Steel Related Defence Parliamentary Questions and Answers

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26 Responses

  1. Well it does seem bizarre that the UK Gov stopped the EU from putting higher than 9 to 13% tariffs on Chinese Steel imports & was rewarded by the Chinese Gov putting 46% import duty on UK Steel.
    With all his inherited wealth, Cameron should be his own man. He should not need to suck up to foreign dictators like Blair does.

  2. @JH

    It’s not a direct “reward”, it’s just what happens once the West starts playing the tariff game – China is retaliating against a whole raft of tariffs from around the world. The Tories were trying to stop escalation of protectionism, but the world was way ahead of them.

    What’s Cameron’s personal wealth got to do with this? Is he perhaps thinking of what’s best for the country rather than “I’m all right Jack?”

  3. El Sid. We do need a Government that is willing to play hardball for British interests, rather than just let other nations walk all over us.
    As to Cameron’s wealth, I think that for a PR man, he has made a hash of it. Some in America, like Trump, as his wealth makes him his own man, unlike Hilary, who will be beholding to all her rich donors. Why do Cameron & Osborne suck up to the Chinese/Saudis, etc. Their family wealth means they do not need to do a Blair, after they leave office.

  4. A single T26 per year would Take up 50% of uk steel production and could be protected as part of our military capability.

    My cunning plan involves build 4 major ships every year and 20 small vessels as well as 200 fighting vehicles of all types

    This would actually save our steel manufacturing, provide top class equipment to our forces and if we start being competitive may lead to export orders.

    If the Germans, Spanish, French, Dutch and Italians can do this why can’t we

  5. @packman, where are you getting that figure from. The UK produces 11 million tonnes of steel a year.

    Even if the navy renewed their entire fleet every year, along with all the army vehicles every single year it would only equate to half of port talbots capacity. The military cannot, and should not be expected to prop up the UK’s steel industry. The problems run much deeper than the distractions and politics of shipbuilding.

  6. @shark bait
    The T26 weight problems are far, far worse than have been publicly admitted…. :)

  7. @JH
    “We do need a Government that is willing to play hardball for British interests”

    No, we need a government that gets the best outcomes for British interests. Sometimes that will mean going in hard, sometimes that will mean trying to stop a situation escalating out of control, where we are at a disadvantage. Remember that the Roman Empire played hardball with the barbarians, the Byzantine Empire took a softer line. Which one lasted a thousand years longer than the other?

    Trade is a prisoner’s dilemma – all nations are looking to pull one over each other on a bilateral basis, but everyone wins in a free trade environment. We were trying to keep a multilateral low-tariff thing going, but as soon as protectionist anti-capitalist countries like the US start whacking 266% duty on Chinese steel then it’s inevitable that China will respond – and we are just collateral damage.

    “Why do Cameron & Osborne suck up to the Chinese/Saudis, etc. Their family wealth means they do not need to do a Blair, after they leave office.”

    Because they’re not thinking of their own pockets, they’re thinking of guys in Lancashire who will be on the dole if they haven’t got Typhoons or missiles to build. I know it’s fashionable to say that politicians only look to fill their own pockets, but most of them are trying to do what they think is best for the country. Most of them think that includes maintaining a domestic defence industry and winning defence exports, and that means a certain degree of schmoozing.

  8. JH, the problem with tariff wars is that it escalates. You might play “hardball” but once the other person plays hardball right back to even the playing field, neither side wins. Sometimes, the only way to win is to simply not start at all.

    Didn’t the old steel battleships of WWI and II use to take up a whole years worth of steel production on a national level or was that an exaggeration?

  9. El Sid. That line has not worked. We are told we cannot put tariffs on Chinese steel as they will boycott Airbus, yet China is not boycotting Boeing, despite the high tariffs America puts on Chinese steel.
    I fear you are pushing the old “managing decline” defeatism that has got this country in this mess. How is being a soft touch, always being shafted by others, the best outcome for Britain?

  10. Actually JH, he’s not talking about “managed decline” or recline or anything like that. He is pointing out the natural reaction when you slap someone, their instinctive reaction is to slap right back! Once that happens, you end up in a situation called a “death spiral”. Does not matter if you are a “declining” UK, an “inclining” China or a “god knows what’s going on” US. You slap tariffs on someone, they are going to slap tariffs on you right back and you end up in a null sum protectionism trade war.

    There are a lot of better methods to do “Balance of Trade” without resorting to protectionist measures or reprisal market embargo.

  11. Observer. I understand what you are saying & I agree that in a perfect world, we would have free trade resulting in a boost to global trade & wealth. However, when everyone else is playing the tariff/protectionist card, then dear old Blighty gets dumped on (in both senses) as our useless politicians are a soft touch.
    We have a brief moment of opportunity until June, to get a good deal for our remaining steel industry from the EU while they are scared of the referendum result. No one in Whitehall seems to be doing anything about it. This is where we need hardball not platitudes.
    If we want to save UK jobs building Typhoons, then offer them to Taiwan, not Saudi Arabia. Taiwan is a multi party democracy, while I am hard pushed at times to see much difference between Saudi Arabia & IS/Daesh.

