British steel makes a comeback with improved morale, products

As a general rule, British Steel Corporation executives have been lying low these days. They don't want to attract any further unwanted attention from the striking coal miners.

Because of the strike - now in its 18th week - and inadequate coal supplies at some plants, the British Steel Corporation (BSC) has had to reduce output 10 percent below demand. At the same time, the company has been losing more than $ 10 million a week.

Curiously, pride within the company has gone up.

In March, the Trade and Industry Committee of the House of Commons prepared a report on BSC that concluded: ''The corporation, which is now the third largest steel company in the world, has made reasonable and commendable progress toward financial viability.

''Workers, management, and trade unions have accepted the challenge to become as efficient as their strongest competitors. They all deserve warm praise for their dedication to work together as a team.

''Although further progress must still be made, in terms of quality, price, and delivery, many of BSC's products are now amongst the best available on the world market.''

Indeed, this week British Steel Corporation (BSC) chairman Robert Haslam announced the company has had ''its best year in financial terms since 1976-1977 .''

A BSC spokesman added: ''We are moving down to a break-even point (by 1986-87 ).''

BSC also announced that the company lost some $226 million in the fiscal year that ended June 30. That compares favorably with a $500 million loss in fiscal 1982-83.

Three years ago, the company, formed by an act of Parliament in 1967, was losing some $21 million per week - a rate of $1.1 billion per year. Just prior to the coal strike that loss had been reduced to $2.6 million a week.

But the coal strike could make reaching the point of profitability more difficult beyond the short-term damage.

The steelworkers have demonstrated such loyalty during the strike, passing through sometimes violent pickets, that it may be politically and emotionally more difficult for the company to shut down another steel plant, possibly that at Ravenscraig in Scotland.

Only last week (July 2) the 14 unions at BSC voted not to accede to the request of the National Mineworkers Union to end steel production. Customers, too, have been largely faithful.

''We still have one strip mill too many,'' the spokesman noted. ''We could service the market with two mills.''

The House committee recommended against closure of such a mill, at least until continental European nations have shrunk their steel industries by the amount pledged under a European Community program.

BSC's basic problems a decade ago lay in vast overcapacity, poor-quality steel, outdated equipment, and unreliability in delivery. The decline of British shipbuilding, automobile production, and other metalworking industries had reduced demand. And often steel consumers preferred to buy better steel abroad.

During the 1970s, large sums were spent on modernization. Then, under Ian MacGregor, a Scottish-born American, the company took drastic measures to bring down costs and improve quality. BSC suffered a three-month strike in 1980 before winning union agreement on a program of rationalization.

Mr. MacGregor went on last year to tackle another problem industry for Prime Minister Margaret Thatcher as head of the National Coal Board. Mr. Haslam, as his successor, has a less-grim task ahead in managing BSC.

''The major changes have taken place,'' said a spokesman. There will be less ''bloodletting'' in terms of reducing manpower.

He added: ''The understanding we have with our unions is very good.'' In return for accepting rapid rises in productivity, remaining workers have enjoyed sizable wage gains.

Here's what BSC has achieved in recent years:

* Manpower has been reduced from 210,000 about six years ago to 71,000 today by closing plants and reducing the number of workers at the remaining five large integrated steelworks.

* Productivity, as a result, has improved dramatically. BSC takes about 3.2 to 3.3 man-hours to make a ton of steel now, compared to some 8 man-hours a few years ago.

That productivity, according to the spokesman, is better than that of West German mills. But it is not quite up to Belgian or Italian levels.

* The company is relatively modernized. All bulk steelmaking is done by basic oxygen furnaces. The last open-hearth furnace was closed down in 1980 - ahead of some American companies. About half of the molten steel passes through continuous casters, an energy-saving method of making billets.

''In European terms we are relatively well off,'' the spokesman stated. The Japanese and South Koreans are still ahead.

* Steel output has been reduced from about 23 million tons in 1974 to somewhat more than 13 million tons in the past year.

But the remaining plants are still running at only 60 or 70 percent of capacity, a level the company considers too low. Quality has improved dramatically.

BSC considers its capacity most in balance with Britain's steel needs of any of the members of the European Community.

British Steel officials see their chances of returning to profitability greatly enhanced by the fact that most of the costs of redundancy payments for their discharged workers and other slimming expenses are now past. Such costs exceeded BSC losses last year.

''We have a policy of being as generous as we can to men leaving the industry , especially those men in their late 40s or their 50s,'' said the spokesman. Redundant workers, on average, have been getting some $10,000 to $11,000 when they leave.

The goal of the Thatcher government is to ''privatize'' the company by selling parts of it or a major portion of its stock to investors.

But that, noted the spokesman, is contingent on the company making adequate profits. And profits hang on better prices as European steel capacity is reduced and the economic recovery boosts the demand for steel.

British Steel also has problems arising from the production quota system imposed by the European Community.

''What we have done is quite remarkable,'' claimed the BSC official. ''But we are not out of the woods yet.''

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