Should HS2 Be Required to use British Steel?

[LNW-GW Joint]

This is an issue raised by the Unite union in defending the UK steel industry from foreign imports.
It seems HS2 does not have a specific "buy British" policy, so there are no agreements in place to use British steel.
There is also a backdrop of British uncompetitiveness in the light of differing trade agreements, which appear to penalise the UK since we left the EU.

HS2 must use overall a huge amount of steel, but I imagine most of it will be used in stations and track/OHLE, towards the back end of the construction.
Tunnelling and route construction doesn't seem to be a steel-rich phase of the project, and the track/OHLE contracts are not even let yet.

The steel industry is global, with the major players operating in many markets.
It is also specialised, and rail is typically one of the specialised markets.
In the UK, most steel for rail applications comes from Scunthorpe.
This plant was owned by Tata Steel, who sold the long products division to Greybull Capital in 2015 and was renamed British Steel.
British Steel became insolvent and after government support was acquired by the Chinese Jingye group in 2020 (surely an irony for a firm called British Steel).
Tata also owned the Hayange steel mill in Lorraine which supplies SNCF (and is now owned by the UK's Liberty Steel).
As a result, Scunthorpe supplied steel to Hayange with rail for SNCF's recent LGV construction projects (eg Tours-Bordeaux, Le Mans-Brittany).
I don't remember anyone objecting to British steel being used to build French railway lines.

HS2 is obliged to build the line on a strictly-controlled budget, and its contractors are multinational consortia.
Logistics dictate that most of the supply chain (eg tunnel/route/station construction) is British-based anyway.
Steel is one of those areas that does not have to be UK-sourced.
(Rolling stock is another: I can't imagine much of the aluminium for the recent trains order will come from Britain).

So should HS2 be directed to buy British steel?
In my view if you enforce protection and exclude foreign (particularly EU) content, tit for tat will rule and potential exports will be lost (not just in steel).
There's also the view that guaranteed orders will reduce competitiveness and cost control (ie HS2 will end up paying more for its steel).
I know NR buys the vast bulk of its needs from Scunthorpe, but some specialist steel does come from places like Austria.
I understand where Unite is coming from, concerned about its members at Scunthorpe, but the UK is not a protectionist economy.
What is more, leaving the EU does not automatically allow the UK to exclude foreign bids in commercial contracts, as we still have WTO obligations.
Thoughts?

Unite demands clear targets for use of UK steel in HS2 project | HS2 | The Guardian

The Unite union is demanding the government sets clear targets for the use of UK-produced steel in the HS2 rail project, after it emerged that the Department for Transport currently has none in place.
Responding to two written questions in parliament posted by Labour MPs in December, the transport minister Andrew Stephenson admitted there is “no formal target” for the use of UK steel in its construction.

 

[SynthD]

HS2 is obliged to build the line on a strictly-controlled budget [snip].
Logistics dictate that most of the supply chain (eg tunnel/route/station construction) is British-based anyway.

These two statements are frequently enemies of each other.

If HS2 were to copy the local experts, NR, would they be buying mostly from Scunthorpe and little from Austria? Would the Treasury, and less important stakeholders like DfT, ORR and Unite be happy with that share? I think they'll have to accept it.

 

[GRALISTAIR]

The Unite union is demanding the government

I lose sympathy straightaway.

 

[hwl]

Most of the steel in HS2 will be rebar for concrete, then structural steel then rail steel. The latter is the mostly likely to be GB sourced but is comparatively small volume/mass overall.

 

[pdeaves]

Most of the steel in HS2 will be rebar for concrete, then structural steel then rail steel. The latter is the mostly likely to be GB sourced but is comparatively small volume/mass overall.

Yes; don't underestimate the amount of steel needed in tunnel linings. That's a huge steel contract in its own right.

To the original post, "should HS2 be directed to buy British steel" (noting that it's a lower case S). I think such a direction (rather than 'preferred, where possible') would open up all sorts of other issues concerning, effectively, government subsidy to private businesses that cannot offer a competitive price. (If they could, we presumably wouldn't need this discussion!).

 

[GRALISTAIR]

Most of the steel in HS2 will be rebar for concrete, then structural steel then rail steel. The latter is the mostly likely to be GB sourced but is comparatively small volume/mass overall.

Bloody hell of course - I forgot about that and I am in the industry!! That will be huge.

