Tata Steel

Tata Steel’s Crisis Could Be UK SMEs Gain

As Tata Steel prepares to pull rank on the UK and close all its loss-making operations here, PM David Cameron is heading into crisis talks with ministers and officials in order to try and prevent action from the firm which, it has been predicted, would result in the loss of a further 40,000 jobs. One man’s loss, as they say, could prove another man’s gain however, and UK businesses could stand in good stead to fill the gap in supply that Tata Steel leaves.

Tata Steel has been in troubled waters for the last eighteen months and the company has made major cuts to its assets at home and overseas in the hope of remaining afloat. The major firm has nevertheless struggled to sustain success, saying that market conditions has rapidly deteriorated and blaming high material and operational costs as well as increasing competition from the Far East.

In fact, demand for steel is falling. Since 2013, the peak of the steel industry, both imports and exports have rapidly declined – a trend we can attribute to the continual innovation in the sector and, as a result, the development of new alloys and materials, particularly for construction. And so, if the government fails to prevent the closure of the Port Talbot plant and others around the UK, many have said a full buy-out is an unlikely prospect. Instead, it might be the case that its rolling mills are sold off separately while the actual steel manufacturing operations are dissolved.

Despite a shortfall in demand, steel will of course remain big business around the world. Steel continues to be the go-to material component for structural and civil construction, as an integral part of both manufacturing and testing in general. And so while only 18,000 people are directly employed by the industry, a great deal of the UK’s 31 million strong workforce are dependent on steel-making and steel products. Should Tata Steel’s difficulties remain unresolved then, pressure will be on to find someone capable of filing its shoes. SME’s and emerging stars in the UK’s steel industry can then find hope in the prospect of new business and new clients.

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