Friday, January 17, 2014

News: Tata Steel outlines its importance to UK's rebalanced economy


Tata Steel, the Indian-owned steelmaker with significant operations in Rotherham, has set out the importance of "Foundation Industries" to the UK economy and called on the Government to help them capitalise on the economy's return to growth.

In a report commissioned by Tata Steel, PricewaterhouseCoopers (PwC) challenges many existing perceptions about Foundation Industries to emphasise the role they play in driving innovation and skills, as well as providing nearly half a million jobs and supporting millions of others.

It classifies the Foundation Industries as those which supply materials to multiple, strategic manufacturing and construction supply chains, such as steel producers, chemical companies and other mineral producers. They accounted for about 30% of the UK's exported goods in 2012. Turnover is close to £69bn per year which is 3% of the UK economy as a whole.

A key point for rebalancing the UK's economy is that many of the jobs in these industries are outside London and the South East. In 2012, nearly 31,400 businesses employing 487,000 people formed the Foundation Industries in the UK. The proportion of the total workforce employed in the Foundation Industries in 2012 was highest in Yorkshire and the Humber, where 3% of employment in UK's Foundation Industries were based.

Secondary steelmaking accounts for much of this with just over 2,000 people employed at Tata Steel in South Yorkshire where sites including Stocksbridge and Aldwarke specialise in the production of high grade and special steels for the world's leading companies in markets ranging from automotive to aerospace, civil engineering to component manufacturing, energy industries to consumer goods.

The report also highlighted how sectors such as automotive, aerospace and construction are important buyers from Foundation Industries and how they have a significant multiplier impact on the UK economy through local supply chains, which is as high as six times in terms of employment.

As well as highlighting the impact on employment and GVA, the report highlights ways in which Foundation Industries are taking steps to ensure that they can compete successfully on the global stage. Tata Steel's involvement in the Proving Factory is used as a case study.

Part of Tata Steel's site at Brinsworth in Rotherham is being converted into a component manufacturing facility for The Proving Factory, a £22m government-backed manufacturing initiative that will take low-carbon vehicle technologies designed by small high-tech British companies and university research departments and prove their viability in production to increase their chances of being adopted by major motor manufacturers.

Over the next five years, the Proving Factory is expected to invest over £10m in machine tools and assembly fixtures; manufacture over four million components and employ 270 people of whom 100 will be apprentices; at the same time as increasing efficiency of electric vehicles and supporting the low carbon economy.

Following the publishing of the report, Karl Koehler, CEO of Tata Steel's European operations, called for urgent action to nurture Britain's Foundation Industries with the appointment of a single minister to champion the sector in government and the creation of a level playing field on key issues such as energy policy.

Energy costs remain a significant element of the costs of the Foundation Industries with evidence that they are higher than those facing competitors operating in other countries. The report highlights the risk that relatively high energy costs will adversely affect the competitiveness of Foundation Industries in the UK as well as that of their potential customers. This will impact negatively on UK firms' ability to compete in both domestic and overseas markets and deter foreign investors.

Mr Koehler warned: "This report makes clear how important Foundation Industries are to the UK.

"Much of the cutting-edge innovation seen in parts of British manufacturing and construction in recent years wouldn't have been possible without home-grown Foundation Industries working hand in hand with them.

"If the Government is serious about rebalancing the economy and creating sustainable jobs in the regions, it must recognise the importance of the UK's Foundation Industries.

"We're not asking for hand-outs but we deserve a level playing field and an equal seat at the table."

Tata Steel website

Images: Tata Steel Europe / twitter


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