Schneider Electric: Steel Industry Transformation Truths

British Steel has not had it easy. Not for a long time. 

The UK government's promised £500m (US$660m) rescue package for Port Talbot Steelworks, owned by Indian conglomerate Tata, hasn’t worked. Two furnaces will subsequently be closed and a staggering 2,500 people will lose their jobs. An estimated further 300 jobs will be cut in three years. 

This is both a blow to the local community and steel-making in Britain, which has long been in decline. With calls to re-industrialise across the manufacturing sector, a lot of work will need to be done for this to be possible in the realm of steel. 

In this bleak situation, some manufacturers- like Schneider Electric- can see forward in a positive light. The light of a new era of British Steel, where the development of green hydrogen revitalises the industry, powers the global clean energy transition and creates new green jobs. 

But before we explore this possible future- let's reflect on Britain’s once-steely manufacturing past. 

What happened to British steel?

Back in the late 60s and early 70s, steel- the skeleton of modern infrastructure- was in its heyday in Britain. 

In 1970, the UK was the fifth largest manufacturer of steel in the world, producing more than 28.3 million tonnes and employing more than 320,000 people. Across the UK, but particularly up in North in Teesside and Scunthorpe, it was a huge job creator and economic driver.

There were lots of factors behind steel’s decline in the UK.

Many operations were privatised and sold abroad. Those that remained weren’t subsided, while other countries did subsidise steel.

Today, electricity prices have made things even more difficult due to steelmaking’s carbon-intensive nature.

Last year, the UK produced 5.6 million tonnes (making it 26th in the world) and employed about 33,500 people. That’s a shocking drop from the seventies. 

And a death blow for manufacturing, as steel is so vital to so many operations. What can you manufacture? Certainly not cars, or heavy machinery. And forget about shipbuilding, even as an island nation. So when we talk about the loss of manufacturing in the UK, the decline of steel is a vital piece of the puzzle. 

The only way it’s going to rise again is through innovation, embracing a new, dynamic manufacturing future for the UK.

Schneider Electric argues this future can and must be a green one. 

Schneider Electric: Steel’s green future 

“The steel industry is undergoing significant disruption and transformation on a global scale,” says Alex Richards, Vice President EMEA, Mining Minerals and Metals at Schneider Electric.

“For a long time, it has been a critical industry to the UK, so while the news about potential job losses obviously comes as a concern, it is essential to shift our focus from managing decline to seizing opportunities for growth at this pivotal juncture.”

And what do these opportunities for growth look like? Alex points first and foremost to green hydrogen.

“Steel is a hard-to-abate industry, but also a key material for our decarbonisation efforts,” he says. 

“In order to future-proof steel production in the UK, we need to be looking at adjacent industries that support growth and decarbonisation simultaneously through a transition to green steel. 

“One such opportunity is green hydrogen. Green hydrogen enables the production of direct reduced iron (DRI), which in turn can be used to manufacture

green steel. 

“Producing DRI using green hydrogen can result in over a 95% reduction in CO2 emissions compared to steel produced with coal. This presents an opportunity to sustain a steel industry with significantly less environmental impact.”

Green hydrogen: creating new jobs

While there are promising opportunities for greater sustainability in this area- where roughly 1.85 metric tons of CO2 is created per ton of steel- protecting our environmental future shouldn’t come at the expense of the current and future workforce. 

Agreeing with this, Alex argues that green hydrogen will create new jobs for manufacturing workers. 

While we can’t ignore the existential imperative of climate change, and the need for sustainable reform, the manufacturing sector must work to bring people along instead of leaving them behind. 

“It's easy to look at news like today’s and worry about the future, but with change comes opportunity,” says Alex.

"By linking the decarbonisation of British steel with the development of green hydrogen, the UK can play a significant role in the global clean energy transition and support the workforce by creating new green jobs.” 

It’s up to policymakers, industry and manufacturing employers to ensure the existing workforce gets the upskilling, support and advocacy they deserve to transition to different or greener jobs. 

Labour is seeking to negotiate for an enhanced redundancy and retraining package, so efforts to address this do seem in some part underway.

Balancing sustainability and the responsibilities this sector has to manufacturing workers will be an arduous and complex process, with sacrifices on both sides. 

But sustainability is fundamentally about ensuring the future of people and the planet, and we can’t compromise the rights of either when we pursue change.

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