Can the co-op movement help save the UK steel industry?

Britain’s steel industry is facing catastrophe. A triple whammy of cheap imports, a slump in demand and rising energy costs means one in six UK workers is facing the axe. Up on Teesside, 2,200 jobs have already gone after SSI , owner of the Redcar steelworks, went into liquidation.

Tata, which owns the remnants of the privatised British Steel, has confirmed it is set to cut 1,200 jobs, with 900 set to go at Scunthorpe and 270 in Scotland . The company blames cheap Chinese imports and a raft of other market woes for its decision to stop production. The figures show that in the past year, the price of steel has halved, global demand has continued to fall and the yuan and rouble have devalued, all piling on pressure on the industry.

Caparo Industries has also gone into liquidation, putting up to 1,700 jobs on the line at Llanwern and Port Talbot, south Wales and Rotherham, south Yorkshire.

But campaigners are not giving up without a fight. Trade unions, MPs and members of the co-op and labour movement are working hard to try to rescue the industry from the biggest crisis in its long history.

Where jobs can’t be saved, they are demanding that packages are put in place to offer jobs and training. A Save Our Steel campaign launched some weeks ago has overwhelming public support and many are calling for the Government to step in.

In Scotland, a task force led by First Minister Nicola Sturgeon is seeking a viable alternative to the potential mothballing of Tata Steel operations in Motherwell and Cambuslang, near Glasgow.

It will look for new owners for some or all of the businesses and help affected workers remain in place while alternative operators are sought. The regeneration needs of the wider area will also be part of its remit.

The task force will include representatives from Tata Steel, trade unions, local authorities, Scottish government agencies and local politicians.

Sarah Deas, CEO of Co-operative Development Scotland, Scottish Enterprise’s co-operative development arm, has confirmed the organisation will be closely involved in the negotiations.

She said: “As a member of the steel taskforce, Scottish Enterprise is considering all possible options to find an alternative operator for the plants at Dalzell and Clydebridge.”

And the pledge is there will be no stone unturned in their efforts to keep the plants open and find a buyer for them.

Over the border, Labour-Co-op Redcar MP Anna Turley is a member of the SSI taskforce which is trying to help steelworkers in her constituency build a new future. Its members include trade unions, local councillors, voluntary organisations, Jobcentre Plus and the CAB.

Anna, who secured a three-hour debate on the future of steel in the House Of Commons, expressed concerns over the Government funding package which turned out to be less than people were hoping for.

She said: “We were promised £80 million; it turned out to be £50 million once you take out the redundancy and statutory entitlement that the workforce should have had.

“I have had plenty of people coming to me and have a huge postbag from people who are not accessing the training and support that they need.”

She added: “Even more concerning to me is to hear that at the recent jobs fair, Subway were there. It is deeply inappropriate for highly trained, highly skilled steelworkers to be offered jobs making sandwiches at Subway.”

She added: “There were 50 apprentices due to start when production at the Redcar steelworks was paused. This is a viable industry with a bright future. We should be encouraging our young people to pursue engineering and giving them the confidence that the Government has an industrial and manufacturing policy that supports their futures.”

It has now been announced that the first £7.3m to be released by the Government will be used for training purposes. That includes £1.7m to encourage other employers to take on one or more of the 50 ex-SSI apprentices who were set to begin their careers.

A rapid response unit set up by the Redcar taskforce has now met with around 1,800 people on a one-to-one basis to give advice and support. This will make sure their training needs are identified and offer help with CV writing and job applications.

There will also be assistance with benefits, pensions, debt advice, and help getting back to work or starting a new business.

A £3m package will fund education and training for former workers, or people who were made redundant in the supply chain as a result of the closure. There will also be a flexible support fund of £2.6m, to address any barriers individuals have to securing new jobs or training provision.

Pressure is also mounting in Scunthorpe, where trade unions dismissed the Government’s announcement of up to £9m to support steelworkers and local businesses as “woefully inadequate”.

