The appointment of Ian MacGregor as new Coal Board boss caused considerable alarm throughout the labour movement. Paul Highfield examines how he carried out the Tories' plans to slash the steel industry and to break its unions.
The crisis in steel puts that of other industries in the shade. Output in western Europe in the last quarter of 1982 was the lowest for 30 years and US plants are working at an overall 40 per cent average capacity. The British Steel Corporation's (BSC) projection for 1982/3 steel demand in the United Kingdom is an all-time low of 11.6 million tonnes (of which BSC will supply 6.6 million) compared to the steel strike year of 1980 when BSC lost 13 weeks production and still produced 7.4 million tonnes. BSC's current British market share of 47 per cent is another low, while exports are now forecast to account for over a quarter of BSC output.
The world slump has coincided with increased steel capacity in the semi-industrialised countries. In 1981 Brazil, India, South Korea, South Africa and Mexico all produced over 7 million tonnes (see Table 1). The result has been the collapse of steel prices worldwide, as well as the EEC's Davignon restructuring plan which fixed higher steel prices to cut European losses. It has also led to intense export competition and increasingly protectionist measures, particularly from the USA and Britain, alongside attacks on the steel unions to cow them into submission. The failure of US capital to invest in its own steel industry has decimated the East Coast steel towns. During 1982 a staggering 200,000 out of 450,000 steelworkers lost their jobs, and one mill-owner alone, a friend of Ian MacGregor, lost a cool $130 million, The unions were forced to take a 10 per cent wage cut.
Ironically much of the huge sums of money needed to build the new steel mills in the semi-industrialised countries came from US and British banks, highlighting this shift in relative power from the manufacturing to the finance sectors in the two economies. MacGregor explained to the Commons Select Committee on Trade and Industry (CSCTI): '(Brazil etc) are hoping to find markets for a proportion of their products in Europe, the better they can service the capital they borrowed from European bankers.'1 The British private steel-consuming sector has of course gratefully bought the cheapest quality steel available, causing imports from the Third World to double in the past year. In the US too imports took a record 22 per cent market share.
The Tories strategy
The steel industry has acted as a guinea pig for the Tories' plans to convert the unions to Japanese-style work practices, while monetarist policies send the weaker (and some not so weak) companies to the wall in the great restructuring of the Corporation. Key to this approach is the reduction of wage costs, even though these only account for one third of the total costs in the steel industry. This grand plan was contained in the now famous Ridley Report, an internal Tory document published before the Tories took office. It listed four categories of unions, according to militancy, and amongst those in category one to be taken on first were the steel unions. This came as no surprise to long-suffering militants in the industry. The main steel union, the Iron and Steel Trades Confederation, had not led a strike for over 50 years, and its annual conference in 1976 was the first for 66 years! Steel-workers were also demoralised by the closure programme of the 1974-9 Labour government when Michael Foot, for instance, was instrumental in closing down the Ebbw Vale works, which provided 65 per cent of all local employment, in his own Constituency.
The unions too were disorganised and dominated by the right wing bureaucracy. There was no organised left in the ISTC. A group formed in the late 1970s, a Liaison Committee for Constitutional Reform, was shortlived, its militants being hounded by the union executive. Added to this weakness, was the existence of so many different unions in the industry, such as the National Union of Blastfurnacemen, TGWU, AUEW, NUBATU and EETPU. Non-cooperation between these unions is commonplace and strike-breaking, mainly by the ISTC, has been a regular feature. No wonder the Tories recognised an easy target.
Steel strike
The Tories moved swiftly after their election and steel boss Villiers offered a two per cent pay deal with inflation raging at [illegible] per cent. [illegible] to 'avoid a national strike' [illegible] over the Xmas 1979 talks, but in the end [Sirs was] forced to call the national strike. Thirteen weeks later the strike was over with Sirs claiming a victory with a 14 [illegible]. [illegible] lessons to be drawn [illegible]. Suffice [to] mention here that the lack of an effective national opposition to the Sirs leadership allowed Sirs to strictly limit the terms of the strike to wages. Thus it proved impossible for the South Wales steelworkers to link their fears of job losses into the national strike, especially when militant areas like South Yorkshire had a low consciousness on the jobs issue. Of course Sirs and the TUC did their best to sabotage the chances of winning the strike outright. It took Sirs 25 days to be forced to call out ISTC members in the private sector and secondary picketing of steel users was totally avoided officially. Nor was serious solidarity action organised by the TUC, though on the day the strike was called off a national solidarity strike was starting. Many rank and file bodies appeared during the strike, uniting workers in the various unions in a challenge to the Sirs leadership. But the left was too weak to mount an effective national opposition.
