The Prince of Wales during his visit to Liberty Speciality Steels in Rotherham, South Yorkshire where he formally reigniting a previously mothballed furnace. PRESS ASSOCIATION Photo. Picture date: Friday February 16, 2018. The electric arc furnace at Liberty Speciality Steels was decommissioned by previous owners during the steel crisis two-and-a-half years ago. The relighting on Friday formed part of a multimillion-pound investment by the Liberty House Group, which will create 300 jobs at Rotherham and its sister plant in Stocksbridge, Sheffield, as well as hundreds more across the country. See PA story INDUSTRY Steel . Photo credit should read: Josh Payne/PA Wire
The Prince of Wales last week formally reignited a Yorkshire steel furnace that had lain idle for two years © PA

As steel factories up and down the UK closed and thousands of workers lost their jobs, Chris Williamson feared the worst.

“We were staring into an abyss and thought, is this the end of steelmaking in Rotherham?” he recalled.

But that seemed like a distant memory last Friday when Prince Charles visited the South Yorkshire steel mill where Mr Williamson works and ceremonially reignited the larger of its two electric arc furnaces, which had lain idle for more than two years.

It was a symbolic moment for the UK steel sector, which nearly collapsed in 2016 under the weight of plummeting global steel prices, a flood of imports, unfavourable exchange rates and high energy costs.

“We aren’t looking over our shoulders any more, we’re looking forward,” said Mr Williamson, who has been a steelworker for 23 years. “Hopefully we can get old customers back and build.”

A recovery in steel prices and an improved global growth outlook have buoyed Mr Williamson and other steelworkers like him throughout Britain.

Although steel represents just 0.1 per cent of UK economic output and employs about 30,000 people, less than a tenth of its peak workforce in the 1960s, many see it as a cornerstone of the manufacturing sector.

Deep cost-cutting and efficiency programmes have left UK steel companies leaner than ever, while some producers have shifted their focus from commodity-grade steel towards more valuable forms of the metal.

“For the first time we have a fairly clear vision of what the steel sector can look like,” said John Bolton, chief executive of Liberty Steel, a division of the commodities and industrials group Liberty House. “There’s a direction now.”

UK steel production chart

But it remains unclear whether the industry has changed sufficiently to weather another downturn in a global market that is prone to boom and bust.

In Britain’s largest steelworks, in Port Talbot, South Wales, renewal efforts are starting to pay off. At one point during the crisis, it was said to be losing as much as £1m a day. But industry figures say the plant, which is owned by the Indian conglomerate Tata, is now showing improved financial performance.

“The restructuring of the costs in Port Talbot is massive. Compared to two years ago it’s a totally different plant,” said one industry figure. “That was low-hanging fruit . . . now to get to world-class, it’s investment they need,” added the individual, who did not wish to be named.

A financial burden was lifted from Tata after it persuaded regulators to sign off the restructuring of a generous £15bn retirement fund, saying the overhaul was required to prevent the plant falling into insolvency. Trade unions agreed to the changes in exchange for keeping Port Talbot’s twin blast furnaces — which produce molten iron that is converted into steel — lit until at least 2021.

But Bimlendra Jha, the chief executive of Tata Steel UK, has said the company is still not generating enough cash on its own to fund a £100m-a-year investment programme to improve its facilities.

A crucial decision looms as one of the plant’s blast furnaces nears the end of its working life, and employees worry it would not be economically viable with just one furnace.

Moreover, as Tata pushes ahead with merging its European steel operations with those of German rival ThyssenKrupp, some analysts see the Welsh facility as the weakest of the three large steelworks in the enlarged group — and therefore a potential target for future cutbacks.

Yet Mr Jha remains optimistic about the medium and long-term outlook for the plant and the wider steel sector.

Asked whether the industry could withstand another massive shock, he said: “If it happened tomorrow, certainly not.” But he added: “If it happens in a few years’ time — that’s what we are working towards.”

A shake-up of ownership has also breathed new life into the sector. Tata has offloaded a number of plants, including its speciality steel division in Rotherham, where Mr Williamson works. Liberty House bought the business for £100m last year and is investing an additional £20m in the site.

A turnround programme is also under way at the giant Scunthorpe steelworks on the east coast of England.

Following the closure of the Redcar steelworks on Teesside in 2015, Scunthorpe is one of just two remaining “integrated” plants — where steel is produced from raw materials — in the UK.

It was sold by Tata for £1 in 2016 to Greybull Capital, the investment firm. The business was renamed British Steel and returned to profit during its first year of independence.

But at an industry conference this month, deputy chief executive Paul Martin said: “We have survived but we aren’t yet sustainable.”

The UK steel industry has benefited from the fall in the pound following the Brexit vote, which has made exports cheaper. Demand in Europe has remained strong, while an EU crackdown on the “dumping” of steel by countries such as China has boosted producers across the European bloc.

But experts warn that there remains a global oversupply of steelmaking capacity.

The UK industry is renewing calls for more support from the British government, including matched funding for research and development, and action to reduce energy costs and commercial property taxes, to create a “level playing field” with overseas competitors.

“If post-Brexit Britain is to be a nation of makers and inventors, we simply can’t operate at such a disadvantage,” said Roy Rickhuss, general secretary of Community, the steelworkers’ union.

Ministers point to changes in procurement guidelines to promote the use of domestic steel, while the department for business, energy and industrial strategy said it was working with the industry, unions and devolved nations towards a “sector deal”.

But Mr Rickhuss said: “The struggle is far from over. Words of support for the industry and its workers must be met by action”.

Redcar ‘devastated’ by plant closure

The October 2015 collapse of SSI UK ended 170 years of iron and steelmaking that was central to the local economy of Redcar, in north east England.

Nearly 3,000 people lost their jobs — and in the years since, few have been able to find similarly paid work.

The average Redcar steelworker earned £33,000, according to Paul Warren, the regional organiser for the Community steel union. Skilled workers earned more.

But now, an annual salary of £24,000 is the “golden egg” for those who can find it, Mr Warren said. He added that for many former SSI workers, earning £18,000 a year is a more realistic goal.

Figures from the Resolution Foundation think-tank have shown that areas with a heritage in heavy industry have struggled to maintain high levels of employment. The Redcar and Cleveland area saw an 8.3 per cent drop in full-time jobs over the past decade.

After SSI collapsed, the government provided £50m to a local task force to assist economic recovery, plus £30m for redundancy payments. The extra funds reportedly helped create 1,793 new jobs and safeguarded another 420 in the area. It also funded more than 23,000 training course places and supported 309 start-ups in the region, according to a local task force.

But task force chair Amanda Skelton, who is also chief executive of the local council in Redcar and Cleveland, said few workers have been able to match their former earnings or lifestyle.

Chrissy North, a Redcar resident whose family has worked in the steel industry for four generations, said: “It’s had a devastating impact on the area. Guys who were on good money are now on the minimum wage.”

Many locals are also bitter that pleas for government support to conserve Redcar’s coke ovens and blast furnace for future use were rejected. “People feel a bit sickened that the government didn’t listen, “ said Mr Warren. “It would have given us a fighting chance.”

Chris Tighe in Newcastle

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