British Steel on brink of collapse

British Steel is on the brink of collapse, putting 25,000 jobs at risk -- 20,000 of which through its supply chain. The country’s second largest steel producer is asking for a £75m government loan to prevent the company collapsing into administration. Supply chain and logistics expert at the University of Salford Business School, Dr Jonathan Owens, says this is not the first time the company has been in trouble.

“This was a business that was sold by Tata for £1 and rebranded with the old familiar nameplate. However, things have not been plain sailing. They have already been assisted by the government by the way of a bridging loan to the tune of £120m. They were settling their carbon emissions bill with the EU and these were back dated. However, this new £75m loan request is a more complex issue as the business is struggling to cope in the competitive market," he said.

“Yes, there is the impact of some European orders that may, or may not materialise due to the Brexit uncertainty, however the weak pound does not help with competitiveness overall."

Owens says that if British Steel currently cannot cope with this level of pound exchange rate, the question begs what strategies they are proposing to put in place to turn this around before parting with £75m.

“Of course in the immediate term there are 5,000 jobs at risk within the company and approximately 20,000 in the support supply chain and these certainly are giving huge cause for concern. However, if the company cannot be market competitive, then this £75m loan would perhaps only be delaying the inevitable and we could be looking at administration again in the near future,” he added.

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