The steel debacle

Not so incompetent when looked at from this point of view which I'm posting out of a genuine wish to understand the problem(s) facing government and the steel industry in Britain.

I don't think it's as clear cut as a complete piss up in a brewery is all I'm saying. Very little in politics as that simple.

On another thread we are talking about tax avoidance, and PWC we hear is manufacturing tax avoidance schemes on an industrial scale, they are also in the frame to administer the wind up of the Tata operation.

So where did Cameron hold his latest "let's chat about the lovely EU" question and answer sessions? Why none other than PWC offices. Dear oh dear.

Er... what has that to do with the current steel industry issues?

It would help, perhaps, if I knew what PWC stood for. I'll go and look it up.

Price Waterhouse Cooper - one of the 4 largest accountancy companies in the UK, and in line to administer the wind up of the steel company, from which they will make a very good little earner.

What really annoys OH is that he can't buy British Steel and is only offered inferior Chinese. He would happily pay more but no one seems to stock it, perhaps it is just because he is only buying relatively small amounts. He really gets upset at the quality of steel he has to work with as he makes precision tools.

Only last week the givernment asked that British steel be bought for building of schools, hospitals etc. Rather late but they have to protect China

Thanks, ww. I looked it up too. My brother used to work for them until he had his crash at age 26.

Why shouldn't a large accountancy firm earn some money doing deals? It's what they're for, isn't it? It's not a sin for them to do what is their reason for existing. Nor is it a sin for governments to ask them to do such deals.

Yes, it's a debacle, but I'm not convinced it was avoidable given the state of the world steel market. I'm happy to be convinced by a good argument, as always.

tizliz, I can see that would be frustrating and annoying. It does seem odd that he can't get the material he wants when it does exist.

Nothing wrong at all with PWC gaining from the sale of Tata - just not very bright considering all the issues for Cameron to hold his little do there.

Why? I'm sure you have a good reason for saying so; it's just not clear from what you've said in this thread. What has PWC and tax evasion got to do with the world steel market?

PWC has an office in Panama, too. Fortunately Cameron wasn't as crass as to go there to talk about whether he gained from his dad's financial wizardry.

I understand that the tax evasion files about Panama are a scandal. What I don't understand is what this has to do with a global steel glut of Chinese poor quality steel. Could someone show what the connection is, please, bearing in mind that it is not only Tories (not that I'm defending any who have avoided/evaded paying tax they really should pay) who have taken advantage of tax loopholes in this greedy way.

If the business is losing £1 million per day it seems unsurprising that its unsustainable in the current market. I gather that the potential buyer wants to change the operation to one that recycles steel. Sounds OK to me. Not sure why there is such resistance to changes to reflect modern priorities.

Though the Times reports today that some of the longest serving steel workers at Tata may lose half their pension. Now that I think the government has got a duty to either prevent or else make up to the workers so thst they don't lose out that way.

But I remember my mother's wise words:

"You get what you pay for"
In other words, if we buy poor quality steel we will reap the consequences in years to come. False economy.

PWC has been picked presumably because they will know what they are doing and have the expertise for the job. Perhaps the Government should pick some small unheard-of book-keeping firm instead?
I agree with thatbags Wed 06-Apr-16 17:24:15

What has the government done wrong so far? I thought they were in discussion with Tata? I won't decide whether they have done a good job or not until the outcome of all the talks.

Is it that they have been pre-judged and whatever deal they come up with won't be good enough for some?

I didn't know it had been decided to wind up "the Tata operation" so surprised that PWC are "in the frame". I think that if I had to make the decision about which company to use for such a large operation I would choose one of the big four (or is it three now?) as the job would be too big for any of the smaller companies.

The government won't choose the administrator.
I think Cameron could have chosen the venue much more wisely given that PWC are into very aggresive tax avoidance and of course in line to wind up the Steel industry in Wales with regard to Tata. None of it very sensible given the situation he finds himself.

Hmm. I think you're making choice of venue into something far more important than it really is. I can think of several reasons why PWC offices might be a good venue for any kind of meeting: good rooms, good coffee, good organisation...

Shrugtastic.

So much for Liberty then. CEO admits it is back of the envelope stuff.

Why go that far for a cup of coffee

Steel production is heavily subsidised by the Chinese government and, because of these huge subsidies, manufacturers can afford to dump steel at or below the actual cost of production. Once China has a virtual monopoly on steel production and our own and other EU steel industries have got rid of their own steel production industry, perhaps China will no longer choose to subsidise the industry since we and other countries will have almost no option but to buy from China, even if the cost rises substantially.

Also, in 2013 the New York Times carried an article that was critical of the US's over-dependence on Chinese steel, referring in particular to the many safety scandals that have arisen with all sorts of products manufactured in China:

"In the case of bridges, six have collapsed in China since July 2011. The official Zinhua News Agency has acknowledged that shoddy construction and inferior building materials were contributing factors".

"When California bought Chinese steel to renovate and extend the San Francisco-Oakland Bay Bridge, problems like faulty welds by a Chinese fabricator delayed the project for months and led to huge cost overruns. These deals eroded much of the expected savings."

In 2015, ABC Australia expressed similar concerns:

".... The Australian Steel Institute and the Welding Technology Institute of Australia say some of the fabricated steel entering the country has serious quality defects" - and the article goes on to give several examples.

We do not want Indian steel, either.
Who was responsible for the flyover collapsing in Kolkata last month?

Today I read that the plant was losing half of what Tata said.
What's wrong with a management buyout, which is what the management want to do?
Why can't the government put its money where its mouth is - march of the makers, who remembers Osborne saying that?

www.theguardian.com/news/2016/apr/06/panama-papers-reveal-offshore-secrets-china-red-nobility-big-business

China had a shutdown on news about the Panama papers.
Haven't read whether there are any connections to steel. Probably not, as most of it is owned by the government. However there is a list of politically sensitive people with connections to the top politicians and information is being withheld on them. Some of the people named on here have connections with power, specifically electricity.

Those are interesting points, eloethan, especially about the poor quality of Chinese steel, which has been mentioned in everything I've read on this subject. So why don't those who need high quality steel (e.g. bridge builders) buy more expensive, better quality steel? It must work out cheaper in the long run. Maybe it is not good enough engineers, craftsmen if you like, making bridges? I'd expect good craftsmen and women to want best quality if only because their reputations depend on their products' perfections.

Perhaps I'm missing something, but I'd have thought that if high quality steel is needed for certain things, and high quality steel is available, then those who need it would buy it.

Something doesn't fit.