The new owner of British Steel hopes to employ more people as the long term investment plan pays off, shrugging off concerns the impact a coronavirus-triggered global downturn could have.
Jingye Group chief executive Li Huiming spoke openly for the first time after sealing the deal with the Official Receiver, with Business Secretary Aluk Sharma also in attendance.
And he highlighted the plan to “internationalise” British Steel’s premium products as a differentiator between now and past attempts to turn the huge foundation industry stalwart round.
Steel has been made in Scunthorpe for 150 years, in public and private hands, by the British, European Indian owners.
Now under Chinese control, retaining the British Steel name, Mr Li said: “I would like to thank all our colleagues here at British Steel for their dedication and professionalism throughout a challenging time for them and their families.
“I should also thank everyone who has been involved in managing the business throughout an extremely difficult period. Today the future of 3,200 highly skilled jobs have been secured and we have taken the first steps of a long term sustainable future for steelmaking in the region.
“Jingye Group’s £1.2 billion investment over the next decade will place this business on a more competitive and sustainable footing as we improve energy efficiency and environmental performance. It has not been an easy journey and British Steel will not be transformed overnight.”
He praised the “British Steel legacy and illustrious heritage,” underlining how the group’s buying power will “help British Steel’s growth” adding “as part of Jingye Group British Steel can become a sustainable and profitable firm for all stakeholders”.
Immediate plans for the investment include the development of an electric arc furnace in Teesside – a cleaner way of making steel, as well as a far more efficient 250MW power plant in Scunthorpe.
Rolling mills will be invested in to “produce high-quality steel products to optimise the product portfolio” while a new rebar line for construction materials and an enhanced rail mill are also high on the agenda.
Asked how Jingye will be able to turn round a business others have ultimately failed with, Mr Li said: “Different enterprises will take different approaches to the same project.
“Jingye’s strategy is to internationalise British Steel. It is a fantastic business and we think if we can combine our strengths with those of British Steel we have a great future ahead of us. We are not in this for the short term. This is about building a long term sustainable future for British Steel.”
While the mood was upbeat on site, 400 are contemplating their next move having missed out on new contracts.
Mr Li said: “We think 3,200 people is the right number for the business as it is at the moment. As we invest more we hope there will be opportunities for further employment.”
And as the global economy faces up to the true impact of coronavirus with millions being wiped off companies’ values the world over as the deal was announced on what is being dubbed “Black Monday” – the worst single day hit since 2008 – he added: “Difficult economic times can bring with them opportunities to develop businesses further in terms of cost being lower than they would otherwise be. Through our history we have been through difficult periods including 1998 in Asia, a difficult time, then the business did well and again in 2008. That’s how we like to look at the situation.”
Business Secretary Alok Sharma appeared impressed with the cleaning up of the industry, as the government targets Net Zero with his department spearheading the push.
He said: “I think it is a very positive moment, and I think it brings uncertainty to an end. It secures several thousand jobs, 3,200 in the business and in the wider supply chain as well, and the steel users.
“Everyone has worked hard to get this deal over the line and I pay particular tribute to employees and their families. British Steel has incredibly dedicated, strong employees who are highly skilled and who we need.
“The very good news is Jingye has clearly set out a long term commitment to British Steel and a long term investment plan – in value terms £1.2 billion – and I have sat in discussions we have had with Jingye today and they are very keen to emphasise they are committed to Net Zero and clean growth.”
He made it clear BEIS was not walking away now the deal had been done, and not immediately able to put a cost on the support to keep it trading in the 10 months it had been in compulsory insolvency.
“We are going to continue to stay in close contact with Jingye Group, and indeed throughout this whole process, my colleagues and officials worked incredibly hard and have been part of the process leading to completion,” he said.
“The new employer has said very publicly this is a long term commitment to British Steel, which is very good news, and while it is positive news it has been tinged with some sadness because some colleagues here are not being taken forward, and some have worked for 20-odd years. That is very sad to hear and we persevere with the support, and I can say the government is doing everything it can.
“The Prime Minister was very keen that we provide the support we have done, and he and the rest of Government absolutely welcome this new chapter.
“I think this deal is a vote of confidence in the UK and the UK steel industry. There is a long term plan here, and there is no doubt we have world-class products being produced in British Steel, and a world-class workforce as well.”
The completion – with all bar the French rail facility included, and work on that ongoing with the relevant authorities – comes after a torturous 10 months which saw a period of exclusive due diligence with a Turkish firm expire without offer.
Cllr Rob Waltham, leader of North Lincolnshire Council, said; “It has been long overdue. First of all we are able to secure 3,200 jobs, plus there is the announcement of £1.2 billion capital in a site, which is long-needed investment, and will bring a crucial boost to the local economy.
“We have to be more confident this time. This is a steel producer taking over a steel producer and what we like about that is it is not just a capital investment. They want to make steel and truly internationalise the British Steel product, taking it to international markets.
“We know we build premier products, now they can be pushed to larger markets. British Steel will be the name it trades on, with high profile premium products in a wider market.”
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