Men of Steel versus Men of Flesh

December 11, 2008

As the recession bites, multinational corporations are lobbying hard to use the opportunity presented by economic distress to their own advantage. In the UK, no company has been as brazen as Corus, the steel firm formed from the ashes of British Steel, and now owned by the Indian based Tata Group.

Corus is claiming that its profits are about to be decimated by falling demand. Facing such a catastrophe, its excecutives have been arguing, it is essential that business, government and workers come together to fight the economic downturn. It’s not a coincidence that business leaders are now conferencing with government as credit dries up and export markets shrivel, while those governments have begun to call for all of us to tighten our belts and roll up our sleeves to banish the demon of recession.

Business will ask those who work to make the sacrifices it deems necessary to maintain profitability.

Take Corus. Its chief, Phillipe Varin, has been busily engaging the governments of Holland and the UK to secure “support” for his firm’s efforts to “avoid redundancies amid falling output” as the BBC puts it. The Dutch have been forthcoming, with the government promising to cover 70 percent of Corus’ costs, as the firm drastically cuts back on output and hours for its staff.

Corus CEO Phillipe Varin

Corus CEO Phillipe Varin

The Dutch deal involves “retraining” – a sure sign of mass lay offs to come. The enforced six week “break” over Christmas could well be a harbinger of seasons yet to come. So the Dutch taxpayer will now pay 70 percent of the wages of Corus’ 4,600 Dutch workers, a pretty handy favor for the firm’s bosses.

Now, Varin is appealing to Gordon Brown for similar perks. As Varin puts it, “We are looking for the [UK] government to take swift and decisive action to mitigate the effects of the financial crisis on manufacturing industry.” He wasn’t just pissing in the wind. Varin was talking at a European Business Summit, no less, “attended by leaders of Britain, France and the European Commission.”

Brown will have to take note. While Varin is appealing for assistance, his firm is holding the sword of Damocles above the heads of its 20,000+ British workers. The Corus plant at Llanwern in Wales is facing closure, on at least a temporary basis. Corus wants 30 percent cuts in output for 6 months, as it seeks to prevent an overhang of unshiftable steel.

What is perhaps surprising is the fact that the Trade Union involved, somewhat misleadingly named “Community,” is acquiescing in Varin’s scheme. Reports suggest that Community is proposing a 10 percent pay cut for Corus staff, across the board.

Although members of the GMB, which also represents Corus staff, have denied this report, it is likely that Union leaders in Wales are making a deal with Corus to “protect” their members’ jobs.

They have form. In 2000, a massive round of lay-offs at Corus followed a deal between Unions and Management. In the years running up to the move, workers had taken on longer shifts and upped their productivity, yet they were sold out in the end in the name of raising shareholder dividends.

As one worker told the Socialist Worker all those years ago, “you didn’t dare complain because there was this feeling that we had to have higher productivity-management said it, the union said it, the government said it. That was the price of saving your job-and I feel bloody stupid for having ever believed them now.”

Henry Williams, also a Corus employee, told the paper that “They call it Corus. It ought to be Con Us. They con us into working harder and harder for them, they get our union leaders and the government to go along with them, and then they throw us on the scrap heap if they can’t make enough money.”

Those redundancies and changes in working practices were also pushed through in an atmosphere of “crisis.” British manfacturing was tanking as production was offshored. Yet while jobs were being lost, Corus itself was getting by. Shareholders received £700 million, for example, when the firm absorbed British Steel at a bargain price.

Strangely, if we fast forward to 2008, things aren’t all that different. As the Financial Times reported in November, Tata has been making plenty of money recently, and can easily cover the costs of “restructuring.” Its Chief Executive B. Muthuraman, told the paper that despite the recession, Tata Steel intends to triple its profits by 2013.

Those profits aren’t inconsequential. As LetsRecycle.com reports, Tata Steel’s turnover for the first half of 2008/2009 was a whopping £12.8 billion. External sales, however dropped just 3 percent, hardly panic stations with a cash mountain stashed away.

Tata is playing a long game – as Muthuraman’s plan suggests – and the British government is primed to collaborate. This entails reducing the costs of manufacturing in Britain to rough parity with Tata’s Indian operations. As the FT dispatch noted Mutharam “said the target could be reached, partly by improving manufacturing procedures in its European plants.”

His aim? To bring earnings before interest, tax, depreciation and amortisation (EBITDA) at UK and Dutch plants into line with Indian plants, a variation on the race to the bottom theme, although we shouldn’t beat up on the Indians. This is regression to merry old England of the nineteenth and early twentieth centuries.

It’s fitting too that open cast coal mining should be re-emerging as working standards drop and unemployment multiplies in the Welsh valleys.

But what should Gordon Brown do? In a sense, Tata have a point. As a corporate-run enterprise, steel plants have to compete in the market, and – if profitability is a good gauge of how well such competition is chugging ahead, then sacking huge numbers of workers and grinding the ones that you retain into dust is good practice.

You could regulate to prevent the layoffs, but this would compromise “labour market flexibility” and open a pandora’s box of labour disputes and corporate-funded attacks in the media. In any case, that would be a palliative, little more than a band-aid solution.

You can simply give in to Tata and pay for whatever retraining they suggest, or you feel bothered to provide, while subsidising the firm’s global pool of shareholding rentiers. Using the recession as an excuse makes this awfully appealing. It will probably happen, although in the face of some worker militancy, I hope.

The alternative is to take Corus’ assets into public ownership and fund their development into centers to produce renewable energy, retraining the workforce as you go. The plants could be re-equipped to produce solar panels, or simply destroyed and replaced, which might be easier. Or they could be made ultra-energy efficient through public investment, and run as a national asset to provide steel for schools, hospitals, essential goods…

As a tragic end-note, BBC Wales reports on the case of 33 year-old Terence Lewis from Blaneau Gwent. Lewis died after being overcome by fumes, probably carbon monoxide, deep within the now close Corus facility at Ebbw Vale.

Lewis, “wanted money to buy a birthday present for his girlfriend’s daughter” in an economically devastated area. He was using a petrol fuelled disc cutter to sever and remove a length of six inch copper wiring.

Corus wouldn’t have noticed, as the whole place has been shut down for years, but it remains a corporate “asset” to be defended at all costs.

Llanwern Steelworks. Lets Green It.

Llanwern Steelworks. Let's Green It.

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