 

[Royston Vasey]

I'd expect at the very least a flag-waving contract for 120m high speed rails with British Steel Long Products in Scunthorpe. They already supply these to Deutsche Bahn.

Tata in Port Talbot produce pretty much every common grade of steel and I expect would get a slice of the contracts for everything else. Any choice of British steel would be limited by what is available and economic. There isn't much more of a steelmaking industry left in the UK, Rotherham is a crumbling shell, so I would guess that much of the non-rail steel will be sourced from the market and therefore Chinese. Rebar, for instance, is a large global commodity market. But there will be value-add fabrication that can be done here from the raw materials.

I'm not sure we can legally choose a producer just based on their location...

 

[hwl]

Yes; don't underestimate the amount of steel needed in tunnel linings. That's a huge steel contract in its own right.

Many many smaller ones in reality as there are at least 4 tunnel lining supply contracts, then there are all the bridges and station concrete both pre-cast and on site.

Tata in Port Talbot produce pretty much every common grade of steel and I expect would get a slice of the contracts for everything else. Any choice of British steel would be limited by what is available and economic. There isn't much more of a steelmaking industry left in the UK, Rotherham is a crumbling shell, so I would guess that much of the non-rail steel will be sourced from the market and therefore Chinese. Rebar, for instance, is a large global commodity market. But there will be value-add fabrication that can be done here from the raw materials.

I'm not sure we can legally choose a producer just based on their location...

rebar tends to be the very lowest quality steel used these days (compared to other uses) and Chinese origin as it is all about lowest cost to win civils contracts.

 

[A0wen]

This is an issue raised by the Unite union in defending the UK steel industry from foreign imports.
It seems HS2 does not have a specific "buy British" policy, so there are no agreements in place to use British steel.
There is also a backdrop of British uncompetitiveness in the light of differing trade agreements, which appear to penalise the UK since we left the EU.

HS2 must use overall a huge amount of steel, but I imagine most of it will be used in stations and track/OHLE, towards the back end of the construction.
Tunnelling and route construction doesn't seem to be a steel-rich phase of the project, and the track/OHLE contracts are not even let yet.

The steel industry is global, with the major players operating in many markets.
It is also specialised, and rail is typically one of the specialised markets.
In the UK, most steel for rail applications comes from Scunthorpe.
This plant was owned by Tata Steel, who sold the long products division to Greybull Capital in 2015 and was renamed British Steel.
British Steel became insolvent and after government support was acquired by the Chinese Jingye group in 2020 (surely an irony for a firm called British Steel).
Tata also owned the Hayange steel mill in Lorraine which supplies SNCF (and is now owned by the UK's Liberty Steel).
As a result, Scunthorpe supplied steel to Hayange with rail for SNCF's recent LGV construction projects (eg Tours-Bordeaux, Le Mans-Brittany).
I don't remember anyone objecting to British steel being used to build French railway lines.

HS2 is obliged to build the line on a strictly-controlled budget, and its contractors are multinational consortia.
Logistics dictate that most of the supply chain (eg tunnel/route/station construction) is British-based anyway.
Steel is one of those areas that does not have to be UK-sourced.
(Rolling stock is another: I can't imagine much of the aluminium for the recent trains order will come from Britain).

So should HS2 be directed to buy British steel?
In my view if you enforce protection and exclude foreign (particularly EU) content, tit for tat will rule and potential exports will be lost (not just in steel).
There's also the view that guaranteed orders will reduce competitiveness and cost control (ie HS2 will end up paying more for its steel).
I know NR buys the vast bulk of its needs from Scunthorpe, but some specialist steel does come from places like Austria.
I understand where Unite is coming from, concerned about its members at Scunthorpe, but the UK is not a protectionist economy.
What is more, leaving the EU does not automatically allow the UK to exclude foreign bids in commercial contracts, as we still have WTO obligations.
Thoughts?

Unite demands clear targets for use of UK steel in HS2 project | HS2 | The Guardian

Perhaps Unite could lead by example and start by ensuring all of the equipment it uses in its offices etc is UK sourced. And then it could ensure its officials are only British nationals.

Funnily enough I won't hold my breath on them delivering on that.

 

[najaB]

I'm not sure we can legally choose a producer just based on their location...

Of course, if the requirements were written such that only a UK provider could meet them...

