This isn’t really possible

Although the importance of the steel industry to the UK economy has declined, it possesses attributes that are critical to the economy’s success. The industry produces a trade surplus, its productivity, investment in R&D and training per employees are higher than the general UK economy.

As far as I can tell the steel industry is currently making a loss. Productivity is therefore negative. Productivity being the value of output created over the value of inputs.

It’s entirely true that labour productivity could be quite high: value produced per hour of labour input. but that’s not quite the same thing, is it?

35 comments on “This isn’t really possible

  1. I understand that one of the Big 4 has had a restructuring team in the business for months, looking for a way to save it. They’re usually incentivised to keep things going, so if they think it’s dead, there’s not a lot of hope. But of course, Murphy thinks they’re all liars.

  2. We made our choice. All but 4 of the little piggies voted for the removal of coal from electricity generation. Bit late to start squealing now.

  3. Gothic laissez faire revivalists are brought to a skid-pants halt by the intrusion of reality into their Autistic Economics dreamworld. Where are Cameron and Osborne ? They appear to be hiding with the cowardice natural to British ruling-class.
    You import cheap stuff and put locals out of work; there is less money around for the locals to buy stuff made by their compatriots so you make cuts, pay everybody less and import more and the whole thing spins downward into industrial oblivion.
    Do I say you should pay people to be employed in unprofitable industries? Certainly; it is the whole economy that has to balance not each of its components.
    Even the Autistic-Economists realise there is no demand in the economy- worldwide by the look of it.

  4. From a purely economic point of view, it makes sense for the steel plants to be closed. But economics doesn’t drive everything, especially if prevailing economics leaves lots of young, fit men permanently unemployed. At the moment, Britain operates a colossal welfare program for the dim middle classes with useless degrees by providing them with government jobs, or private sector jobs in areas such as HR, “sustainability” and “diversity” in order to comply with pointless legislation. Now there may be a sound argument that inventing non-jobs to keep people off the dole is better than having people on the dole, but I’m of the opinion such a policy would need to abide by two criteria:

    1) It is openly acknowledged that the jobs are a form of welfare, for the good of society.
    2) The jobs produce something of use.

    The current situation of employing millions of dim middle classes in government departments fails both of these; the policy of employing people to make steel at least passes one of them, so in a straight race between a local government diversity outreach department and a steel mill, the steel mill wins.

    Of course, the problem with the steel mills is you get self-serving unions ignoring the welfare role of the plant and insisting they can keep ratchetting up their own terms and conditions, and the whole exercise becomes unsustainable, which is why criteria no. 1 I stated above is vital. At least the welfare cost can be counted, and voters informed, instead of the costs buried in among that of economically viable industries.

    Personally, I have some sympathy for the argument that a nation should provide enough work for young, able-bodied, but not particularly bright young men. If this means steel gets produced more expensively than it is in China, then so be it. This is vastly preferable to today’s situation where strong but dim young men are excluded from the workplace on economic grounds while armies of middle class dimwits flourish on the taxpayer dime – and meddle in every damned aspect of their lives as they do so.

  5. I wonder whether the plants would be viable had we pursued a cheap energy policy.
    I also wonder about the feasibility of mothballing them until such a policy produces results.
    No idea, just wondering.

  6. I thought Bastiat had covered that almost 200 years ago? I would have thought 200 years would be long enough for dimwits such as dbc reed to understand the concepts.

    Or am I too optimistic?

  7. Tim Newman

    Agreed.

    One other issue that should be taken into account beyond the purely economic argument: without any domestic steel production it becomes pretty difficult to sustain any form of shooting war, especially an existential one. Militarily it’s suicide.

  8. without any domestic steel production it becomes pretty difficult to sustain any form of shooting war, especially an existential one. Militarily it’s suicide.

    We’re not going to be fighting WW2 again. Any existential war will be over before we are thinking of converting any raw material in to any militarily relevant product.

  9. If it’s military suicide we’re already dead. We don’t produce iron ore, so the only parts of the steel production process that are any good are those which recycle existing steel.

    Also, apart from say ammunition, it takes years to produce anything of military value. The question is, do we have enough stocks of ammunition, and of the steel to make more, and of friends who could supply us, to survive long enough to build the kit to recycle steel from scratch? I’m not sure, but I strongly suspect that a major war would be over before we could scale up ammunition production enough even if we had unlimited steel.

  10. I would have thought 250 years was long enough after the publication of Wealth of Nations for the dimwit legions to realise that you can’t have laissez faire without a Land value Tax as Adam Smith insisted.You would, otherwise, end up with no economic recovery but a splendid recovery in land price inflation and higher house prices.Just like now.My !You can’t say the dimwits don’t have influence.
    Don’t worry steelworkers, you can eat house prices; all that Tories can produce.

  11. Tim N,
    Its you make a fair point, but …..

    Why condemn them to work in a dirty polluting energy intensive industry, why not get them fixing the roads, mowing fields by hand and any number of non-jobs.

    If we acknowledge that its welfare should it be comulsory for young men and, in the interestets of equality, women, to work there?

    And what about crowding out productive industries.

  12. “without any domestic steel production it becomes pretty difficult to sustain any form of shooting war, especially an existential one. Militarily it’s suicide.”

