Mick Galvin, a 30-year veteran of the Scunthorpe steelworks, is feeling chipper. Along with more than 4,000 colleagues, he is celebrating the end of a year-long agreement to give up 3% of their wages to help secure the future of British Steel.
The restoration of their pay coincides with a return to the black – a £47m underlying profit capping a dramatic turnaround since the plant slumped to a £79m loss in its final year under the stewardship of former owner Tata Steel UK. Employees have also been given a 5% stake in the company, meaning they will share in any dividends, if and when there are any to be handed out.
“It shows the company has stuck to its word,” says Galvin, a shift manager in the plant’s rod mill. “We showed faith in them and they’ve shown faith in us. The mood is positive and that’s good for the town and particularly for the young people.”
Behind him, a four-tonne length of steel, heated to 1,080C, glows incandescent orange as it rolls through the mill to be made into wire coil, which is used in items ranging from paperclips to the metal ropes that support the Humber Bridge.
The intense light and heat given off by this industrial process seemed at risk of being snuffed out just 18 months ago as the once sturdy UK steel industry looked doomed. Overcapacity in Europe, slow demand and competition from Chinese steel producers that were flooding the global markets with cheap subsidised product made for a bleak future.
From Port Talbot to Teesside, Britain’s once-proud steelmaking industry appeared destined for the scrapyard. Some steelworks, such as the Redcar plant near Middlesbrough, did not survive.
“It got to the stage where you were worrying about your job,” says Galvin. “It was doom and gloom.”
Colleague Ian Strickland, one of the operators, already knew how it felt to see a steel mill go cold. He came to Scunthorpe 12 years ago after the mill he worked on in Rotherham closed down. “It was pretty bad,” he remembers. “My daughter was only three or four and I thought that was it, you’re on the scrapheap.”
Scunthorpe offered him a lifeline, although more than a decade later he has not stopped ribbing colleagues about the sleepier atmosphere in his new home town.
But, like Galvin, he feels the mood at the plant has been turned on its head, just 18 months after its survival appeared uncertain.
Scunthorpe sorely needed a saviour after Tata, the Indian conglomerate that owned the remnants of British Steel, declared it could see no way forward for its UK operations and planned to pull out.
While national attention focused around the uncertain future of Port Talbot in south Wales, Scunthorpe was in just as dire straits. But last summer, it quietly found a buyer in Greybull Capital, an investment firm run by the little-known Meyohas brothers, Marc and Nathaniel, two London-based French investors who specialise in reviving distressed companies.
Tata was willing to sell its “long products” division, including Scunthorpe, for just £1 as it beat a relieved retreat from a heavily loss-making operation.
The rapid recovery has been founded on cost cuts and efficiency measures that, according to hints that hang heavy in the air here, were long overdue.
The takeover saved 4,000 jobs and, according to some estimates, up to four times that many in sectors reliant on the steel industry. Greybull will invest a further £40m this year in a bid to accelerate the resurgence.
The new owner even revived the defunct British Steel brand, a symbolic declaration that this industry was, if not back to its heyday, at least in recovery mode. It was a smart move, given the mixed publicity that Greybull had encountered following previous UK deals.
The investment firm enjoyed some success with its rescue of Monarch airlines. Staff had to accept pay cuts to keep the business afloat but Greybull has since poured £165m into the company to breathe new life into it.
But its previous foray into the public eye was more painful. Greybull was one of the investors in a controversial deal, led by private investment group OpCapita, for doomed electricals retailer Comet in 2011. The takeover attracted bitter opprobrium and political scrutiny, with investors accused of taking millions out of the company even as it went bust and staff lost their jobs.
So far, however, the picture for British Steel has been more Monarch than Comet.
The plant was back in the black within 100 days of its acquisition from Tata in June 2016. And the £47m underlying profit declared for the full financial year is just a starting point, according to the executive chairman, Roland Junck. He talked of a £240m turnaround from Tata’s valedictory £79m loss, indicating £120m of annual earnings is within reach.
So powerful is the reflected glory of Scunthorpe’s phoenix-like resurgence that Theresa May chose to bask in it during the early days of the election campaign. In a tightly controlled photo call, she boasted of the support provided by government and declared UK steel to be “at the heart of our modern industrial strategy”.
Junck now wants May to make good on the rhetoric by offering British firms a “level playing field” – code for cheaper energy bills and lower business rates. He also wants more government contracts, having supplied 35 miles of track for the Crossrail project from British Steel’s sizeable rail business.
And Junck has a stark warning for anyone prepared to let the UK fall back on World Trade Organisation tariffs rather than sign a trade deal on EU terms. He thinks the outcome unlikely but warns: “If for one second we believed that scenario would happen, we would not make investment, because it would make no sense.”
That’s a robust counterpoint to the notion, put forward by May, that no Brexit deal at all is better than a bad one.
If she returns as prime minister after the election, steelworkers must hope that trade negotiations do not once more cast a shadow over the UK steel industry. Otherwise, it seems unlikely that May will be welcome at the Scunthorpe steelworks ever again.
