘rebalancing the economy’ in favour of manufacturing,” Beddows tells Kallanish. “Neither of these two desirable objectives will be made easier by steel industry developments.”

Last week the UK government said it would set up three working groups chaired by ministers covering the areas of public procurement, international comparisons, and competitiveness and productivity (see Kallanish 19 October 2015). It also said it committed to support the compensation package for energy intensive industries such as steel. However, this action has been criticised for coming far too late.

So what can be done? “The UK has inappropriate technology, a poor culture on the workshop floor and in the board rooms,” Beddows says. “Its management culture is focused on short term costs and not long term performance and service. The government does its best to hamstring the operations through high energy prices. Finally we are hamstrung by the EU from taking rapid and effective action against ‘dumped’ imports – of which China is guilty.”

The UK needs to make use of its large scrap surplus at energy prices equivalent to the EU. EAF technology would be less expensive, more flexible, less capital intensive and would use indigenous raw materials.

“New cultures can be brought from North America via Nucor and its acolytes,” Beddows continues. The UK is seen needing indigenous entrepreneurs, new capital – from venture capitalists and the likes of Nucor, government support to reduce energy prices, and radical action on trade policy which might require an exit from existing EU structures. “And finally no government capital and subsidy,” Beddows concludes.