Tata’s regeneration arm, UK Steel Enterprise, has now pledged £3m to support job creation and industry minister Ann Soubry has been asked by North Lincolnshire MPs to mount a rescue  package to save the local steel-making industry. They want capital investment and a level playing field between UK steel and its European competitors on energy costs, business taxes and procurement.

The Employee Ownership Association, founded in 1979, represents and supports hundreds of businesses which are employee-owned or making the transition to new models of operating.

Its long list of successful members includes workers in the healthcare, manufacturing and retail sectors.

New CEO Deb Oxley agrees that Government intervention could be a lifeline for the steel industry but does not underestimate the challenges ahead.

She said: “Traditionally, the model of employee ownership has been used at the point of opportunity, not failure.

“The momentum comes from success in planning and looking for future structure for the business to be sustainable and resilient for growth and looking to engage staff in a positive climate handing things on.

“This is not currently the case with steel. It is a very sad situation which is about the collapse of the market and steel dumping by China.”

The management team at Tata’s Scunthorpe steel mill is said to be eyeing a buyout of the loss-making plant. The Indian conglomerate has been trying to offload its Scunthorpe-based division since a sale to the billionaire industrialist Gary Klesch, owner of the Klesch group of global industrial commodities, fell through in August.

Labour has asked emergency questions in the House of Commons, and business secretary Sajid Javid has said the Government will not stand by while workers lose their jobs.

Ms Oxley believes the only realistic hope for the steel industry right now is for the Government to step in to offer a lifeline.

“If you could imagine it was likely the market would recover, then public subsidy by the Government would help it hugely,” she said. “Employee ownership is not an antidote to failing business but if the Government decided that changing ownership structure would help it survive, things might be different.

“When you engage people more there are higher levels of productivity but as I understand it the industry is already productive. It is about understanding what the problem is and the problem is the global market. To undertake change of ownership you also need capital investment.”

As Ms Oxley points out, other EU countries have much more favourable legal frameworks which enable employees using co-operative models to raise capital and save their jobs.

Italy’s Marcora law, which recently marked its 30^th anniversary, facilitates employee buyouts by enabling collaboration among all stakeholders and making available financial support schemes that can help enterprises navigate the difficult economic conditions they often face.

Between 2007 and 2013, with €84m available capital, CFI – a society promoted by the three Italian co-operative confederations, AGCI, Confcooperative and Legacoop – supported co-ops by generating €473m. It brought a financial return for the state up to six times the invested capital, saving and promoting more than 13,000 jobs with an average investment per employee of €13,200.

Ms Oxley said: “This is a brilliant solution in many cases if owners do not have the capacity to survive. But unlike Italy, this Government’s ideological position is not likely to help the steel industry

“Employee ownership works very well in the service and retail industries but steel is very capital intensive and does not easily lend itself to the model. The majority of employee ownership initiatives in the UK are trust-based or share-based. And if the market is not there you can’t make money.”

Looking at another route to help areas hit by the steel crisis, Labour MEPs have called on the Government to apply for European funding to help steelworkers facing redundancy.

The European Global Adjustment Fund has a maximum annual budget of £110m, and can fund up to 60 per cent of the cost of projects designed to help workers made redundant find another job or set up their own business.

Last year the Romanian steel sector received more than £2.5m to help 1,000 former steel workers who lost their jobs.

Glenis Willmott MEP, Labour’s leader in the European Parliament, said: “The government has the opportunity to apply for more than £5m of EU funds to help families affected by closures in the steel Industry. It is money Britain is entitled to, money that will help workers get back on their feet.

“They should apply now for the funding, so support can be provided immediately. The longer they take, the harder it will be for workers to find new jobs, education or training.”

With the grim prospect of more redundancies, the Employee Ownership Association is urging those affected to seek expert help on opportunities for a new start.

Ms Oxley said: “There are plenty of organisations within the co-op movement supporting organisations and individuals keen to support start-ups and growth – so I would say to any of those workers that they should think about the possibilities.”