 

[Taunton]

Bear in mind a lot of the steel is in other products, such as the rebar in the concrete sleepers. That means imposing on many other suppliers, who have their own established supply chains and raw material stocks.

Then, having ordered myself from British Steel in the late 1970s when it was a major UK producer, it turned out after issues that what they supplied had actually been produced in Italy and they were just the importers. It had too high a copper and zinc content, which we presumed was because it had been made from scrap without removing any brass from the base material.

The issue with specifying a single source is that the supplier then knows they are a sure thing, doesn't offer any discounts, and indeed is quite likely minded to put the price up significantly.

 

[Danetime]

The interesting thing about steel is how bad for the environment it is in terms of emissions. Especially the way we manufacture it here in the UK. We the UK and many other counties have signed up to the Paris agreement where counties agree to reduce the green house gases. Steel creates 8% of the global CO2 emissions.

Counties have targets to hit and offloading CO2 emissions to another county e.g China reduces our ''emissions'' and helps towards our target. Like the the US new 1
trillion infrastructure bill majority of the steel and ''heavy emissions'' will be off loaded to other counties. So big government projects will always try and use imported steel. 1) because its cheaper 2) those emissions and targets.

I can't believe I'm siding on China's side for once but they want to change the Paris agreement or add a clause where steel and other heavy emissions materiel produced for another counties government projects get included or at least shared with that county.

Soon as that happens you will see counties investing in the technology to create cleaner steal and using home produced steel.

 

[Shimbleshanks]

The UK is also a signatory to the World Trade Organisation's Agreement on Government Procurement which in theory disbars it from favouring domestic suppliers over those from other WTO members.

 

[MoleStation]

And that's the factor. Global Village, if that's still a phrase. And various bits of materials will be shipped from halfway round the world probably.
Economics are daft.
Meanwhile in Middlesbrough an ex-puddler will be deliverooing.

 

[Dr_Intoxicated]

I see in the news today that the EU have signed an agreement with the US so that European steel is now exempt form US inport duties. While UK steel is still subject to a 25% duty. Puting UK steel at a disadvantage. Subsidising steel by awarding contracts was supposedly one of the gains from Brexit.

Steel is supposedly a strategic industry so helping steel and getting a return seems like a good move

 

[GrimsbyPacer]

As many materials as possible should be sourced in England to reduce environmental impact on transportation of baulk cargoes, and to help local businesses where possible.

 

[WatcherZero]

This came up a couple of years ago and it emerged that the UK didnt manufacture the grade of steel required for the rails.

 

[swt_passenger]

I see in the news today that the EU have signed an agreement with the US so that European steel is now exempt form US inport duties. While UK steel is still subject to a 25% duty. Puting UK steel at a disadvantage. Subsidising steel by awarding contracts was supposedly one of the gains from Brexit.

Well I suppose if the US consider “ours” as being Chinese then isn’t that completely predictable?

 

[Dr Hoo]

Would this involve re-opening the relatively low-grade iron ore quarries around Corby or wherever, or would Unite be prepared to accept continuing with imported iron ore from (say) Australia? Ditto re. coking coal from Cumbria and so on.

 

[XAM2175]

While UK steel is still subject to a 25% duty. Puting UK steel at a disadvantage. Subsidising steel by awarding contracts was supposedly one of the gains from Brexit.

It's even better than that - the US continues to apply tariffs to British steels because of Brexit (specifically, as a result of the continual threats to abandon the Northern Ireland protocol).

As many materials as possible should be sourced in England to reduce environmental impact on transportation of baulk cargoes, and to help local businesses where possible.

Do you have a any particular reason for specifying England alone, or have you simply forgotten that significant portions of England are further away from HS2 than Wales is?

 

[Meole]

By purchasing foreign produced steel we get ever closer to being a zero carbon nation and we are determined to be the world leader in this respect surely that is sufficient incentive to buy from abroad, we already source most of our rolling stock from elsewhere after all.

 

[py_megapixel]

By purchasing foreign produced steel we get ever closer to being a zero carbon nation

On paper that might be true, but all we'd be doing in effect is outsourcing our carbon emissions - which doesn't solve anything.

 

[nw1]

By purchasing foreign produced steel we get ever closer to being a zero carbon nation and we are determined to be the world leader in this respect surely that is sufficient incentive to buy from abroad, we already source most of our rolling stock from elsewhere after all.

Except other nations will not be zero carbon in that case. The aim is to reduce carbon emissions for the whole world, surely, not just the UK?

 

[LNW-GW Joint]

I see in the news today that the EU have signed an agreement with the US so that European steel is now exempt form US inport duties. While UK steel is still subject to a 25% duty. Putting UK steel at a disadvantage. Subsidising steel by awarding contracts was supposedly one of the gains from Brexit.
Steel is supposedly a strategic industry so helping steel and getting a return seems like a good move

I think the 25% US duty was a surcharge imposed in the Trump era as part of a wider trade spat with the EU.
The 25% has now been removed on the EU27, but remains on UK production because of the unresolved trade situation over NI.

The supposed benefit of Brexit was the ability to support UK industry more directly than was possible while in the EU.
But there are still WTO competition rules which are very similar, anti-dumping etc - and rail is not a strategic sector.
Airbus and Boeing have been in a decade-long WTO dispute over government subsidies which repeatedly threatens to break out into a full trade war.

This thread has shown that there are multiple areas of HS2 that use steel, subject to many different supply contracts.
The rail/OHLE steel contracts are likely to be a low number of individual contracts and under direct HS2/ministerial control.
There's the question of whether UK plants have the technology to produce 360km/h rail and matching OHLE.
I can't remember how HS1 rail was sourced, but it was designed as a clone of LGV Nord on the other side of the Channel, and was of course a smaller project.

I could easily see HS2 prime contracts for rail going to British companies, but with much of the underlying production coming from elsewhere.
It's how car and rolling stock production is managed, after all.
We're also assuming the UK steel industry will stay in its present form for a decade or more, which seems unlikely considering recent restructuring.

 

[Meole]

Except other nations will not be zero carbon in that case. The aim is to reduce carbon emissions for the whole world, surely, not just the UK?

Our declared national ambition at COP is to be the flagbearer for others to follow, its a matter of national pride for our leadership.

 

[nw1]

Our declared national ambition at COP is to be the flagbearer for others to follow, its a matter of national pride for our leadership.

I've made comments before at my deep scepticism of Johnson being green. IMO it's just a good way for him to attract votes from affluent liberal voters who deserted him over Brexit. The guy basically doesn't believe in anything except Boris Johnson. He'll drop it as soon as he finds some other way to expand his voter base. And he may well be gone soon anyway if there's a leadership contest.

Also, do countries really follow each other? I get the impression that now, more than ever in recent times, countries very much 'do their own thing' and won't be swayed by what other nations are doing.

 

[stuu]

Our declared national ambition at COP is to be the flagbearer for others to follow, its a matter of national pride for our leadership.

I thought your initial post was sarcastic... climate change is a global issue, moving the CO2 offshore achieves nothing, fairly obviously I would have thought

 

[thejuggler]

It is easy to say buy British, but you need to ensure there is capacity in the system to actually provide what you need which doesn't adversely affect the ability of manufacturers to service existing clients. You also can't limit it to one supplier.

HS2 and Hinckley Point are already sucking out of the UK supply chain millions of tonnes of building materials and equipment, compounded by Covid supply chain issues and this is affecting other building contracts.

 

[misterredmist]

Our declared national ambition at COP is to be the flagbearer for others to follow, its a matter of national pride for our leadership.

So shutting down industries and putting people on the dole is your answer ? crazy..... especially as importing from around the globe created additional emissions.....

you do realise that wherever emissions originate, there are no boundaries on the Planet for CO2 ? saving the Planet is not a box ticking exercise, it wll need every nation to engage, and not just ourselves who are a tiny proportion of the said emissions...

 

[WAO]

I think that we should (mostly) trade freely with countries that trade (mostly) fairly. With steel, I think that that probably includes the EU as there is two-way trade. China is a separate case as I don't consider 3rd world conditions and forced labour rates as "fair" or its methods as "green".

I also think that an advanced country with a significant defence need (all of them) should source the majority (not all) of its capital goods at home. Even where overseas firms have UK bases, they should also export some of their output rather than have just a screwdriver assembly plant without design capability. Cheap overseas manufacture is fine for the soft affluent south of England but for those in the regions who would have a living from industry it can spell poverty. Hence the large votes for Boris.

Some imports are always desirable; we owe the EMU to Sprague of the USA and much electrification to Siemens, just as other countries have gained from our goods and technologies, when we were bothered to produce them.

WAO