Saturday, May 21

Lack of British Steel in Dreadnought Nuclear Submarines Underscores Procurement Failure | Metallurgical industry

With enough nuclear firepower to lay waste to multiple cities, the first of four new British battleship-class submarines will leave the Barrow-in-Furness shipyard sometime in the 2030s.

The replacement for the Vanguard class, which lurks beneath the waves with its terrifying cargo since 1994, is being built by BAE Systems at a projected cost of living of £ 31 billion.

However, while the UK’s nuclear capability may be viewed by some as emblematic of British military steel, the reality is that the steel inside the submarines will be anything but British.

The most recent government disclosures, for 2018-19, provide further insight.

That year, BAE Systems purchased £ 7.7 million worth of steel for the battleship project, but none of it was produced in the UK.

That’s not so much BAE’s fault as a facet of the current look of the global steel industry. As fast as capacity and overseas capacity have exploded, the UK industry has declined, limiting domestic options for buyers of specialty products.

BAE is also not a huge steel industry customer in the grand scheme of things. It buys a few thousand tons here and there, a modest amount compared to national production of 7.9 million tons per year, or the demand of 5 million tons expected to come from projects like HS2 and Hinkley Point.

But it does feel emblematic of the long and slow deterioration of Britain’s steel industry and raises questions about what the government should do to revive it.

Figures from 2018-19 show UK producers lost millions of pounds on contracts, on everything from school construction to NHS accommodation facilities to the decommissioning of the Sellafield nuclear power plant.

For a £ 440,000 contract, a box encapsulation plant to house nuclear waste in Sellafield, government analysis shows that 53% of the steel was supplied by UK producers, when 100% could have been.

In another £ 350,000 contract, all the steel could have come from the UK, but none did. A host of other contracts simply have no information on whether UK producers could have been able to do the job. According to the industry trade body UK Steel, the government only knows the origin of 20% of the steel used in public projects.

Liberty Steel is the latest producer to find itself in crisis, in its case due to the collapse of financial backer Greensill. Liberty joins Tata Steel and British Steel on the list of UK companies that have flirted with disaster.

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Now the government is under pressure from Labor and UK Steel to support the industry in general. The key to this is ensuring that British producers are not hurt by energy costs that are sky high compared to those enjoyed by foreign rivals. Commercial rates are another key factor.

But the government could also ensure that millions of tonnes of steel destined for upcoming infrastructure projects come from Britain whenever possible.

Projects like the battleship won’t move the needle on that. Tightening the procurement rules for large initiatives like HS2 and Hinkley Point C could do it.

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