Ian MacGregor arrives
The fears of the South Wales steelworkers soon proved justified. Ian MacGregor was appointed steel boss and by December 1980, working to Thatcher's brief to rationalise the industry to break even by 1982/3, had produced his Corporate Plan. The workforce was to be slashed from 180,000 to 100,000, wages to be frozen for six months, and several plants were to close. Keith Joseph then brought in the Iron and Steel Act to end BSC's iron-making monopoly to pave the way to full privatisation.
The rest is now history. Exceeding MacGregor's targets, the workforce plummeted from 186,000 in December 1979 to 82,000 in January 1983 with the projection for December this year down to 76,000. 'Slimline', as the cuts are quaintly known, has become anorexia, as the massacre has gone far beyond even the 1960s pits closures programme. Nor has there been any national pay award since the strike (the TGWU estimates that with loss of shift premium payments some workers are now an incredible £64 a week worse off), and decades of union agreements have been torn up in the quest for 'multimanning', with workers doing others jobs.
The moves towards privatisation have seen much of BSC's plant hived off to private contractors, and its highly profitable construction wing, Redpath Dorman Long, was sold at the knockdown price of £10 million to Trafalgar House. Three major BSC private companies have also been created in an attempt to close down duplicate operations prior to handing over entirely to the private sector if they become profitable. Those impoverished minnows, GKN, and Lonrho, are two of the main benefactors.
Such unprecedented, rapid changes in the industry could not have been achieved without the total surrender of the ISTC leadership. This has only emboldened MacGregor and the Tories who have adopted US management methods, and cynically played off different geographical areas against one another through successively rumouring the closure of different plants among the Big Five (Llanwern, Port Talbot, Redcar, Ravenscraig and Scunthorpe). MacGregor has warned Arthur Scargill to expect the same treatment in the coal industry. He outlined his view of the role of the unions as endorsing at a local level the national BSC 'viable formula': 'this business is not run like a communist cell on total consensus,' he declared.
The future for the industry
The depth of the recession took the Tories by surprise. One fifth of all private steel firms are in danger of folding, and the crisis has sparked rows among the Tories themselves over the possible total closure of one of the integrated plants as MacGregor recommended. Secretary of State for Industry Patrick Jenkins, for example, fought to retain Ravenscraig as a steel-making plant. He fears an increased import bill if capacity is cut too far, causing higher costs for British private capital. Nevertheless he has authorised MacGregor to reduce the present commitment to 14.4 million tonnes a year manned capacity, ie capacity with the present workforce (potential output with a bigger workforce at BSC is 22.5 million). Thus MacGregor is attempting to close the steel-finishing part of Ravenscraig plant, and to transfer its semi-finished steel to an ailing US plant. Vehement opposition to the plan has come from the US Congress, which sees it as a back door way round import controls, the US workforce, which fears the loss of its own steel-making plant, and from the ISTC. Such bizarre business deals could well be a forerunner for future arrangements, especially with the EEC.
The future for steel is intimately bound up with that of the steel-using manufacturing industry in Britain, one quarter of which has so far disappeared under the Tories (See Tables 2 & 3). With the likely cuts in British Rail and the National Coal board, and without any export-led growth from this sector, the market for BSC steel will shrink even faster when the small upturn has petered out. Tory hardliners are not so concerned about this prospect even though the Italian industry increased steel production during 1979-81, while the West German industry held it constant. Thatcher's plan is to invest in high technology and high added value industries such as micro-electronics and telecommunications. What could be better than overseas capital from Japan and the USA starting operations here and dictating draconian terms of employment? And what better places to start than those areas devastated by steel and manufacturing closures, like South Wales and Central Scotland, with their grants and rates exemptions and incentives to multinationals, and their plentiful supply of cheap labour, not just those ex-steelworkers unable to buy their own businesses from redundancy money but also youth with no union experience?
