STREAMING NOW: Watch Now

Tariffs and Brexit could kill this steel company

Peter Davies watched as the UK steel industry was decimated by foreign competition, plunging prices and higher energy...

Posted: Jul 23, 2018 1:32 PM
Updated: Jul 23, 2018 1:32 PM

Peter Davies watched as the UK steel industry was decimated by foreign competition, plunging prices and higher energy costs. Now he's beginning to panic.

The chief executive of Original Steel Services, which has four steelworks in the United Kingdom, has warned that tariffs imposed by the Trump administration are putting his company under pressure. Brexit could make things even worse.

"We're used to getting hit by incoming shrapnel, but for the first time in my life, I am genuinely worried," he said.

The steelworks take raw metal - most of it from Germany - and process it into custom grades and sizes. More than half of sales are to the United States, where the material is used in mining, railway and oil and gas products.

Highly specialized, the products are not subject to new US tariffs on steel and aluminum, but Davies said that buyers are looking for new sources because of fears the trade conflict could escalate further.

"We've already got emails and letters from some of our major customers asking what the implications are of these tariffs," Davies said. "They're already looking at alternative supply."

Related: A transatlantic trade war is brewing. Can it be stopped?

Davies said the uncertainty has caused him to delay six-figure investments at his plants, which employ 200 workers in the West Midlands region of central England.

"If you're a multinational or you've got billions in the bank, then it's fine, you can ride these things out," Davies said. "But we live day to day, and like a lot of small companies the tariffs are a major problem."

The pain could soon be compounded by another potential economic disaster: Brexit.

A subsidiary of Original Steel Services, Bromford Iron and Steel exports high-grade steel to the European Union, where it's used in everything from horseshoes to handrails.

But with less than nine months to go before the divorce, UK exporters still don't know whether they'll face new regulations, tariffs or customs checks.

Davies says that leaving the bloc without a deal on trade would make his products up to 10% more expensive for European customers.

"We would probably lose up to 50% or 60% of our market, and that would be devastating," said Davies. "We haven't got the luxury of a year or two years to go around the world finding new business."

Related: Brexit is killing investment in UK car industry

Demand for steel could also drop in the United Kingdom.

Car manufacturers, which rely on complex international supply chains, are worried that Brexit will lead to new trade barriers and delays at the borders. Investment in the UK auto industry plunged in the first half of this year.

Jaguar Land Rover has warned that if the United Kingdom leaves the European Union without maintaining a smooth trading relationship with the bloc, over -1.2 billion ($1.6 billion) of its annual profits would be wiped out.

Gareth Stace, director of the industry group UK Steel, said the pain would trickle down to UK suppliers.

"These small companies are the engine room of the manufacturing sector in the United Kingdom," said Stace.

'We need some clarity'

So much metal was once produced in the West Midlands that thick smoke from the ironworks led one section to be dubbed the Black Country. Many workers at Original Steel Services have been on the job for decades, surviving cheap steel from China and waves of automation.

Some voted for Brexit because they think the European Union hasn't done enough to protect manufacturing jobs, and because they wanted to reduce the number of immigrants coming to the region.

"When I look around me, the conditions we're living in are getting worse," said Andrew Rich, the operations manager at Bromford Iron and Steel.

Despite the risks to his employer, Rich said he sympathizes with Trump's tariffs because he understands the desire to protect local industry. He also still supports Brexit and said that politicians in London and Brussels both need to work to come to an agreement.

"We need some certainty," he said. "We need to know what's going to happen and then we can respond, but at the moment, I don't think anybody knows."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 16041

Reported Deaths: 767
CountyConfirmedDeaths
Hinds103526
Lauderdale74568
Madison74525
Neshoba70742
Jones66331
Scott66112
Forrest59439
DeSoto5538
Leake44712
Rankin4468
Holmes43928
Copiah3154
Jackson30813
Attala30318
Yazoo2864
Newton2824
Leflore27334
Lincoln27029
Monroe26525
Harrison2637
Oktibbeha25314
Lamar2485
Lowndes2309
Wayne2242
Pearl River21131
Pike20411
Adams20015
Noxubee1916
Washington1917
Warren18110
Covington1732
Jasper1654
Lee1657
Bolivar16511
Clarke15419
Smith15311
Kemper14711
Lafayette1414
Chickasaw13714
Coahoma1274
Winston1211
Marion1179
Carroll11711
Clay1154
Claiborne1122
Lawrence1061
Simpson1020
Grenada993
Yalobusha966
Tate951
Hancock9112
Itawamba897
Wilkinson859
Union857
Sunflower853
Montgomery851
Panola843
Marshall813
Jefferson Davis803
Tippah7611
Webster683
Calhoun674
Amite641
Walthall610
Humphreys597
Tunica563
Prentiss563
Perry513
Choctaw482
Pontotoc433
Jefferson431
Tishomingo340
Quitman340
Stone310
Franklin292
Tallahatchie291
George261
Greene221
Alcorn181
Benton140
Sharkey70
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 18474

Reported Deaths: 651
CountyConfirmedDeaths
Mobile2283118
Jefferson1882103
Montgomery180243
Tuscaloosa81616
Marshall7059
Franklin5768
Lee55234
Shelby52220
Tallapoosa43166
Butler41618
Walker3782
Elmore3739
Chambers35826
Madison3444
Morgan2971
Baldwin2929
Unassigned2922
Dallas2823
Etowah26112
DeKalb2563
Lowndes25512
Autauga2395
Coffee2381
Sumter2267
Houston2235
Bullock2136
Pike2080
Colbert1872
Hale1789
Russell1770
Barbour1751
Marengo1746
Lauderdale1672
Calhoun1653
Choctaw15310
Wilcox1527
Cullman1501
Clarke1482
St. Clair1311
Randolph1287
Marion12411
Dale1230
Pickens1215
Talladega1175
Limestone1080
Chilton1041
Greene954
Winston910
Macon864
Jackson833
Henry812
Covington811
Crenshaw783
Bibb761
Escambia743
Washington726
Blount631
Lawrence510
Monroe442
Geneva430
Perry420
Conecuh411
Coosa401
Cherokee383
Clay282
Lamar260
Fayette160
Cleburne151
Tupelo
Clear
73° wxIcon
Hi: 87° Lo: 70°
Feels Like: 73°
Columbus
Broken Clouds
74° wxIcon
Hi: 87° Lo: 70°
Feels Like: 74°
Oxford
Clear
68° wxIcon
Hi: 88° Lo: 67°
Feels Like: 68°
Starkville
Clear
70° wxIcon
Hi: 86° Lo: 66°
Feels Like: 70°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather