Since British Steel went into liquidation in May, everyone’s been looking nervously at Tata Steel. No less at that uneasily quiet giant Arcelor Mittal, which reported poor financials earlier this year. As half-expected, the lid came off Tata Steel earlier this week when it announced 3,000 job cuts in what its chief executive in Europe Henrik Adam described as “unprecedented severe market conditions.” Can it be any different for about 500 steel mills across Europe? Is Europe the last place on earth now where making steel makes sense, and money?
Wages in Europe have always been relatively high. Add to that a rise in the price of coking coal of late and a dramatic rise in iron ore. The price of European emissions trading permits has soared since last year, and that hasn’t helped. A lot more steel mills would likely have gone down by now but for a wall of protective tariffs built around steel imports into Europe, particularly from China. But could we be seeing the glimmer of silvery look steel lining here in an apparently bleak picture?
Despite mounting difficulties, Tata, and Europe aren’t shutting shop, or mill – for now. Tata is getting smart about steel the way Europe is having to. And that’s the way of new and high value-added products, with new low-carbon production processes. That’s the way Adam says Tata Steel. Will now go. Most of its job cuts will be in offices and not on the production floor. Tata Steel will now do on its own what it had hoped to through a merger with Thyssenkrupp, which was blocked earlier this year.
Look out now for European steel-making that becomes carbon neutral and then holds hands with legislation slapping tariffs on steel that is not demonstrably carbon-neutral. Europe has a way of looking after itself. It’s going the way of differently made steel, and of different things made with it. The Tata job cuts speak obviously of a crisis. But in less obvious ways it could be a sign that it’s moving smart and fast into another steel cycle that it hopes will not need rescue from the Chinese or by the Chinese.
Welfare at a Price
Debates on socialism versus capitalism fizzled out it would seem generations ago, even centuries ago; that language is now considered passe, even embarrassing. But it is essentially a fallout of that debate that grips the disputes over Britain’s National Health Service (NHS) in the election campaign. The NHS represents a triumph of the socialist principle within a market economy that parties compete to support.
The NHS is a great institution. Nobody pays for any medical treatment other than a ceiling of nine pounds for prescribed medicine, whatever its actual cost. Anyone in frequent need can cut this cost with an annual payment of a little over a hundred pounds a year, and that’s that. No one below 16 or above 60 pays anything at all. For some rare treatment available only in a country such as the US, the NHS will pay for that treatment there, together with transportation costs. All this may all add up to thousands, even tens of thousands of pounds. There’s much to think about for anyone who falls ill, but it never has to be about money. The NHS will cost 134 billion pounds this year as it stands, but a Labour charge that the Conservatives are talking to the US sent shock waves and drew rapid denial. Private funding of medical care is a notorious idea no party dare invite.
The service is no doubt overstretched at times, and underfunded for its ambition, and that’s what parties and candidates are quarrelling about. Each party is promising billions of pounds more a year to fund the NHS, not easy when the government has been borrowing already well above limits most institutions should consider acceptable. The Conservatives are pledging four to five billion pounds more per year over the next many years if they were to form the government. Labour would plan to better that.
Either way, an expansion could turn into a substantial Indian story. The NHS has currently about 65,000 doctors of Indian origin among a total of about 300,000, Dr Ramesh Mehta, president of the British Association of Physicians of Indian Origin (BAPIO) tells CNBC TV-18. The Conservatives have promised 6,000 more general practitioners among 10,000 new doctors by 2024-25. And a lot of these could come from India. BAPIO is in talks already to recruit doctors from India who would be given three years of training in Britain, at British government expense, to then practise in Britain. Many doctors to come, and the patients who need them, must think this a Capital idea from a welfare state.
London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around. Read his columns