Redcar Steel

[Hope]

Have been listening to some interviews about the Redcar Steelworks situation on the Jeremy Vine Show, and especially one lady who questioned why the Government couldn't nationalise the plant - after all, the speaker said, they 'nationalised' the East Coast Rail line a while back and it worked out very well.  She asked whether the EU differentiates between core manufacturing and service industries in its approach to government subsidies.  I assume that, since steel manufacturing occurs across the world and within the EU, it says that a national government can't support steel production within their own country - whilst the service provided by a railway s limited to that particular nation/region.

[Walt Zingmatilder]

Have been listening to some interviews about the Redcar Steelworks situation on the Jeremy Vine Show, and especially one lady who questioned why the Government couldn't nationalise the plant - after all, the speaker said, they 'nationalised' the East Coast Rail line a while back and it worked out very well.  She asked whether the EU differentiates between core manufacturing and service industries in its approach to government subsidies.  I assume that, since steel manufacturing occurs across the world and within the EU, it says that a national government can't support steel production within their own country - whilst the service provided by a railway s limited to that particular nation/region.

Germany are taking economic migrants in droves. I bet they don't want British workers though.

[jeremyp]

why the Government couldn't nationalise the plant

What we we do with all the steel it produces that nobody wants to buy?

[Rhiannon]

Whereas demand for train commuting is likely to rise.

[wigginhall]

It's the Chinese dumping steel on the world market, thus depressing price.  This has also happened with oil, since normally countries like the Saudis restrict production to give them a high price, but for various reasons, they are not at the moment.   I guess a little country like the UK is powerless.    Some say that China is producing steel at a loss, but they can do that with their top-down economy. 

[Harrowby Hall]

It's the Chinese dumping steel on the world market, thus depressing price.  This has also happened with oil, since normally countries like the Saudis restrict production to give them a high price, but for various reasons, they are not at the moment.   I guess a little country like the UK is powerless.    Some say that China is producing steel at a loss, but they can do that with their top-down economy.

The Redcar steelworks were part of Corus which was sold to Tata (owner of Jaguar Land Rover). Tata sold the Redcar plant to SSI a company based in Thailand.

As I understand the situation, SSI used the Redcar steelworks to produce a single type of steel which is used as a constituent of another, commercially-useful, kind of steel made by SSI in the far east. SSI can obtain this more easily locally. Hence the closure of Redcar.

If I have got this wrong, then please correct me.

The Government should step in.

How naive. We have a government which believes - as strongly as Johnny Canoe believes he has a guardian angel - that private enterprise is inherently better than public enterprise and will always manage activities better than the the state. So much so that it has sold off every single thing it thinks it can get money for to anyone prepared to buy.

There is no way that Cameron would spend one new penny on Redcar - even if a vision of the Virgin Margaret Thatcher appeared to him whilst at his prayers. What is happening now was pre-destined and is as should be.

[jeremyp]

As I understand the situation[/i], SSI used the Redcar steelworks to produce a single type of steel which is used as a constituent of another, commercially-useful, kind of steel made by SSI in the far east. SSI can obtain this more easily locally. Hence the closure of Redcar.

As I understand it, that is correct.

The Government should step in.

So people say, but I have to ask why? The plant can't make steel at a price at which it can be sold. What do we do with all that uneconomic steel? Do we sell it at a loss (aka a cost to the tax payer) or do we force people to buy it at inflated prices, if so how?

[Harrowby Hall]

The company has now gone into liquidation.

[Hope]

The company has now gone into liquidation.

Is that the Thai company, or just the UK limb of that Thai company?

[Harrowby Hall]

I don't know for certain but I assume it is the British subsidiary. If so, it means SSI has closed its operations in Britain.

Frankly, going back to your question, does it matter?

[Hope]

I don't know for certain but I assume it is the British subsidiary. If so, it means SSI has closed its operations in Britain.

Frankly, going back to your question, does it matter?

Not particularly, other than if its the UK section (which I understand it is) it only impacts on UK-related employees.  Had it been the mother organisation, it would clearly have been impacting on far more people.

On the other hand, I hadn't realised that a regional/'national' section like SSI (UK) could go into liquidation separately from any parental organisation.

[Harrowby Hall]

I don't know for certain but I assume it is the British subsidiary. If so, it means SSI has closed its operations in Britain.

Frankly, going back to your question, does it matter?

Not particularly, other than if its the UK section (which I understand it is) it only impacts on UK-related employees.  Had it been the mother organisation, it would clearly have been impacting on far more people.

On the other hand, I hadn't realised that a regional/'national' section like SSI (UK) could go into liquidation separately from any parental organisation.

Any subsidiary can be liquidated. What would be the point of an unproductive, unwanted, unsaleable subsidiary hanging around on the balance sheet?

[Hope]

Any subsidiary can be liquidated. What would be the point of an unproductive, unwanted, unsaleable subsidiary hanging around on the balance sheet?

I am aware that any subsidiary can be closed, but I just hadn't thought of liquidation being the process.  Mind you, I also thought that liquidation could only occur following administration - shows how little I understand about business!!

I suppose this might be being skewed by a situation I currently find myself in the middle of: the railway company I'm involved with, hold an underlease on the trackbed from a 3rd party organisation, who hold the headlease for the whole railway corridor through the valley from Network Rail.  That 3rd party went into administration 11 months ago, and we are still waiting to hear officially what is going to happen to the lease.  We have been told, unofficially, that the headlease will be cascaded to the railway, but that was 3 months ago, and nowt - officially - so far.

[jeremyp]

Any subsidiary can be liquidated. What would be the point of an unproductive, unwanted, unsaleable subsidiary hanging around on the balance sheet?

I am aware that any subsidiary can be closed, but I just hadn't thought of liquidation being the process.  Mind you, I also thought that liquidation could only occur following administration - shows how little I understand about business!!

Liquidation is just another name for winding up a business, realising the assts (aka selling them) and distributing the resulting cash amongst the owners and creditors.

Liquidation can often be the end result of a period of administration following bankruptcy, but it is not the same thing as administration. Quite a lot of companies actually leave administration as a going concern.