Thus South Wales is now the leading area for Japanese investment in Britain, and Central Scotland is a new 'silicon valley'. With the new industries so highly automated unemployment will remain high in these over-specialised areas, as high as the state handouts to multinationals to persuade them to stay (a staggering £5 billion was paid out to Inmos, Sony, Fords and others last year). Meanwhile the Tories refuse to find the £75 million needed for a new rolling mill at Port Talbot (which even MacGregor agrees is necessary) or to provide continuous casting at Llanwern. No doubt these will finally be granted after further concessions have been wrung from the workforce. It is a myth though that state handouts to BSC are high. A recent BSC survey shows that the British government's aid overall to steel, including energy pricing, coal and transport subsidies, is the lowest of all EEC countries except Italy.
It is unlikely that state aid from member countries to steel companies within the EEC will end by 1984 when scheduled, as union opposition elsewhere in Europe is stronger to the planned cutbacks. The Davignon restructuring plan is thus in tatters. Competitive devaluations of the franc and the depreciation of the pound have made French and British steel cheaper for European firms to import, which will lead to further price cutting and dumping. And while the fall in the pound will lead to higher import prices in Britain, nevertheless productivity in British manufacturing still lags so far behind that of West Germany and France, not to mention Japan, that demand will increase for imports like Italian washing machines and fridges. All the signs are thus for increasing strains within the EEC with BSC's export sales vulnerable to protectionist measures. And with the trend towards increased steel production in Third World centres, excluding the USSR and Eastern bloc countries, it is clear that cutbacks in the EEC steel sector have only just begun.
The labour movement's response
While the Labour Party and the TUC have bitterly complained about the Tories' cutbacks, the record of the last Labour government is scarcely blameless. Its plan to concentrate steel production at five huge integrated sites — Llanwern, Port Talbot, Redcar, Ravenscraig and Scunthorpe — was faithfully carried out (See Table 4) with resulting plant closures. In 1977 the Labour government went so far as to offer BSC some £835 million to double steel capacity at Port Talbot from 3 to 6 million tonnes a year while halving the 12,000 strong workforce! Fortunately BSC turned down the offer as it doubted the need for such increased capacity.
In Labour's new Campaigns Document the needs of steelworkers are never mentioned. It commits Labour to keep open the 'Big Five' which is less that Michael Foot's commitment at 1982 conference to a 25 million tonnes a year capacity, which entails retaining all existing plant. It also calls into question Labour's commitment to renationalising all concerns privatised by the Tories. Nor are the statements from union leaders about the industry any more encouraging. The TGWU in the CSCTI called for a 'thriving profitable industry', whilst Sirs told the same body he wanted to 'reduce the overheads in the cost system, (then) we will reduce the price of making steel ... to have cooperation between men and management and the opportunity to work one of the most efficient industries in Europe.' Of course this means continuing Sirs 'remarkable co-operation', as Industry Secretary Jenkin has dubbed it so that the Tory government can, as Sirs said, 'help our industry considerably by having a correct exchange rate'.2 They might do better by exporting Sirs himself.
While there are as yet no takers for BSC's large scale operations like tinplate production and the finishing mills because of high losses, the aim is to sell all BSC's potentially profitable 'downstream' activities leaving only raw steel production in state hands. Thatcher and MacGregor admit that Britain may not be in the forefront of the technical development of steel making over future years, but they argue, we will have the lowest wage cost steel industry in the advanced capitalist world. No wonder the Tories feel well pleased with their efforts so far
The ISTC's campaign to save Ravenscraig has been based on similar misconceptions. The one day national strike against closures last December was forced on Sirs by an all-unions delegate conference. Sirs' own approach can best be illustrated by the issue of the union journal, ISTC Banner, which headlined: 'All Party National Steel Appeal has a big impact on Government'. It continued: 'Over 500 mayors, councillors, clergymen, businessmen and other community representatives from 52 steel towns gathered in Westminster for a national steel appeal called by Bill Sirs.' And Sirs commented that: 'Because it was an all-party affair ... it was all the more effective.' Stirring stuff. Meanwhile any localised unofficial action has been met by stiff opposition by Sirs over recent years on the grounds that it threatens BSC's drive to become profitable, not to mention threatening Sirs' own position. The recent South Yorkshire action shows that some concessions can be won by militant action with firm, local leadership, but it was the craft unions with their greater militancy and unity who won this particular battle with the BSC, not the ISTC members, who were yet again sold out totally by the national leadership.
Opposition within the steel unions
Not surprisingly then opposition is growing to the collaborationist [illegible] ISTC conference voted to transform itself from an advisory to a policy-making body. The executive ratified this move by 11 votes to 10. The union has also affiliated to CND, and reserves a quota of places for women delegates to conference. These changes would have been unthinkable before the steel strike, yet the opposition remains weak and fragmented. Unfortunately the right wing has altered the election procedures for the executive in an attempt to further assure its domination by the right. Many activists have been made redundant and many more are demoralised. The continuing divisions into many unions in the industry continues to perpetuate the divisions in the workforce fostered by the Tories. A national Broad Left is sorely needed in the ISTC.
Unfortunately a central plank of the left in the industry is that of import controls. With 'price wars', steel dumping, and 'illegal' importing, as well as the decline in BSC's share of the home market, this option seems very attractive to steelworkers, especially when their union leadership are so commited to such controls. The TGWU suggests: 'We should place restrictions on EEC imports until other countries reduce their capacity as we have'.4 In other words, import controls until overseas producers sack as many of their workers as BSC has done — so much for international workers' solidarity! This approach comes not only from the British steel unions. 'We need a tariff policy that will keep car and steel imports out — there must be a balance', says a US steelworkers recently made redundant on the East Coast. The prospect looms of another EEC/US steel war, this time involving Third World producers too.
Import controls are not just bad from the standpoint of international trade, they also imply a strategy for the industry based on management and workers uniting to save the 'national' industry against the common 'enemy' of fellow steelworkers overseas. Any notions of linking up with steelworkers from other countries to fight against the EEC rationalisations across Europe are dismissed as utopian. Nor do import controls challenge the way steel firms are run by the multinationals who can transfer operations to other countries to get the most exploitative working conditions. Withdrawal from the EEC and the creation of a 'Fortress Britain' economy sheltering behind import controls is no solution for steel or any other workers. International workers solidarity and workers control of industry would be serious policies to unite steelworkers against their real enemy — the steel bosses and the multinationals.
With the removal of Sid Weighell as General Secretary of the National Union of Railwaymen (NUR) there will be increased pressure for the co-ordination of the Triple Alliance of Rail, Steel and Coal, particularly at a local level. Though the Sirs leadership will do its best to undermine any serious national co-operation. The triple alliance and the formation of a Broad Left in the ISTC could also be usefully complemented by the formation of Labour Party workplace branches within the steel industry. They could help to break down the divisions between the different unions in the plants, group together the most political militants, and stimulate discussions on the Labour Party's policies on steel throughout the Labour Party.
The miners clawed their way back from the disasters of the 1960s restructuring programme. Whether the steelworkers can do the same will depend in part on a real alternative to Sirs being built within the steel unions, but also on the capacity of the left in the labour movement as a whole to elaborate a programme of socialist policies for the development of industry, not based on the false solutions of the AES and import controls.
References
1 House of Commons Second Report from the Industry and Trade Committee Session 1982-3, the British Steel Corporation's Prospects.
2 Measured in terms of adding to profit (or reducing the loss) per tonne produced.
3 House of Commons Report, p42-60.
4 Letter in evidence to the Select Committee, dated 24/1/83 from Graham Powell, District Secretary.
PAUL HIGHFIELD worked with the South Wales Steel Sheet group during and after the 1980 steel strike and is currently a member of the TGWU.