May 16, 2020

UK steel crisis sends ripple effects through the British manufacturing industry

steel
metals
UK manufacturing
Admin
3 min
UK steel crisis sends ripple effects through the British manufacturing industry
Industries do not exist in a vacuum. When one segment of an industry suffers, the effects can be felt far and wide in both the segments that supply them...

Industries do not exist in a vacuum. When one segment of an industry suffers, the effects can be felt far and wide in both the segments that supply them and the segments they feed into. According to a new report from UK source The Telegraph, Tata Steel announced this week that it is cutting 1,200 jobs at its Scunthorpe plant and Scottish mills, bringing total job losses in the UK steel sector up to 4,000 in just a few short months and ending Tata Steel’s production of steel plates in the UK altogether. This is a crushing blow to the British steel industry, and could have serious ramifications for its manufacturing industry as a whole.

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According to the Telegraph report, 12,500 manufacturing companies in the British Midlands—many of them small businesses, and in total representing roughly 260,000 employees—are at least partially, if not completely dependent on high quality steel for production. A loss in UK-made steel stands to make the industry at large slower and less agile with regards to client needs, which could in turn put manufacturers at risk for losing contracts to other manufacturers:

“Our precision components manufacturers rely on very high quality steel from the UK,” said Paul Forrest, the forum’s head of research. “You need quality material coming in to get quality coming out. These businesses get that steel quickly from UK steel plants but if they can’t get that steel reliably here they have to look abroad. That pushes up costs and cuts their competitive advantage because they can’t react so quickly to customer demand,” he said, with delivery times of up to three months.

 

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This problem could especially affect the UK’s automotive industry, where manufacturers like Jaguar or Rolls Royce are not be able to trade in current materials for inexpensive lower quality steel, and may soon have to outsource similar high quality steel that was once available domestically:

Prof David Bailey, an automotive industry expert at Aston University, said: “A lot of high specification steel goes into cars which is bought from UK producers. If the UK steel industry downsizes, car makers would have to buy high quality – rather than cheap Chinese – steel elsewhere, and that would certainly push up costs.”

 

The report calls the UK’s steel crisis not only a crisis for the metals industry, but one that “goes to the very heart of the UK’s industrial manufacturing.” Indeed, if this pattern of closing continues among metal producers, it could be a precursor to trying times ahead for the manufacturing industry as it struggles to find new suppliers to carry on.

[SOURCE: Telegraph]

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Jun 8, 2021

IMF: Variants Can Still Hurt Manufacturing Recovery

IMF
Manufacturing
COVID19
Musk
Elise Leise
3 min
The International Monetary Fund (IMF) claims that while markets are rising and manufacturing is coming back, it’ll push for global immunisation

After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022

Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery. 

Lingering Concerns Over COVID

Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high. 

Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery? 

IMF: Current Boom Could Falter

Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”. 

Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”. 

Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.

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