Name: Why the steel industry is worried about Brexit | CNBC Reports
Uploaded: 2020-04-28T02:43:05.000Z
Duration: 4 min 19 s
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They've been forging steel here since 1866,

it's one of the oldest steel manufacturing facilities in the U.K.

But now experts say the threat of a no-deal Brexit could mean that the safeguards that have

helped prop up prices for British steel could vanish alongside European union membership.

Steel was vital to Britain's industrial advancement in the 19th century.

It helped support the country's railways, bridges and buildings.

And in Europe, after the Second World War, steel played a major role

in the continent's rebuilding, both physical and political.

Six European countries, who'd fought on different sides of the war,

agreed to set aside their commercial differences and share centralized authority over steel production.

That decision really marked the first step in the formation of the European Union.

But since the 1950s British government hoped to nationalize the U.K's steel industry,

it did not initially sign up to the new European “club” and only joined much later.

But experts say that it's European Union membership that in recent years

has provided bigger benefits to steelmakers, in terms of propped up prices

and increased employment, than to any other U.K. industry.

So with Brexit now so close, how might the British steel sector

react to a change in the U.K.'s relationship with Europe?

In the event of a no-deal Brexit, the percentage of total U.K. steel exports facing trade restrictions,

including tariffs, could swing from 15 percent to a whopping 97 percent.

Higher shipping and admin costs could total £70 million, or $92 million, a year for steel exporters.

And let's not forget President Trump's steel and aluminum tariffs

that have separately threatened the industry.

Basically, the timing could hardly be worse.

Alex Cross has spent most of his adult life around giant slabs of molten metal.

He's the production director at Somers Forge, it's one of the oldest steel manufacturers in Great Britain.

How many people work here overall? What's your total workforce?

There's around about 120 people who work at Somers.

And while the products may ship out looking shiny and new,

the furnaces here are more than a century old.

And at this family-owned firm, that dates back to 1697, business is booming - despite all that Brexit uncertainty.

It's turbulent times at the moment, for the U.K., and to have such a robust company,

with a strong healthy order book into the future, of course, we're extremely proud.

Somers produces highly-specialized steel products used in submarines, ships and right across the energy sector.

We have the capabilities to process a piece of material that's over 60 tonnes in weight,

we heat that up to temperatures in excess of 1,200 degrees, and we have the ability

with our 4,000-tonne press, to manipulate that steel into a shape

which can prep it for machining further down the line.

However, many in the steel industry aren't equipped to bounce back

from Brexit, Trump and trade tariffs quite as well.

In 2016, the steel sector virtually crashed, since then it's on a steady journey of recovery.

Tammy Inglis is the Finance Director here.

She admits that U.S. tariffs have hurt her bottom line,

but a hard Brexit, she insists, could mean much harder times for many of her peers.

Steel prices I think would fall, the steel industry would suffer.

Do you feel like you've had a partner in government, in a sense, that's helped you plan?

No, I don't think we've had the visibility that business needs.

I think because of the way that Somers operates we haven't felt the adverse impact of that.

We've been through two world wars, numerous recessions.

I guess to some degree we feel like we are equipped and experienced to take it on.

Brexit will just be another chapter in the Somers history book.

But for those companies with a weaker pedigree, and indeed a weaker cash position,

in an industry that's already being squeezed, there's no politician in the U.K.

who can promise Brexit won't spark significant, and lasting, damage for the country's steel.

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