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British steel facing administration

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1 hour ago, Voice of reason said:

This is a major element in all of it. Low wages, low regulation = lower prices. We accept their goods, made with low safety, high pollution and accept it.

It is also something for everyone to watch out for. People may well accept the steelworkers going to the wall, but there are also low paid engineers, graphic designers etc etc etc in China, all willing and able to undercut workers here. The same problem will soon start happening to people who don't have old fashioned smelly jobs.

exactly...but you dont help it by sticking yet another "brexit" hurdle in the way that hinders not helps

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On 22/05/2019 at 12:24, lobster said:

Whilst no doubt Brexit and Cheap Chinese Steel have played their part in British Steel's demise . Everybody seems to be missing the obvious,  the rather " murky " secretive hedge fund Greybull that acquired British Steel . They have a track record of acquiring distressed companies ,restructuring them so when they do go  bust Greybull make money . Remember Monarch Airlines ,Greybull claimed it would lose up to £250 million when in fact they had struck a rather lucrative deal with Boeing insulating themselves against large losses

 

Greybull acquired what was to become British Steel from Tata for £1 though there are unconfirmed reports that Tata handed over a not insignificant dowry and Tata picking up some of the pension liabilities . (Shades of Philip Green & BHS  ) Greybull seem to have put very little of their own money in  , taken out in substantial  fees  and protected itself as a secured creditor whilst leaving the British Taxpayer to pick up the tab

Thank you lobster for drawing attention to this neoliberal sleeze.

 

Here's what Jonty Bloom, Business Correspondent for BBC News had to say yesterday on Radio 4's The World at One, on the subject of Greybull private equity:

 

'... if you sell a company of 5000 people for a pound, presumably because you're trying to get it off your hands because you think it's a lost cause, and it was certainly a loss-making plant, and it's far from clear if they ever could manage to turn it round successfully. Also there's a fair amount of controversy about this because Greybull is one of these private equity firms, they basically invest the money of two very wealthy European families through Greybull, and it charges, for instance, British Steel plant management fees for running it. It also lends it money at above market rates, so it makes money on the interest it lends to its own companies. And many people will say there's been a long tradition opf these private equity companies coming in, buying distressed firms, basically making a profit while they go bust, and then walking away from them when they go into administration. And this isn't the first one for Greybull. Monarch Airlines went bust when they owned it. and the taxpayer had to spend £60million flying its customers home from abroad.'

 

https://www.bbc.co.uk/sounds/play/m000570v

 

I wonder how much Greybull made out of this little episode? There are all the usual signals of tax abuse in Greybull's strategy.

 

A nice little earner for some, while five thousand ordinary people stare at a bleak future and another town loses its economic base?

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Tory philosophy ... market forces... nowt to do wi'us.

 

Thatcherism was overtly spiteful to the North.  This lot are far more devious ... we shall do this, we shall do that, we shall give ... after years of cuts.  Almost a year since May and Hammond announced Austerity was over!

 

Liars.

 

 

 

.

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4 hours ago, Baron99 said:

Top are the Chinese who produced 928.3 million tonnes. The UK is placed at position 22 with 7.7 million tonnes, just ahead of that mighty steel producing nation, Austria on 6.9 million tonnes but behind Egypt on 7.8 million tonnes.  For comparison, Poland 19th, (10.2); France 15th, (15.4); Italy 11th, (24.5) & Germany 7th, (42.4).  So there you have it, our place in the world.  Or another way to look at it is that by amount, the UK probably manages to sell more of its steel by percentage as we don't produce as much as the others. 

 

Have also had a look at what is supposedly the salary of your average Chinese steel worker.  Latest info I could find is from 2017 when the hourly rate was the equivalent of $3.60 or £2.85 at today's rate. 

 

How can you compete with that? 

3

Germany manages to compete, but if we cannot compete fairly, then that is what tariffs are for, which the Tories blocked.

Trump put a tariff of 25% on steel imports in 2018, a little over a year later he exempted some countries, but a good boost to the steel manufacturers in the USA.

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53 minutes ago, El Cid said:

Germany manages to compete, but if we cannot compete fairly, then that is what tariffs are for, which the Tories blocked.

Trump put a tariff of 25% on steel imports in 2018, a little over a year later he exempted some countries, but a good boost to the steel manufacturers in the USA.

Those tariffs would have to be eu wide of course.

I don't imagine the tories care if british steel succeeds or fails.

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1 hour ago, El Cid said:

Germany manages to compete, but if we cannot compete fairly, then that is what tariffs are for, which the Tories blocked.

Trump put a tariff of 25% on steel imports in 2018, a little over a year later he exempted some countries, but a good boost to the steel manufacturers in the USA.

Germany has had a completely different attitude to engineering and manufacturing for decades. They now reap the benefit of that investment, training and infrastructure.

