Steel: round one to vulture capital?

Brian Parkin of Leeds rs21 provides an update on the crisis in the UK steel industry.

Tata’s Scunthorpe plant. Image: Ian S

The announced closure by Tata of over 80% of the UK steel industry at the end of March threw the Tory government into deep crisis. As news of the steel melt-down broke the Tory Business Secretary Sajid Javid was unbothered enough to take a business holiday to Australia with his daughter, seemingly glad to see another chunk of UK industry go down the pan. But as the sheer scale of the steel collapse emerged, with over 40,000 jobs at immediate risk, it looked like one hands-off economic disaster too far.

Lack of vision

From the start the steel industry union leaderships, presumably by now case-hardened to industrial bad news and with reflex mechanisms set to roll-over mode, did little other than make lame appeals to Tata whilst forcefully playing the national interest card. Demands on the government amounted to little more than requiring David Cameron to recognise the scale of the crisis and take personal charge of any rescue or aid package.

At no time did the steel unions demand nationalisation of the industry and an immediate halt to any redundancies or partial plant closures. And within hours of the prospect of Port Talbot being a certain closure victim much of the union effort seemed to be channeled behind Windbag Mark II Stephen Kinnock and much of the Welsh Assembly, whose idea of a rescue was to call for a local ‘steel taskforce’ in order to counsel soon-to-be redundant steel workers through Job Shops and small business start-up schemes.

The context of the current steel crisis was covered in some detail in our briefing paper in which a number of immediate dangers were identified along with some ideas that we felt could decisively transform the situation from passivity to resistance. Although we still argue for direct action to save the industry’s blast furnace capacity at Port Talbot and Scunthorpe the immediate danger to the future of the industry has now presented itself in the worse-case scenario we warned of: the take-over of the Scunthorpe complex by the vulture capitalists Greybull Capital.

Cowboys and Sloane rangers

On Monday 11 April, within minutes of Tata placing their steel assets up for sale, a bidder for the four blast furnace complex at Scunthorpe acquired the entire plant for the sum of £1 – yes, one pound Sterling. The bidder, as we expected, was Greybull Capital and whilst socialists don’t engage in differentiating between competing capitalists we would have to be exceptionally naive if we were not to identify Greybull as the worst of a very bad bunch.

The news of Greybull’s acquisition of Scunthorpe – albeit subject to EU scrutiny and required due diligence – is bad news in every respect. Firstly it heralds the possible break-up of the industry which will endanger the ‘critical mass’ needed to maintain it as an integrated entity. Secondly because it relieves the government of what could be a crippling crisis whilst allowing the union leaders to play down the need for the kind of mass resistance that is the only real hope for saving the industry. And thirdly because it opens the industry to unregulated vulture capital that will ‘realise’ the saleable assets whilst consigning the workers and any entailed social responsibilities to the dogs.

In terms of the corporate low-life that now inhabits the scum of the neoliberal stagnant pond Greybull qualify par excellence. With a registered office in Sloane Street, Knightsbridge, London, Greybull operate across a range of specialities, most significantly in the lucrative area of mergers and acquisitions where they excel in ‘turning around ailing and under-performing’ companies and ‘nursing them back to health’. As in the case of their ‘rescue’ of the Comet retail chain where over 130 stores closed, over 6000 workers lost their jobs and pensions and Greybull walked away with a handsome profit and no liabilities. Or more recently the airline Monarch where Greybull imposed a ‘rescue’ package that involved over 700 compulsory redundancies, an imposed 30% pay cut for remaining staff, union de-recognition and a substantial downgrade of the pension scheme.

Greybull’s Scunthorpe ‘rescue’ bid

We disclosed the dodgy financial structure of Greybull in our previous article and it stands testament to the governments ‘get-rid-quick’ policy for steel that little heed was paid to the company’s gross under-capitalisation. Yet, unless stopped, Greybull are about to take over the 2,000 acre Scunthorpe steel complex, at the heart of which are four blast furnaces that the steel expert Sloane rangers say are unnecessary.

