Steel chief's strong belief - regardless of Brexit or Trump's tariffs
Paul Martin's take on British Steel's status as the second full year results and significant investments were announced.
By Scunthorpe Telegraph | Posted: 18 Jul 2018
STRONG belief in British Steel as a business is being shown by bosses in Scunthorpe, as it invests heavily despite ongoing uncertainty over Brexit and the direct and indirect implications of US steel tariffs.
Paul Martin, deputy chief executive, underlined his absolute confidence in what the company is doing strategically, while having eyes and ears across the North Sea and Atlantic, as well as a voice in Westminster.
He also welcomed moves from Brussels to take action against dumping dangers exacerbated by US tariffs, announced as British Steel’s annual results were published today.
The European Commission has tabled a quota and tariff package to ease pressure on markets, set on average imports over the past three years, with a 25 per cent tariff for anything above.
Mr Martin said: “We have a couple of key critical customers in the US and we continue to supply at the moment. They are still having to pay a tariff. we are working with them, and if they want to apply for exemption we will work with them to see if that is possible.
“The bigger risk of tariffs is what happens to steel that would have traditionally gone in to the States. We are in regular dialogue with the Government and EU, who are going to put in safeguarding measures to make sure we don’t become a dumping ground, and that we don’t have a repeat of the crisis in 2015. We continue to work with them. If we cannot get exemptions on products, the bigger picture is ensuring we don’t become a dumping ground for cheaper, substandard steel that creates all sorts of problems. I was delighted to see what was announced this morning, and that the EU is looking at safeguarding measures.”
On Brexit, like many in business on the Humber, he wants frictionless borders and open market access. Investments in capacity have already have been made to gain access to the German rail market, with more coming down the line, and the wire rod investment also has uses, particularly in car-manufacturing.
“We are in regular dialogue,” said Mr Martin, with British Steel having welcomed Prime Minister Theresa May on her ill-fated election campaign in 2017. “We have plants in France and the Netherlands, where steel made in Scunthorpe is finished, and we would like to have access to EU as a market, and want frictionless borders. We don’t want lots of problems putting material from Scunthorpe to France, or Scunthorpe to The Netherlands. We don’t know what the outcome will be, but we have regular dialogue and Government knows what our asks are.”
While some companies are threatening to pull out of Britain should it be hard Brexit, the company carrying the country’s name categorically won’t.
“Our operation of primary steel making is here,” Mr Martin said. “It would be impossible to pick up and move it. As a board we could sit and not make decisions, but you have got to have a belief that our business will be in a good position regardless of the outcome. It could be negative, it could be positive, we have got to work it. When you take a look at today’s results, we are making steady progress, and we are seeing no stalling of orders from Europe.”
A £50 million commitment to Scunthorpe Rod Mill was the headline act of the results, and it front ends a £500 million wish list.
“We have got to make sure we have got a cost effective and up-to-date primary end where we make steel, and also in our downstream businesses in the high value added products,” Mr Martin said. A blast furnace relining at a cool £70 million is on the horizon, while the rod mill follows other specialist additions for Scunthorpe. “We have seen some of that already in our investment in rail,” he continued. “We have got to 120-metre rail, which allows us to go to the German market, and we are finalising a coated materials facility.
“It is balancing future investment in maintaining our base, but also going up market in downstream businesses.”
That is a clear reference to the stated desire to service specialist rather than commodity markets.
“There are steel companies that make small margin, huge volume, and there are smaller steel companies with differentiators. That’s our strategy, to make steel for the differentiator market. The rod mill is part of that, it will allow for a better product range, with higher quality, and this market tends to be higher price, higher value.”
Taking check of what has happened within the business since the British Steel flag was hoisted up on June 1, 2016, and acknowledging a “much higher sense of job security, not only security for people in the rod mill, but the 5,000 employees across British Steel,” Mr Martin added: “For me, from a loss of £80 million then to a first quarter profit of £21 million now is good progress.
"We are reasonably pleased that the transformation is on track, and when we talk of future £500 million of investment, it shows the growth we need for the plan to be achieved. Not only do we want to be sustainable and profitable, we want to be in the top quartile of profitable steel companies in Europe. We are not there today, we have made lots of progress, but there is definitely more to do. Today is a good day, it is good for employees, it is a good news story, but we don’t lack ambition to develop further.”