A UK downstream manufacturer has been rejected for government funds to modernise its operations, at a time when its exports to the US have been heavily impacted by the country’s new tariff regime, Kallanish learns.
Laurence McDougall, owner of All Steels Trading, has expressed disappointment with the lack of government support for his downstream steel manufacturing operations, which include two hot-rolling mill businesses in the West Midlands.
Special Steel Sections in Ettingshall and Bromford Iron in West Bromwich are both heavily export-oriented, with the US representing a significant market for the specialised products.
McDougall notes that some US buyers cannot afford to pay the 25% tariff, nor can they pass it onto their customers, while it is not financially viable for them to split the cost either. Around half of the customers have so far paid the 25%, which he says is creating huge inflation. The other half of his customers are “sat on the sidelines”, he adds.
“Our products are so bespoke, they haven’t got another source, there is no domestic supply,” he says.
McDougall also highlights the currently unimplemented UK-US trade deal that was previously agreed earlier in the year, with UK companies still facing the 25% tariff that was due to fall to zero.
His customers have indicated that the tariffs make costs unsustainable, threatening the viability of their own businesses.
Bromford Iron has already closed one of its two rolling mills, while Special Steel Sections is evaluating its future. McDougall has had his proposal for funds to modernise Bromford Iron’s remaining mill rejected by the government.
The proposed scheme involved upgrading the mill to modern, energy-efficient technology, converting from gas-fired furnaces to electric induction heating. This comes despite the government putting aside up to £2.5 billion ($3.37 billion) through the National Wealth Fund (NWF) for the sector as part of the Steel Strategy.
He has engaged with local MPs and government bodies, including Prism, without success.
The mills also support domestic steelmakers, historically purchasing 25,000 tonnes/year of feedstock from British Steel and 7 Steels for its rolling mills.
All Steels Trading was willing to fund over half of the total investment, with the induction heater and cooling system, being sourced from UK-based Inductotherm, representing the largest expense.
Government feedback indicated that the plan “ticked all the boxes” in terms of efficiency, carbon reduction, and supporting local jobs. However, officials advised that because the project only required £1m of funding, which was well below the £20m minimum threshold, it would not be considered.
McDougall adds that trading imports would be more profitable than manufacturing in the UK. He says he understands the government’s focus on supporting large domestic steel producers, but stresses that a downstream consumer base is critical for the future of UK steel.
In addition to this, the energy costs in his rolling mills are set to rise by 30% from 1 October, further straining margins in the sector.
Carrie Bone UK
