The Iron & Steel Industry
Changing location of British Steel
- Originally located on a small scale in 18th Century. Location dependent on the location of Iron ore, water & charcoal (which has the strongest influence). Found where there is lots of wood e.g. Forest of Dean.
- Invention of smelting with coke – migrate to coalfields, particularly where iron & coal together e.g. the Black Country.
- Railways and increased efficiency makes the location of coalfields less important as less coal needed.
- Iron industry also begins in areas where there are phosphoric ores due to Gilchrist-Thomas process. The ore is 35% pure in E Midlands so attracts industry.
- Post 1945- More reliance on imported iron & coal as cheaper & purer. Plants locate to the coast to lower transport costs. E.g. Port Talbot with deep-water terminals for cargo ships. Coastal sites also have large areas of cheap, flat land so can operate on a larger scale.
- Vertical integration of steel industry so all done on the same site. I.e. steel made after blasted.
- Steel in the UK is now concentrated at 4 sites. Special steels are made in Sheffield using serap steel & electric arc furnaces. This is not on the coast due to large investment in fixed capital assets.
Reasons for decline of UK Steel Industry
- Fall in demand
- Cuts in steel business due to depression
- Technological development so less steel needed
- Steel lasts longer as better quality
- Aluminium used instead of steel
- Competition from subsidised EU countries e.g. Spain
- SE Asia produces cheap, good quality steel due to cheap labour & modern plants.
- No longer supported by state subsidies.
- British steel now needs to please shareholders.
- Increased competition from overseas
- Over-capacity so have to cut production
- Closure and layoffs due to rationalisation & restructuring.
Consett Closure – NE England
Reasons for closure
- Cheaper imports from abroad
- Poor location as isolated and raw materials running out.
- Loss of many jobs – particularly amongst men
- Bitterness and anger towards BSC as feel let down
- People have to commute to Newcastle & Sunderland as no nearby work
- Many people decide to leave the area – particularly young so changing social structure – older
- Less social activity as many pubs close down
- Women now more important – support family leading to wife battering, generally get on better as spend more time together.
- People are more business orientated and in touch with the outside world.
- The town is a lot quieter – different shift patterns
- Less community spirit as don’t all work for the same company
- 4000 job losses
- Devastating impact on area with 30% unemployment – closure of coal pits loses 15000 jobs.
- Loss of steel causes many supporting industries to close e.g. ball bearings.
- Very few major employers. Many tertiary industries shut down due to the ripple effect – people have less money to spend as no job.
- Most jobs are created for women & young people.
- Over 1800 jobs created but still doesn’t make up for steel plant closure.
- Environment has actually improved since the steel closure
- Previously it was dirty and polluted and people didn’t make the effort to keep it clean.
- Colliery tips have been cleared and the plant has been built over with new, clean, hi-tech industry.
- Industry attracted because of the nice, clean image and good countryside.
- Roads are now busier with more commuters
Attracting New Employment
BSC and Derwentside Industrial Development Agency (DIDA) have done a lot to encourage industry to Consett. The BSC’s job-hunting division tried to find jobs before the plant closed and attracted a few small firms. This did not make up for the huge number of jobs lost. All the jobs created were in small firms, which could lead to expansion. Unemployment figures are not always lower as women take many of the jobs. There are large grants and low rates to attract industry. Not enough has been done as only 2200 jobs created since 1985. DIDA and the BSC have spent a lot on advertising to attract jobs. New industry now has a turnover of £110 mlln, 50% more than the steel plant did. There is now greater diversity to prevent similar disasters happening again, but many jobs are not useful for redundant steelworkers.
Japan’s Steel Industry
All Japan’s steel plants are located on the Pacific Coast as Japan imports most of its iron and coal, as it is cheaper. It is also easier to export from coastal sites. The plants are very large & efficient and are vertically integrated to cut costs. The plants are located near to markets e.g. Tokyo. Each plant supports local industry and is operated by huge companies e.g. Nippon Steel. Each plant covers 10km squared near deep-water terminals for access by bulk carriers There may be multiple blast furnaces at 1 site making them cheaper and more efficient. Products such as tubing are also made on site. The company’s capacity has been reduced and concentrated at its main plant to be more cost efficient.
Global distribution of Iron
Iron production is predominantly in Asia, Australasia and N America. The USSR had a production of 110 mlln tonnes and Japan’s is 80 mlln tonnes. The US produces 50 mlln tonnes and Brazil produces 23 mlln tonnes. The UK produces only 12 mlln tonnes.
The main producers are MEDCs but there is an increasing number of LEDCs e.g. Brazil. This is due to cheap labour and more modern efficient factories. Markets are moving to LEDCs so factories are built nearer to them.
Problems in Europe
The main problem in Europe is over-capacity. The EU produces 30 mlln tonnes too much steel. They are trying to cut production but nobody can agree. Overproduction causes falling prices. The EU also wants protection from cheap foreign imports, to monitor steel imports and to cut production. There is less demand for steel in EU countries due to de-industrialisation.
Advantages of S Korea (NIC)
- Expanding home market so large demand for steel.
- State supported industry with government grants.
- New factories – modern & efficient production methods.
- Foreign investment from TNCs
- Local, cheap raw materials with greater purity.
- Cheap labour and land
- Less environmental control
Future trends for the steel industry
- Increasing demand for steel, especially in NICs e.g. China
- Increasing privatisation for steel companies.
- Companies will be more competitive.
- Production will be greater
- Increased merging of TNCs to create a global company to tap overseas expanding markets.
- Rapid technological advances.
- Lower costs
- Greater range of steels for specific markets e.g. cars
- Greater reliance on “mini-mills” as they are more flexible.
- Large integrated plants will remain dominant for quite a while as they increase productivity and flexibility.
Other ‘Economics Systems’ revision notes at A Level:
- Motor Vehicle Industry
- The Global Economyand and Multinational Corporations
- The Rise of Manufacturing in NICs
- Location Models
- Stages of Economic Development
- The Iron and Steel Industry
- Nike – A TNC
- Product Life Cycle Theory
- World Trade