Welsh dragon shows steel

A LADLE of molten iron is poured into a vast steel making vessel at British Steel's Llanwern works near Newport, South Wales. Half an hour later, thoroughly blasted by pressurised oxygen, it will be tapped as 180 tonnes of high-quality steel. From there,it will flow away to be cast continously into slabs. A handful of men, watching a bank of computers and television screens, control the entire process.

Llanwern made history this month when British Steel announced it was to take on another 150 workers. No-one can remember when the company last increased its UK workforce. Since 1980, it has fallen from 166,500 to 36,500, and Llanwern's numbers have tumbled from 9,350 to 3,500. Output, however, has risen, and the people of Newport are at last being rewarded for productivity.

It is a long way from 1980, when Llanwern came within an ace of shutting down. "All the time people in pubs, everywhere, were telling us exactly when we would close," works director Bill Harrison said later. The Government showed no desire to prolong thelife of Llanwern - or of the rest of British Steel. Norman Tebbit, then junior industry minister, called the corporation "this squawling baby. We can't give it away. We can't even leave it on the doorstep."

Now, with the highest productivity in the steelmaking world, British Steel could expect to buy a lot of extra output with its 150 men. It will. The investment, in a second continuous casting machine, will unblock a bottleneck and should increase production by 1 million tonnes - or 50 per cent. Brian Moffat, the group's chairman and chief executive, says that the new machine - combined with streamlining thoughout the company - will make up the production lost when Ravenscraig closed in 1992. "When Llanwern is on stream, we will be looking to produce more steel with four plants that we did with five," he said.

Mr Moffat said he expected further expansion in the UK. Llanwern already has a plant, Zodiac, which produces rust-proof galvanised steel for the motor industry. "We might go downstream, nearer to our customers," he said. "We think we will eventually do pressing for car manufacturers."

The Llanwern announcement signals that British Steel believes its recession is over. The new machine was planned years ago, but was put on hold when the downturn arrived.

Last month, British Steel announced it was to be a partner in Trico, an advanced American "mini-mill" that could, Mr Moffat said, provide a route for further expansion abroad. Mini-mills, electrically powered plants that use only scrap as their feedstock, are well-established in the US. But Trico, which is a joint venture between LTV of the US and Sumitomo of Japan, will aim to make a further technological leap. Usually a hot mill rolls the steel to a certain thickness, then a cold mill gives it a perfect finish. Trico will attempt to produce finished steel directly from the hot mill. "That could save £60, or about 15 per cent, a tonne," Mr Moffat said.

According to independent studies, British Steel is the lowest-cost steel producer in the world. Mr Moffat and his team spent much of the recession excoriating other European producers - especially state-owned ones - for failing to cut their ca-pacity. Hesaid there would be further trouble when the market turned down again, but in the meantime he was turning his attention to opportunities for expansion. As one of the few steel makers with a strong balance sheet and rock bottom costs, it was in a strong position to move where it would.

It is, in fact, well placed to become the world's first steel multinational - producing locally around the world, albeit usually in joint ventures. Its executives have been busy in Asia, talking to family-controlled steel makers to see if it can make joint investments. "The thought of putting down plants in those regions is quite exciting," Mr Moffat said. China had the best long- term prospects, but the other giant, India, could be more fruitful in the nearer term, he suggested. British St e el will move cautiously rather than building giant new plants. Mr Moffat would like first to build mills - the last stage in steel manufacture - "and when we have got to know the market, to integrate backwards".

Though the Trico model should give BS and its partners a huge advantage in some markets, elsewhere Llanwern is a better template. Mini-mills are economical only where electricity is cheap - which is why they are not popular in Europe. They also need scrap rather than iron ore; and developing countries tend to be net consumers, not generators of scrap.

Llanwern is proof that a traditional design, efficiently run, can be as good a model as any. It was opened in 1962, and its fundamental process has remained unchanged since then. It is the only European steel plant built in a straight line - it runs for three and a half miles. This allows the ingredients to flow smoothly from one end to the other.

Not that there are many signs that this is one of the most efficient steel producers in the world. The management offices are temporary structures rendered permanent by default. Rusty pipework surrounds the blast furnaces, and weeds grow wherever they can - not perhaps surprising, for Llanwern lacks an essential element in successful weedkilling: people.

In the minds of the managers and workers, the plant's history is divided into two eras - "before 1980" and "after 1980". That was the year a three-month pay strike crumbled, and British Steel's management - seeing imports flooding in - said it wanted to close Llanwern. The unions started negotiating frantically and it was reprieved in exchange for massive job cuts. The headcount fell from 9,353 to 4,899 in three months. In the next few years, it fell by another 1,400.

Ian McGregor, the tough American who took over as chairman in mid-1980, declared that he knew of plants in Japan where it would be possible to fire a bullet from one end of the steelworks to the other without hitting anyone.

By the time he stepped down he could just about do that at Llanwern. The lack of people at the plant is eery.

Iron ore comes in by train from Port Talbot, the plant 35 miles away that operates as one business with Llanwern. The trucks are automatically tipped, and the ore travels to a stock yard where it is built up in carefully graded beds. One man controls this entire operation.

Each bed is "eaten" by a giant roller, which spits the ore out on to another conveyor belt, where it is carried to the blast furnaces.

Blast furnaces operate in "campaigns" of about five years before they have to be relined or rebuilt. Furnace number three, now running, never achieved its capacity of 5,000 tonnes a day during its first campaign, from 1976 to 1980. It employed 170 peoplethen. It was relit in 1990, with 70 workers, and is now producing 7,500 tonnes of molten iron a day.

In the control room, two men watch a bank of television screens and computer terminals, while one wall is covered with a diagrammatic representation of the process.

As the ore travels to be loaded into the furnace, a series of white lights moves along to track it. Though the computer system is only five years old, the atmosphere is still very Sixties, very Man from Uncle.

One of the monitors shows two more men clearing the way for molten iron in the cast house: these were the only two workers doing physical labour that I saw in the whole plant. Fourteen men work in the blast furnace in each of the four shifts. "Four do p h ysical labour; the rest are controllers of some sort," said Wayne Roberts, the controller, adding that a good proportion of these are studying for open university degrees.

Llanwern's workers are paid bonuses, linked in part to physical measures. The men who control the blast furnaces earn more, for example, if the iron has low levels of sulphur. This, combined with a "total quality" campaign, means that workers have every reason to keep quality and productivity up. Everywhere, there are examples of costs shaved, waste reduced.

The story is the same thoughout the works. The continuous casting machine holds the world record for non-stop production of steel: in 1993 it produced 43 miles of slab steel in a month. That needed extraordinary quality control.

In the hot mill, red-hot steel, reheated after it has emerged from the continuous caster, is pressed ever thinner by a series of rollers. As it moves along, the strip becomes longer, thinner - and faster. It emerges from the final roller at 35 miles an hour, a glowing red steam train a third of a mile long hurtling towards the buffers. In a handful of seconds the steel is coiled, and instantly loses its red glow. The entire process is monitored by two people.

British Steel may be looking most covetously towards the east in its expansion plans. But it is comforting to see a dragon of the West fighting back. For once it is Wales, not Japan, that is an example to the world.