Huge task for Steel – chief

Press, 16 July 1980, Page 12

Huge task for Steel - chief

By

YOUSEF IBRAHIM,

of

the "New York Times” News Service London

Mr lan MacGregor, the Scots-born American who is the new chairman of the British Steel Corporation, faces’ the daunting task of turning Britain’s most glaring industrial white elephant into a lean, competitive and profitable enterprise in three years. Industry analysts, politicians, and most certainly the trade unions with which he will have to do battle if he is to turn around the'deeply troubled steel industry, believe the storm that greeted Mi* MacGregor’s appointment is nothing compared with what is ahead.

The stumbling nationalised steel giant is a corporation expected to lose the equivalent of almost $1 billion this year and labour under the weight of more than $3 billion in long-term debts. Burdened with ageing plants, too many workers, and low productivity,’ 'the

British Steel industry’ is no longer able to compete overseas and continues to lose an increasing share of the home market. Its share of the domestic steel has fallen from 54 per cenjt last year to below 45 per cent this year. Despite plans already announced to lay off 52,000 steel workers this year alone — one-third of the entire labour force at B.S.C. — it now appears that the corporation will have to sack another 10,000 workers before the year is over. Steel output, which last year stood at 21.5 million tonnes and was targeted to reach 35 million tonnes in the 1980 s, will have to be trimmed far below the announced target of 15 million tonnes for 1980 because there are no takers. Last year’s steel imports of 4.3 million tonnes are rising rapidly because of competitive German and Japanese products and the strong Pound, according to preliminary estimates from the Department of. Trade for the

first few months of this year. “All the evidence is that this year will be 7 per cent worse than last year in steel consumption in the home market. Next year will be substantially worse than this year,” said the outgoing

chairman of 8.5. C., Sir Charles Villiers. If the corporation were in the private sector, it would have gone bankrupt a long time ago. On top of the eight main plants already closed or about to be closed, and the rapid reduction of stock, B.S.C. may have to sell assets not related to steel output such as its construction, engineering and'chemical subsidiaries to, stop the monthly losses of $35 million. . .■ The losses have reached the point where the corporation's threatened with run-ning-out of money to meet its bills, which includes big settlements with the’workers being laid off. It is partly in recognition of these facts that the British Government has "announced that it will double the $1 billion borrowing limit available to B.S.C. for this. year, after having insisted for months that no more money was to be given to the corporation to meet its financial obligations. Mr MacGregor, : mindful of

the political storm that surrounds him, has been careful not to make any disclosure of his plans for B.S.C. It is widely believed that he has already told the British Industry Secretary (Sir Keith Joseph) . that it will be impossible to fulfill the goal of returning B.S.C. to profitability within the limits set by the Government Mr MacGregior, a former partner in the New York investment bank Lazard Freres and Company, will meet the Iron and Steel Trades Confederation, the main union group, to hear their proposal for what should be done with B.S.C. The union will present him with a study. Although no details of the union’s plans have been released, union leaders have already expressed the view that high labour costs are not the reason behind B.S.C.’s problems, and have taken issue with the contention that a reduced demand for British steel in the long-term requires the draconian measures being implemented.