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IPPR- A further 1700 jobs could be lost in the supply chain of Welsh and English steel-making communities

IPPR analysis looks at the potential indirect job losses in the supply chain

A further 1700 jobs could be lost in the supply chain of Welsh and English steel-making communities, new analysis has found.

IPPR looked at the potential indirect job losses in the supply chain. In Port Talbot (south Wales), 750 job losses have been announced, but a further 1200 could follow as the plant's suppliers shed workers in response. In Trostre (south Wales), Corby (Northamptonshire) and Hartlepool (north east England), where up to a combined 300 jobs will go, a further 500 could be lost as the supply chain adjusts.

These are the jobs that are lost as a consequence of lost demand from the plants themselves, which will have a knock-on affect for their would-be supplier firms.

The supply chain job losses are likely to hit the basic manufacturers and suppliers of iron, manufacturers of machinery, and processes and suppliers of coke and petroleum.

In total, 2,750 jobs may be lost: 1050 from the plants directly and 1700 in the supply chain.

Experts at IPPR say the figures do not capture the impact of lost demand in the local economies from reduced spending power of workers and their families.

Catherine Colebrook, IPPR Chief Economist, said:

“British steel is facing difficult international headwinds, with slowing demand for steel from China having knock on effects for the industry right across the world.

"British steel providers also face an imperfect global market. Despite weak demand, there is currently significant additional investment in new steel facilities and plants from regions that are traditionally net importers of steel, such as North Africa and South East Asia. Combined with existing excess capacity in Europe, the US, Russia and China, this is widening the gap between the amount of steel the world can make and the amount it actually needs. 

"The costs of sustaining all this excess capacity is biting heavily into the profit margins of steel producers around the world, with little foreseeable respite on the short to medium term horizon."

Contacts

Sofie Jenkinson, s.jenkinson@ippr.org / 07981023031

Notes to Editors

These estimates have been arrived at using employment multipliers by industry for basic iron and steel (SIC code 24.1-3), supplied by the ONS (2014). Estimates of job losses down the supply chain are based on an assumption of reduced output as a result of job losses at the plant. As with all multipliers, these estimates will be subject to a margin for error. Further, these estimates do not take account of the fact that some people will find work elsewhere. They therefore represent estimates of gross job losses, not net.

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