As British Steel asks for a £75 million loan from the British Government to prevent the company collapsing into administration, Dr Jonathan Owens, supply chain and logistics expert at the University of Salford Business School, comments on the situation in which the struggling company finds itself.
“This was a business that was sold by Tata for £1 and rebranded with the old familiar nameplate. However, things have not been plain sailing. They have already been assisted by the government by the way of a bridging loan to the tune of £120 million. They were settling their carbon emissions bill with the EU and these were back dated. However, this new £75 million loan request is a more complex issue as the business is struggling to cope in the competitive market.
“Yes, there is the impact of some European orders that may, or may not materialise due to the Brexit uncertainty, however the weak pound does not help with competitiveness overall.
“So, if British Steel currently cannot cope with this level of pound exchange rate, one would have to ask what strategies are they proposing to put in place to turn this around before parting with £75 million?
“Of course, in the immediate term, there are 5,000 jobs at risk within the company, and approximately 20,000 in the support supply chain, and these certainly are giving huge cause for concern. However, if the company cannot be market competitive, then this £75 million loan would, perhaps, only be delaying the inevitable and we could be looking at administration again in the near future.”