    No it isn’t, because modern weaponry isn’t made from masses of raw steel. Plus the lead time on manufacturing modern weaponry is such that its not like WW2, Spitfires pouring off a production line as fast as they are shot down, or Sherman tanks being produced faster than Tigers can brew them up. A war between two modern armies would be over pretty sharpish, one side would degrade the other’s forces to zero in a short space of time due to superior technology/tactics/training, far quicker than new weaponry can be produced, or indeed new troops trained to use them, regardless of whether the materials are available to make more. If the forces are equally matched technology and numerically then the side that runs out of ammo first loses. Still would be over before new weaponry could be manufactured.

  13. @Recusant – if in an existential war the UK is unable to import steel, why would it be able to import iron ore for smelting?

  14. Tim N’s thing is fun. If nothing else it describes our productivity problem in graphic terms. But not convinced the economic case is made. At least steel production has some strategic benefit, which has “economic” value. Personally I think if we lose the ability to make stuff then we are f****d.

  15. Pat

    I also wonder about the feasibility of mothballing them until such a policy produces results.

    I think I remember that a blast furnace has to be kept going 24/7. If you let it cool down it is buggered.

  16. Reed–where do you conjure your malarkey from. Do you save old dog-turds as you pass them in the street to keep your supply topped up?

    Since when was Steel part of Laissez-Faire? The end of the 19th century?

    In case you forgot numb-nuts, your gang of clowns took control of it and –so successful were the eternal principles of socialism–that by 1975 they were losing 600 million of taxpayers dosh per annum. And –to paraphrase the late Dudley Moore in “Arthur”– “That was when £600 million WAS £600 million pounds”.

    Since then Steel has been the hands of corporate socialism of one kind or another–apart from a brief stint helping Sapphire in 1977–and has been fucked about one way and another.

    Try to keep you stupidity and mental distortion under control before you pose an even greater danger to others.

  17. I fear this tread shows the seductive threat of the DonaldTrump/Bernie Sanders/Jeremy Corbyn school of economics. We use the same terms for Steel that we use for foodstuffs. We use terms like “strategic interest”, the inference being that of course that means steel-making. We nevet srt out clearly what “strategic interest” means, but it seemed built upon a world full of military adversaries, all lining up to blockade us. We speak of ensuring we have “secure” domestic supply, as if importing it in this modern world implies insecurity. And, just as for foodstuff we assessment that stroll, intrinsically, is “useful”.

    Well I’m sorry. Unsold steel lying around doesn’t seem very useful to me. Its ‘usefulness’ depends entirely on here being a market for it. Our strategic interest lies in securing factors of production for whatever it is we wish to produce and securing them at the best possible price. It does not lie in chiding random products and declaring that we “need” them. And the jobs market and job prospects for young men can only be undermined by ignoring the information prices and Capital are giving us and setting up idiotic subsidies for ‘social’ reasons.

  18. It’s worth mentioning that Carbon taxes are one of the big reasons why the steel industry is unprofitable.

  19. If the balloon goes up, the steel industry will be the last of our problems. With no textile industry any more, where are we going to get the fabric to cover the Fairey Swordfish that are the only aeroplanes capable of taking off of our new carriers ?

  20. Well Corbyn thinks he needs steel for the bayonets his stormtroopers will use to kill fascists and save on bullet costs… or something…

  21. People forget – or chose to ignore – that Sheffield produces more steel now that it has ever done – it’s just it’s all done by one man and a dog instead of the near-hundreds of thousands of toilers in the past.

    During 1900-1910-ish there was an economic slump and Sheffield Council employed people to build new roads, explicitly stating that it was a public welfare scheme (I think they called it a “cushion”), and explicitly making sure useful things came from it – improved road infrastructure to support future development, skills maintained in the workforce, families prevented from breadlining, and probably, keeping Labour out of the Town Hall for another decade.

    Labour learned from this and after they took control did similar economic cushioning in the 1930s and expanded the already-existing council house building projects.

  22. jgh

    Road building; that sounds like a great idea for Port Talbot. I know a few Poles, great lads they are. I’ll let them.know about the scheme; there must be hundreds, thousands of their mates would come over for the wage rates on offer.

  23. If a criminology lecturer was to be asked “Did Jack the Ripper have difficulties relating to women?” he would find the question so stupid he would be offended. Yet it’s apparently OK for hin to ask “If the banks were to big to fail why not Steel?”

    What a twat.

  24. I assume it will be like Llanwern where they cut back piece by piece until there’s just enough left that they avoid the cleanup costs of closing the site without suffering too much loss, or even turn a small profit as they focus on the post-production bits

  25. PeterS: It’s one of those bits of information that I know is broadly in the right direction but I have trouble pinning down documentary proof for. The main source is a conversation with a steel man at a Lord Mayor’s do more than a decade ago. Every now and then I try to do the research to get some concrete figures, but mainly it’s I point I throw at people who baldly state “Sheffield doen’t make any steel any more”. Hmm. So what was that 30-ton lump that rolled off that lorry a couple of years ago and sank through the road as though it wasn’t there?

    If somebody would give the funding I’m sure I could dedicate the time to do the research properly. 😉

  26. IronMan: That’s why I was no good in local government. When asked a question I wanted to go away and do the research, but the questioners demanded the answer immediately and saw the inability to have the entirety of human knowledge in your head as some sort of personality flaw.

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