Crowd sourcing of a blast furnace?

A management buyout of Tata’s UK steel operations could use a crowd funding model to help gather the financial firepower needed to save the business from closure.

Well, I’d like to see them try, for sure. They need a few hundred million at minimum…..

Staff at the plant were briefed on Tuesday about the scheme, which could involve employees being asked to contribute up to £10,000 to help fund a deal.

Ah, they don’t actually mean crowdfunding at all. they mean plain old fashioned worker capitalism. Not a good model: losing your job and your savings at the same time just isn’t quite the point of having savings.

Mr Phillips said to be workable the buyout would need the Government to invest alongside – and it is not certain what form this would take – but added that funding could come from a wide base.

“It could be open to the 130,000 members of the pension scheme,

Government (ie, taxpayers) plus the already in the red pension scheme? These might be serious political manouevres but they’re not serious economic ones, are they?

The £485m deficit the Tata pension scheme has is seen as one of the major stumbling blocks to any deal, and involving its members could help clear away potential hurdles.

Because investing in a loss making business does such wonders for the returns of a pension scheme….

20 thoughts on “Crowd sourcing of a blast furnace?”

  1. A Management Buyout for an organisation making losses on the scale of Port Talbot would be insane.

  2. @Arthur

    But the whole economic/fiscal/political discourse is insane.

    With the majority of the population living slightly or partially (many) to totally (more than ever before and far more than logic dictates) from state-managed handouts everything revolves around buying votes.

    We have created levels of entitlement, dissatisfaction and envy that are going to destroy us. We are witnessing a moral degradation that to me only has one explanation: the removal of individual effort and responsibility to be replaced by Nanny.

    People believe in simple but rationally impossible solutions and that the ‘others’ are scum and evil who won’t let them work.

    The left – right divide has disappeared to be replaced by a common theme of ‘we’ll take care of you’ when manifestly it is impossible.

    Ho hum. Back to work or I’ll end up depressed!

  3. I don’t understand this clearly.

    Are we talking about people putting in all this money in order to (a) buy the thing, and/or (b) give it a cash buffer to burn through so it doesn’t have to shut immediately?

    Is there a (c) invest in something transformative so the plant can turn a profit? If so, what could (c) be? If not then what’s the point of (a) and (b), except for managers and workers to be paid (but particularly, one suspects, the managers) for a while longer before the cash runs out?

    Is this just a “wait out the market conditions and hope for the best” affair, with half an eye on the Chinese government reducing that country’s steel capacity, half an eye on European willingness to whack up tariffs or even funnel in subsidies for fear of losing jobs?

  4. I think it’s a great idea.

    Lefties, IME, when they say we must spend money on xxx or increase taxes on yyy, always mean spend other people’s money and increase taxes on people conveniently just wealthier than they plan to be.

    So, if they are soooooo keen on saving this Steelworks, they can cough up for it themselves.

  5. Paul, I’m with you.
    Has anyone approached the Guardian or the BBC pension fund administrators with your suggestion?

  6. Flogging the pension scheme deficit along with the rest of the business to the pension holders seems like a smart move. Deficit on your pension? You fund it.

  7. The members of the pension scheme have 485 million reasons for hopiing to God the trustees of that scheme are smart enough, honest enough and strong enough to see what’s coming. Because, if they’re not, it doesn’t bear thinking about.

  8. I’m with Paul as well, in a put your (instead of ours) money where your mouth is way which is unknown to the statists, except for this snippet: “would need the Government to invest alongside”.

    Government=us

    So it’s business as usual really.

  9. A business’s pension scheme should NEVER invest in its members’ business. That way lies madness. Business goes tits up, pension scheme goes tits up.

  10. @ jgh

    If it’s not already illegal, it should be.

    Make reasonable allowance for indirect holdings through funds, obviously.

    In this case, there’s no way that the trustees would do it because it would be a clear breach of their duties.

    This seems like a Hail Mary idea to try and emotionally blackmail the government into stumping up 90% of the required ‘investment’. It’s a very special edition of stupid.

  11. A business’s pension scheme should NEVER invest in its members’ business. That way lies madness. Business goes tits up, pension scheme goes tits up.

    I was working at Marconi when it went belly-up in 2000 thanks to Lord Simpson’s sending it down the pan after years of careful stewardship under Weinstock. Most employee pensions were invested in Marconi, and when the company went under, they lost their jobs and pension in the same week. Some had worked there for 30+ years. Naturally, Simpson walked away with a huge payoff and a huger grin.

  12. On the TV news last night I caught an quick interview of one of the Port Talbot workers.

    Asked whether he would be prepared to put £10K of his own money in as an investment… answer = “I won’t put £10K of my own money into a business losing £1M a day”.

    Says it all doesn’t it.

  13. When Mittal cosed the high furnace in France the protests were deafening. To imagine France will allow a penny of government aid to Port Talbot is to live in EUEUland.

  14. Bloke in North Dorset

    They’re going to invest worker’s pensions in their own business? It’s almost like Enron never happened.

    Anyway, this looks to me like a classic privatise the profits, socialise the costs and losses situation. Does anyone seriously believe that if this goes ahead the next Govt won’t at least bail out the pension funds?

  15. Jim

    A one and the same time my sympathies are all with him: why should he invest his own money in thus lose? And he also makes me very angry: my taxes that U worked to pay should apparently go to keeping his,er, community going.

  16. Ironman,

    As many others have noted, a bail out for Port Talbot means the former staff and British Leyland will come calling next etc etc.

  17. It appears that the general consensus is that this is a terrible idea. I, however, think this could be a great plan.

    Once labor gains controlling financial interest in Port Talbot everything will be sunshine and roses. Because the workers now have an obvious financial stake they be far more productive. This, along with a solid business plan that can turn a profit, will allow the glorious workers to out-perform their counterparts at non-employee owned plants. Since this group already has the plan all they need is the capital.

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