Steel giant throws weight behind Dalzell and Clydebridge

Douglas Dawson, the Scottish chief executive of Sanjeev Gupta’s Liberty Industries Group, highlighted the long-term prospects for the group supplying steel plate to the oil and gas, automotive and renewables sectors, even though the continuing Brexit uncertainty has led to a softening of demand.

The Scottish plants, which were shut by Tata with the loss of 270 jobs in 2015, are on course to produce around 75,000 tonnes of steel plate this year and increase that by at least a further 25 per cent next year, a report published by Liberty’s parent group, GFG Alliance, reveals today.

Turnover at the plants dipped slightly to £42 million in 2017/18 from £43m, as employee numbers fell to 145 from 187, the report found.

Mr Dawson conceded that falling steel prices, sparked in part by huge output in China, means conditions are extremely competitive in the global steel market, with the depth of the challenges underlined by the recent decision by Tata to axe

1,000 jobs in the UK.

However, he said Liberty’s position in Scotland has been strengthened by a recent “sizeable” acquisition in eastern Europe, which brought it two steel plants and six downstream steel businesses.

The GFG report says its Scottish plants have reclaimed a large share of the UK plate market and moved into markets such as Germany, France, Belgium, the Netherlands and Ireland.

Mr Dawson said: “No one is insulated from what drives the steel market. Currently a big influencer in the steel market is the fact that iron ore is quite scarce because of the issues in South America. Iron ore, a key commodity in steel making, is driving much poorer margins, [and] the steel price is softening, so you have got what we call a margin spread erosion. But of you stand back far enough, the world continues to consumer more and more steel, so the steel market is growing. It is how we participate in the market.”

He added: “The key element that we focus on is our downstream activities, where we add value. That’s where Dalzell fits into our strategy – it is adding value to the actual basic steel.”

Mr Dawson noted that Dalzell makes high-quality steel for offshore platforms, on and offshore wind towers and deck plates for frigates and war ships. “The actual product itself is very good,” he said. “It really has to be positioned well, and have the support of steel plants behind it, which we now have.”

The Scottish plants have a sister oil and gas pipeline business in Hartlepool, which buys plate made by them, illustrating the benefit of being part of the wider GFG Group. Other markets for Dalzell plate include GFG’s automotive businesses, which supply “yellow goods” to the likes of JCB and Caterpillar.

As for Brexit, Mr Dawson said the company is “agnostic” in terms of political positioning, but admitted the continuing lack of clarity is affecting orders. “It is the uncertainty that it brings,” he said.

“I think that is causing softening in volumes in our automotive and supply chain businesses, and the same for yellow goods.

“But steady as she goes. We are not too concerned. We could do better, but we are by no means doing badly.”

The GFG report states that Liberty has invested £500m in its Scottish assets since 2016, and is planning to move into wind tower manufacturing at its Clydebridge site, using equipment purchased from Mabey Bridge. It says the location is ideal to support the expected growth in the onshore wind sector, given its proximity to the motorway network.

Mr Gupta’s property division, JAHAMA, has also revealed its intention to build a hotel on the land it owns near the site.

It anticipates that the 100-bedroom Clydebridge Hotel would provide 50 jobs and further indirect employment in the area.

Elsewhere in Scotland, Liberty has a major presence in Fort William, where it acquired a hydroelectric station and the only aluminium smelter in the UK in 2016. That deal also brought with it neighbouring hydro-power plant in Kinlochleven and around 120,000 acres of estate land.

The company has secured conditional planning permission for a £120m alloy wheel factory in Lochaber, which would be fed by the smelter, though Mr Dawson said it may be used for alternative uses given the decline in UK car manufacturing since 2015.

He said: “The industry is struggling. We haven’t lost sight of our primary commitment, which is to add jobs in downstream manufacturing in Fort William.

“The question before, as now, is we want to make a responsible investment. It could be aluminium extrusions, it could still be alloy wheels. It could be forged allow wheels, it could be aluminium cans, because since we acquired the smelter everyone has woken up to how concerned we are about plastic and the use of plastic packaging."

Liberty, which hopes to break ground on the new facility in the middle of next year, now employs numbers around 237 in the area, having added around 45 roles during its ownership.

Mr Dawson said: “If you stand back far enough, our strategy is really simple. And that is to take renewable energy, which will drive primary metal production, which then feeds downstream manufacturing.

"One site in Fort William pretty much embodies that vision."