Slow death of an industry that forged a superpower

In the 1950s, Britain's iron and steel industry employed more than half a million workers and symbolised the manufacturing might of a superpower.

Those were the days when the strength of a country's economy was denominated as much in steel and coal production as it was in gross national product.

Steel company employees were considered working-class aristocrats. The people of south Wales habitually referred to the steelworks at Port Talbot as Treasure Island. Men were paid unconscionable wages of £20 a week. Those who worked on relining furnaces, which were barely allowed to cool before the work began, could bring in nearer £30. They were employed by an elite industry which dominated vast areas of Britain.

By the time the industry was nationalised in 1967, when about 90 per cent of capacity was taken over by the state, the numbers employed had dropped to 270,000. When Margaret Thatcher, as Prime Minister, "re-privatised" the industry in 1988, the workforce had further declined to 51,000. Yesterday's announcement by the directors of Corus will take the workforce below 24,000.

The cold facts belie the social impact of the slow death of the industry. The heart has been ripped out of communities in the old industrial areas which were built on steel. No longer can school-leavers rely on a job in the steelworks.

The industry has been at the mercy of seismic shifts in the global economy. Those in charge have been forced to cope with rock-bottom prices. Market conditions have resulted from a combination of the huge over-capacity that arose from rapid expansion after the Second World War and dwindling demand as manufacturing industry gave way to the electronics and service sectors.

More recently, the strength of the British currency compared with the deutschmark and now the euro has rendered British steel products even more uncompetitive.

Another blow came last year when the US government imposed tariffs on imports because domestic steel makers were unable to cope with the competition.

Companies in Eastern Europe and the Far East added to the problems by undercutting Corus prices. Steelworkers in Britain are no longer working-class aristocrats but their pay rates are inimical to competing on price alone.

Perhaps the most graphic sign of the British industry's decline came in 1992 when the privatised British Steel closed its Ravenscraig plant at Motherwell. This huge establishment had been a symbol of Scottish economic virility. John Reid, now the Blairite Leader of the House of Commons, said at the time of the closure (and after a 12-year battle for survival) that the decision was an industrial obscenity.

The present company was born in 1999 out of a merger between British Steel and Hoogovens of the Netherlands. At the time, it was said that the name Corus, albeit misspelt, was chosen to give the impression that all employees would work together in harmony towards the same goal.

But the new company has presided over further decline and managers conceded yesterday that they had no idea what the name meant.

The new group formed the eighth biggest steel company in the world and the fourth largest in Europe, operating plants in Britain, the Netherlands, Germany, France, Norway and the United States. It produces steel for a wide range of businesses, including the automotive, construction and railway sectors.

About 32 per cent of production goes to construction, 18 to vehicle production and 13 to mechanical engineering.

In 2000 the joint leadership by the chief executives of British Steel and Hoogovens fell apart amid shareholder concern that little was being done to tackle costs. Sir Brian Moffat, the chairman of the group, took charge. Despite his long experience in the industry, he declared that he was more interested in making money than steel. He embarked on his mission to boost profitability by planning the next big tranche of job losses.

Early in 2001 he announced more than 6,000 redundancies. As part of the restructuring exercise, steel making was to end at the Llanwern plant near Newport in south Wales. The company's tinplate works further north at Ebbw Vale was to shut. The package of cutbacks slashed the workforce by a fifth and amounted to the most draconian cost-cutting since the closure of Ravenscraig.

The closures were prompted by a £1bn loss, its biggest in 20 years and the worst since privatisation. At the time, management calculated that its British steel plants were losing more than £1m a day, equivalent to the loss of about £30 on every tonne of steel produced. Yesterday's announcement followed the disclosure of operating losses in 2002 of £393m.

The ISTC steel union finds it bitterly ironic that its members have co-operated with management to make British steel plants among the most productive in the world.

One ISTC member said: "It seems part of the problem is that our members insist on being paid for their work."

HOW WORKFORCE HAS DECLINED

* 1967: Iron and Steel Act takes 90 per cent of steel making into public ownership.

* 1970: Government starts £3bn 10-year plan to modernise the industry and concentrate production in south Wales, Sheffield, Scunthorpe, Teesside and Scotland.

* 1980: Workforce has been reduced from 268,500 at the time of nationalisation to 130,000.

* 1984: The company achieves better productivity than most continental rivals.

* 1988: Industry "re-privatised" at a time when workforce has declined to 51,000.

* 1992: Ravenscraig steelworks at Motherwell closes after 12-year battle to keep it open.

* 1999: Corus formed out of merger of British Steel and Hoogovens of the Netherlands.

* 2000: Joint chief executives stand down amid shareholder concern over high costs.

* 2001: More than 6,000 job losses, including the end of steel making at Llanwern, south Wales.

* 2003: Management announces 1,150 job cuts, which will take workforce down to 24,000.