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Monday, 29 January, 2001, 07:58 GMT
Europe's core of steel
Steelworker slagging off steel
The European Union was constructed out of steel
As steel plants face closure across the UK and Europe, BBC News Online looks at the post-war history of the European steel industry and the way it was forced to rationalise in the face of falling subsidies and growing international competition.

Steel dragon roller coaster in Japan
Steel structures can be found in the leisure industries...
The transformation of Europe's steel industry is highly symbolic.

The first European Community was the Coal and Steel Community, founded in l951. The modern European Union is built upon it.

The Coal and Steel Community almost died -- but it didn't.

It survived, remodelled itself -- and now it challenges the best in the world.

Can the modern steel industry do the same?

Government ownership and subsidies

The organisation of 350 million people, 15 countries, and potentially the most powerful economy in the world, began as a plan to organise the European coal and steel industries within a protective ring, owned and subsidised by governments.

Steel spider artwork the arts...
The industries first grew through the 1950s and 1960s, exporting all over the world, before advances in communications and transport turned the tables on them, producing fierce competition mainly from the developing new producers of the Far East.

Soon the Europeans were swamped.

Governments which had used subsidy and selective ordering to support their coal and steel industries soon found they were fighting a rearguard action against technically superior opponents which were also able to produce at far lower costs than the Europeans.

Coal mines and steel plants were huge employers, representing massive investment and shaping the social fabric of whole regions.

Plants were large; closing them was unthinkable.

Restructuring plan

By the l970s, the European Economic Commission, through the French politician Viscount Etienne d'Avignon, attempted to develop a plan which would rationalise what had become a bloated and inefficient industry.

Oil platform other industries.
He failed; steel was revived partly by an upturn in its notoriously slow and pendulous business cycle.

By the next substantial downturn in the mid-1980s, a new Commissioner, Karel Van Miert, was trying to do what he could.

He enjoyed slightly more success than Viscount d'Avignon before the cycle turned again and the steel producers were reprieved.

UK leads the way

But there were fewer of them by then, and the subsidies on which they had survived for so long were shrinking and threatening to disappear altogether.

Steel cutlery
...and in the home.
Change was already happening - pushed by what had been happening in the United Kingdom in the l980s.

The most visible change was the struggle for dominance between the British miners unions and Margaret Thatcher; and the socially wrenching restructuring and privatisation of British Steel by the Scottish American industrialist Ian McGregor.

Meanwhile, the industrious Dutch had recognised what was happening to world markets, particularly steel, and were already adjusting.

The result was the development of one of the most efficient steel groups anywhere, the Koninklijke Hoogovens operation, by then in private hands with only a token 12% held by the state, and a leader in the latest technology, the small and efficient mini-mill.

Corus is created

This was the company which merged with British Steel in September 1999.

The new group became Europe's biggest steel maker, and the third biggest in the world with a market capitalisation of 2.9bn and sales of an estimated 9.4bn.

The merger aimed to bring together Koninklijke Hoogovens' skills at offering world beating low cost output with British Steel's international presence.

It was a clear sign of things to come for Europe's steel industry.

A highly competitive group of five European steel producers emerged:

Its players; the transformed Thyssen Krupp group of Germany, privatised Usinor Sacilor of France, Riva of Italy, and Arbed of Luxembourg.

Rationalisation was the name of the game as they all pushed ahead with cost cutting efforts to survive in an extremely tough market where prices were falling fast.

And in a global economy, the clash of the titans was not limited to Europe.

The role played by the steel industry as a massive employer, and the product's importance to almost all areas of manufacture have often spun the international competition between steel makers into edge-of-the seat dramas involving high-level trade scuffles between governments.

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See also:

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Corus axes steel jobs
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