On the back of the industrial revolution, steel making in the UK grew to be the fifth largest steel manufacturing concern in the world, a rank it held as recently as the late 1960s. However, it fell pray to a changing of the economic profile of the UK under Margaret Thatcher which saw GDP shift from mining, steel making and heavy industries to reliance on the service industry and finance for the bulk of the nation’s wealth production. This restructuring was caused by the emergence of Asia as the global hub for such heavy industries where production and wage costs were so low that Western, first world, manufacturers simply could not compete. The remaining UK steel production has tended to concentrate since on speciality products.
Once part of Tata Steel, British Steel (rebranded) was sold off for a nominal sum of £1 during the 2016 European Steel crisis. It currently employs 4500 people directly and up to 20000 indirectly through its supply chain. The firm is the second largest steel maker in the UK. It has had to secure a loan of £100 million from the UK government in order to meet its obligations over an EU carbon tax and avoid a hefty fine. However, this has not proved enough to safeguard the company’s future and it is urgently seeking a further £75 million worth of loans.
A British Steel statement noted: "Uncertainties around Brexit are posing challenges for all businesses including British Steel. We are holding constructive discussions with our stakeholders on how to navigate them. Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues, whilst continuing with [the company's] investment plans."
Uncertainty over Brexit has led to a slump in orders from Europe and it has also been affected by US tariffs on steel imports. The weakness of Sterling since the referendum has meant that the value of exports has also declined.
If British Steel is unable to secure the additional funding it needs, it could be forced into bankruptcy, although a management buy-out or even re-nationalisation are also being suggested as possible outcomes.