Within the £400 million ‘investment package’ are conditions that rs21 presciently suggested would entail a pay cut and an end to the current pension scheme terms. And as we stated Greybull have said that the £400 million will be a mix of their own shareholders’ cash plus an undisclosed sum from unnamed banks and a dollop of around £60-100 million from the government. The £400 million, Greybull insist, is necessary to replace the existing blast furnaces with electric-arc smelters that will be able to process graded scrap steel. But this, they also insist, is only viable if the government is able to secure for them long-term low cost electricity supply contracts which industry experts say – in light of the aluminium industry experience – will not be possible.

Yet in the absence of any resolve on the part of the union leaders, there is every possibility that Greybull will acquire access to some 2,000 acres of land, some saleable assets and control over a sizeable chunk of the British Steel Pension Scheme. Perhaps what most sticks in the craw is the sight of union officials hailing as a victory a ‘deal’ that requires workers to take a pay cut as well as future pension uncertainties and job insecurity that they themselves would never accept.

Blast the Tories – save the blast furnaces

The Greybull bid for Scunthorpe is a clear warning that any ‘rescue’ sell-offs are going to entail big capacity closures, massive job losses and, for the remaining workforce, further cuts in wages and pension terms. Whilst some consideration of EU import tariffs is unavoidable, the most urgent task facing socialists who want to see a fight to save steel jobs is to convince the steel workers themselves of the need for a turn from passive trust in Tata, the Tories, would-be buyers and the trade union bureaucracy, and to instead step up the campaign towards direct action.

In 1971 workers at Upper Clyde Shipbuilders (UCS) in Glasgow faced a Tory government determined to see off the remnants of the UK’s ‘lame duck’ industries. With their policies of allowing key industries to collapse under market pressure Edward Heath and his Tory government were amply aided and abetted by a press and broadcasting media who daily egged them on in the task of writing-off outdated heavy industries inhabited by union militants and bully-boys. But the UCS closure plan turned out to be a massive blunder as a passive protest unleashed an anger that initiated an all-out occupation, which in turn created a country-wide wave of solidarity.

In factories throughout the UK workers raised weekly levies to support the UCS occupation and the present author, at the time a modestly paid junior draughtsman, made a weekly contribution of £1 to the UCS fighting fund. Unfortunately today there is no longer such a workplace activist movement, let alone much in the way of large scale manufacturing remaining. And whilst it is undeniable that some such network will have to be built over the coming period, there are still actions that could decisively change the fortunes of steel workers and their industry:

  • An urgent demand that the steel unions reject Greybull Capital’s toxic bid
  • For the unions to reject all future private bids for the steel industry
  • An immediate lobbying effort to convince the steel unions and the Labour economic team that wholesale nationalisation now is the only way of saving jobs, communities and the necessary critical mass for a viable steel industry
  • A demand that the blast furnace capacity at Port Talbot and Scunthorpe be kept on a viable care and maintenance programme through an occupation under the control of the steel workers themselves
  • That a widespread solidarity campaign be launched aimed at raising both financial and whatever other support the steel workers need to save jobs and communities
  • For the nationalisation of the steel industry under workers control


  1. Although modest (to say the least), McDonnell’s position is an improvement on the original suggestion that the government must work urgently with TATA to find an alternative buyer. But an immediate problem is how quickly the Panama scandal and the ‘success’ of the early Greybull vulture bid has blown the scale of the steel crisis off the agenda. This problem is of course compounded by the union leadership’s preference to clutch at straws rather than organise a fight. The problem regarding the demands set-out in the steel crisis articles is that revolutionaries have little prospect in getting the ideas of resistance through to steel workers and their communities. How nice it would be to be making demands for the here and now rather than for posterity. But even if Scunthorpe is momentarily out of the frame, Port Talbot- which was always going to be the key- can still be a rallying focus as long as the blast furnaces are safe. But in this regard a steel works is like a colliery; when the ventilation system and the drainage pumps are switched off, all hope fades. Which is why the one demand of not letting the blast furnaces go cold still has some traction.

  2. At the rally after the People’s assembly demonstration yesterday, John McDonnell called for the “temporary nationalisation of the steel industry if necessary”. Even the Labour Left is soft on this one.


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