  12. ” I am hard pushed at times to see much difference between Saudi Arabia & IS/Daesh.”

    Easy, they’re not actively trying to kill you. :)
    What I think people forget or mistakenly tar with a *huge* brush is that Saudi Arabia as a state and government, is not supporting terrorism, it is a fraction of their people and a small one at that. Would you say the UK supports terrorism by the actions of Jihad John? When it comes to their own country, people see the separation between person and state but somehow when it comes to other countries, they suddenly become unable to see the dividing line.

    In hindsight, I’m wondering if my aversion to protectionism comes from indoctrination. We’ve been taught since young during Social Studies (do you guys still have that topic?) that part of the reason for our growth was Raffle’s insistence on a “free port” while the other ports under the Dutch were taxing the hell out of their customers. Hence “capital flight” into Singapore and massive influx of business. Most of the people who came to do business ironically ended up staying and moved their businesses in as well, so while protectionism works in the short run, in the long run, the ease of business and higher returns will push businesses into the country with the less legal burden. And now that I actually “verbalized” it out, suddenly a lot of government policies start making sense. And I start to wonder how many in our Parliament have also been brainwashed into thinking this way since they were educated with the same syllabus, lol.

  13. Observer. Saudi statecraft seems to smile & flatter you with one hand, while the other hand funds the jihadists & gives them the extremist doctrine to spread around the World. So is the Saudi government directly trying to kill me? No it is not, but it is quite happy to arm & fund, those that would.
    Again, I agree with you, that in an ideal world, free trade is the way to go, but with the US & China preaching free trade while being protectionist themselves, it puts British industry at risk of extinction unless the UK Gov does something. The forthcoming referendum provides a brief one in thirty year chance to get the EU to agree to some help of some sort for UK industry.

  14. @JH

    It’s not like protectionism is something new. :)
    The biggest culprits were (and still are) the French.

    Sorry Frenchie, it’s painful but true, your unions hold a very disproportionate influence on your government policies. And I’m not sure if it is to the benefit to France as a whole.

  15. @JH
    “We are told we cannot put tariffs on Chinese steel as they will boycott Airbus, yet China is not boycotting Boeing, despite the high tariffs America puts on Chinese steel.”

    That’s either a straw man or Phase II, depending which way you look at it. But from a Chinese perspective, they a)didn’t start a tariff war and b)have hitherto responded to the West starting of one in a limited way and keeping it to just steel – a 46% tariff in response to a 266% tariff hardly seems like escalation. Why should they start a trade war on a broad front, when things like planes will hurt their economy? If I was them and wanted to escalate things, I’d be going for luxuries like whisky and handbags rather than aircraft. They can keep that up their sleeve for now. But they know that the reason why the 1930’s were so miserable for the world economy was not so much because of the Wall St crash, but the tariff battles that ensued.

    “I fear you are pushing the old “managing decline” defeatism that has got this country in this mess. How is being a soft touch, always being shafted by others, the best outcome for Britain?”

    British steel isn’t in decline relative to the Chinese industry, it isn’t even in the same ballpark. In the last two years China has produced more steel than Britain has in the last two centuries; their current production is more than the entire planet was producing in 2000, or about 5x US production. So it’s nuts to think that this would be a good area to take on China.

    I’m not saying free trade at any price, I’m not saying don’t respond when someone else starts a trade war – but it’s almost never, ever a good idea to be the one who starts a trade war, and you have to pick your battles rather than reacting to every provocation. In fact your approach recalls that of General Galtieri – play hardball to salve the national ego, and then be surprised when the victim of your hardballing responds in kind.

  16. Did not know where to post this but last Friday Space X successfully landed a Falcon 9 first stage on its barge Of course I still love you. This should have an influence on defence in that they will now be launching US military payloads breaking the United Space Alliance monopoly. Critics of the United Space Alliance because they use Russian built rocket motors and are thus at their mercy.United Space Alliance have so far bid cheaper than Space X but this new development of a reusable first stage will cut Space X’s costs and thus strengthen their position so they can win more orders from the US government.
    They have another barge on the Pacific coast to recover launches from Vandenberg called Just read the instructions. The barges will be modified to partially refuel the first stage so it can take off again and fly itself back to the spaceport for refurbishment.

  17. El Sid. I think we can both agree that Britain did not start this bout of Tariffs/protectionism. We both can see the global wealth benefits from free trade. The difference is how we respond to the situation, Britain finds itself in now. Do we not put on tariffs or help our industry, when all our competitor nations are doing just that? Our trade gap is alarming as it is. I do not want it to grow as our remaining industry gets shut down.

  18. @JH
    You’re moving the goal posts. You were the one that found it bizarre that we opposed an EU first strike. I didn’t. Perhaps it would help if you explained what your objectives were, and how you would use tariffs to achieve those objectives?