Our country has done the opposite and is hell bent on a Starbucks driven economy.

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Here's Daily Mail reporter Rachel Millard, writing in December 2017 under the headline Monarch owner now making millions from British Steel: Tycoons charging sky high interest for loans to Scunthorpe plant
 
The former owners of failed Monarch Airlines are set to extract millions from British Steel after loading it with debt, accounts reveal. Brothers Marc and Nathaniel Meyohas and business partners Richard Perlhagen and Daniel Goldstein are charging interest of 9.6 per cent on a £154million loan. Their private equity firm Greybull Capital snapped up British Steel, which employs 4,400 people in the UK, largely in Scunthorpe, for a nominal £1 to stop it going under in 2016. Employees took a pay cut to try to turn around the firm. But the French brothers are now set to rake in cash from the loan pumped in via a company in tax-haven Jersey as part of a £400million rescue package. They have already charged fees of £3million, and accounts reveal that a further £16million in interest was due last year.


It comes as Greybull is under fire for its ownership of collapsed airline Monarch. Nearly 1,900 workers were made redundant when Monarch went bust in October, forcing authorities [that's the taxpayer - you and me] to step in and help more than 100,000 holidaymakers get home. Greybull is believed to have reduced its exposure to losses through a complex deal with financing from airplane maker Boeing, and the private equity firm will get first say on any of the travel operator's assets. Meanwhile, Monarch customers and business partners are expected to lose out from the demise.


Last night, Greybull defended its loan to British Steel. It said: 'Greybull's investment structure is market standard and in line with the way many financial institutions provide capital to higher risk companies in the midst of a turnaround.' Greybull has not yet received any interest payments, as it has let British Steel defer them until it makes more money. The total debt has climbed to £167million. Greybull created British Steel out of Tata Steel's long products division, which it bought just as it was almost wiped out by a major downturn in the industry. Tata has since sold further assets and closed its heavily indebted inherited pension scheme, threatening workers' pensions and triggering a frenzy among financial advisers. Greybull then rebranded the division as British Steel and staff agreed a 3 per cent salary cut. British Steel has returned to profit for the first time since the industry collapsed, making £39million last year compared to a £65million loss the year before, on revenue of more than £1billion. Chairman Roland Junck, 62, said he was targeting around 10pc profit. Staff have been rewarded with a 5pc stake in the business.


Greybull said: 'We are delighted with the progress that British Steel has made since mid-2016. 'We are proud that the employees will share in the success of British Steel through the profit and share ownership schemes that we have put in place.' British Steel said: 'We have had nothing but strong support and help from Greybull since they rescued the business.' In the annual accounts yesterday, British Steel directors said: 'We have made great progress under our new ownership.'

 

https://www.dailymail.co.uk/money/markets/article-5153241/Monarch-owner-making-millions-British-Steel.html

 

 

Greybull employ routine venture capital techniques to extract value from an ailing enterprise: purchase the company at bargain basement price, load the company with debt, cut staff pay, strip the assets, then leg it to the nearest tax haven, leaving the taxpayer to clear up the mess.

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3 minutes ago, Voice of reason said:

Germany has had a completely different attitude to engineering and manufacturing for decades. They now reap the benefit of that investment, training and infrastructure.

Our country has done the opposite and is hell bent on a Starbucks driven economy.

This is true.  Whereas Germany has traditionally seen a steel company (for instance) as being there primarily to make steel, the UK has traditionally seen it as being there primarily to make money.

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2 minutes ago, CaptainSwing said:

This is true.  Whereas Germany has traditionally seen a steel company (for instance) as being there primarily to make steel, the UK has traditionally seen it as being there primarily to make money.

I once saw a repeated news story from the 70s of a shipyard on Tyneside closing. A shop steward said 'we don't just make ships here, we make men'

Ok a bit 70s sexism maybe. But the point being there is so much more to a factory producing high value goods, paying and employing skilled people on good wages. There is untold benefits to society and communities of that factory operating.

Too late I fear, in this instance, as the rot has been allowed to set in for too long.

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2 minutes ago, Voice of reason said:

I once saw a repeated news story from the 70s of a shipyard on Tyneside closing. A shop steward said 'we don't just make ships here, we make men'

Ok a bit 70s sexism maybe. But the point being there is so much more to a factory producing high value goods, paying and employing skilled people on good wages. There is untold benefits to society and communities of that factory operating.

Too late I fear, in this instance, as the rot has been allowed to set in for too long.

Yes, we've all been conditioned to accept that the only stakeholders in a company are its owners and senior management (not necessarily in that order).  The idea that part of the reason for existence of a company is to provide decent, interesting, self-respect-inducing jobs that people might aspire to is, as you say, very 1970s.

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