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Blast furnaces across the UK are under threat as the steel industry bounces from one crisis meeting to another. And, as the last flames in the furnaces flicker in the headwinds, commentators are scrambling to find out what has gone wrong.

China is the easiest fall guy with its huge increase in low-priced exports flooding the international markets. But the scaling back of the British steel industry is as much down to historical bad decision-making as it is the current threat of foreign competition.

Indian-based Tata Steel is the largest producer in the UK, having taken on many of the British steel assets when it bought the European operation, formerly known as Corus, for a whopping £6.2 billion in early 2007. The UK division of that business is now a forlorn shadow of its former self with headcount diminished and many of the assets mothballed.

The company announced a further 1,050 job cuts Monday with the majority of jobs to be cut located at its blast furnace-based Port Talbot plant in south Wales. Talks are ongoing regarding the sale of its long products division, centered around two active blast furnaces in Scunthorpe, the assets of which have had their value written down to zero. Sources close to the negotiations with Greybull Capital suggest that if Tata cannot sell the division by the end of March, then operations will be halted as the Indian parent company finally loses patience.

With the liquidation of the Teesside slabmaking business, SSI UK, in October last year, one of Europe’s largest furnaces was rendered another relic of a former industrial powerhouse. Undoubtedly it will face the same fate as Ravenscraig, a giant symbol of Scottish steelmaking that was closed in 1992 and demolished in 1996. Sources suggest Port Talbot may itself run out of funding without a radical restructuring to restore profitability, hence this announcement of further job cuts.

The current chapter in the story of the British steel industry is one of accelerating rationalization as businesses find it increasingly difficult to compete in one of the world’s most globalized industries. But why is the UK, once the giant of the industry, such an uncompetitive place to produce steel?

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