  19. El Sid. Its not that simple. How far back do you want to go? The Chinese dumping was the first strike. You cannot claim an EU “first strike”. The Americans went sooner & harder & they only did that because of Chinese dumping.
    The press is saying that Britain gave money to the EU, which the EU then lent to the Chinese steel plants in question, for their modernization. Ironic, then, that the EU will not allow the UK Gov to give money to update UK steel works. Though pre referendum, they may grant a derogation, as long as buzz words such as “climate change, energy efficiency & emission reduction” are used.
    If you want my basic aim for trade, it is free trade for those that allow free trade in return & matching tariffs/protectionism for those that do not. I don’t see why the UK should be a soft touch.

  20. JH, sometimes refusing to step off a cliff because someone else did isn’t a “soft touch” but simple common sense. If you had 0 tariffs, you would have been in a very, very good position to guilt trip the Chinese into matching your restraint, but if you simply plotted a course to ram heads with them, they’ll just dig in their heels and push back. Human nature is that contrary, against aggression, we give out even more aggression, it’s the adrenaline and testosterone in us. This means that to get them to do something we want, we cannot ram heads with them, once we become their “enemies”, they would “cut off their nose to spite their face” as my father would say. Or another way to put it would be you catch more flies with honey than vinegar.

    Escalation would simply stiffen both side’s spines and harden their aggressive stance. Not something you want when your aim is total abolition of tariffs.

  21. The thing about the EU lending money to the Chinese plants is a classic “Look, squirrel” distraction. We’ll leave to one side the fact that it is the result of government intervention – government has worked out that it can get the same CO2 reduction by lending £80m in China than say £300m in Europe. It’s another example of outsourcing in a global “market” – in this case the atmosphere. We contribute about 10% of the EU budget, so we contributed about £8m of that £80m loan. That would keep Port Talbot going for just over a week. But it is an offence to avian nutrition to call that £80m of lending chickenfeed in the context of the lending that has happened to create the Chinese industrial base, it has been an epic misallocation of capital on a scale of £100bn’s.

    Those kinds of misallocations lead to booms and busts on a massive scale, without any political direction to “dump” stuff, people just become desperate to sell what they produce at any cost. The price of iron ore has collapsed – have Australia and Brazil conspired to “dump” iron ore on the market, or are we just seeing the result of too much investment leading to much more production than there is demand? If we produced iron ore, would you be considering a trade war against Australia?

    I think there is a tendency to think that the Chinese are some kind of evil genius. They do a lot of things right, especially at the operational/low strategic level, but they have made some big blunders in grand strategy particularly when it comes to economics where at times they are clearly flying by the seat of their pants.

    I was more thinking of what your objectives are for the steel industry. Do you want :

    1) a UK steel industry that concentrates on high end products with significant amounts going for export, with low-end products mostly imported
    2) self-sufficiency, providing low and high end products for domestic consumption, but with little imports/exports.
    3) Import the cheapest steel from abroad, and use the money we save to invest in graphene, fuel cell chemistry, robotics and other new technologies.

    The three aren’t completely incompatible, and yes it would be lovely to have our cake and eat it, but they do require policies that are very different so if you only had to choose one, which would you pick?

    PS @TD If you’re getting bored, just tell us to shut up…. I would argue though that we are moving into an era where economics is the main battleground for the great powers – Gulf War III was fought largely through insurance companies and bank embargoes.

  22. El Sid. Option 2 is nearest to my thinking. This new “British Steel” is I fear, a kick the can the other side of the EU referendum ploy. I agree that if we want UK steel production to continue, then there has to be investment, to be more energy efficient & also make higher grades of steel. Perhaps a business rate rebate that can only be spent on plant modernization.
    Option 3 looks good on paper, but I fear the money would go anywhere but investment in new factories, products & technologies. Most likely on dividends, directors bonuses, MPs expenses & foreign aid.
    Observer. It is pointless the UK being noble if no one else is.

  23. Majority of British manufacturing businesses that are doing well when facing cheap mass-production from elsewhere are doing so either through automation or via IP.

    Automation, such as plastic injection moulding, requires similar levels of cost wherever it’s done: Injectors, dies, designers to develop the dies and the specialists to maintain the machines. Cheap and plentiful unskilled or semi-skilled labour force won’t impact production margins mush.

    For IP, it’s the knowledge of how to develop and *consistently produce* the higher end materials that is a success story in British material production. Again cheap unskilled and semi-skilled workforce doesn’t impact on production costs for the likes of the Bridgman process single-crystal growth or the the lengthy 10-day low-temperature process for producing Super Bainite at Port Talbot. The TenCate fabrication plants in the UK are doing well. It’s the lower end staple materials that has a difficult market for the more expensive UK manpower to compete in.

    Knowledge of these production methods, and the ability to consistently produce the quality, implies knowledge of the lower end production methods using processes that can can be ramped up far more easily with a rapidly trained semi-skilled workforce given enough motivation and funding.

    The thinking is If you can produce advanced iron-crystal growth steel, you have the skills to train a workforce and reopen/build a smelt/forge to produce more standard steels should you need to, have to or want to.

    Going the other way requires huge expenditure, decades of research and reinventing the wheel, delicate talks with companies and states who retained the skills and the disapproval of many old grognards who “told you so”.

    Consequently, we should be focussing on the higher end products, using/exporting them, and leverage the cheaper and more easily produced material from abroad while continuing to invest in the newer technologies and material sciences as we have been.

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