State Capitalist Steel (1969)

From the February 1969 issue of the Socialist Standard

There was a time when the nationalisation of an industry was heralded as bringing it within the ownership of the whole people. Vesting day for the coal industry was marked with many pits be-bannered and placarded with displays recording the claim of common ownership. This delusion long demonstrated by the policies of the NCB, plus the experience of redundant unemployed miners from a declining industry, and the experience of workers in other nationalised industries, probably accounts for the lack of such claims when steel was recently nationalised.

Why then, it might be asked, are industries nationalised if it does not bring them into common ownership? Broadly speaking there are three answers: to control the run-down of a declining industry. (Back in 1948 this was thought to apply to gas); to control an industry best operated as a single-unit for the whole capitalist class because of its powerful position, e.g. electricity: and to rationalise industries in need of re-organisation—railways, coal and steel.

Prior to the nationalisation of the steel industry the British Iron and Steel Federation (Steel Co. owners) had set up a committee (Development Co-ordinating Committee) to look into the rationalisation necessary to meet the industry’s future. The reasons for this enquiry lie in the world’s steel market. Since the early 60’s all over the world there has been excess capacity in the industry. Not too much capacity for peoples needs for steel, but too much capacity for the purchasing power of the world, developed and under-developed countries. Put another way this means that there is intense competition on the world’s steel markets and the producer who can offer at the lowest prices increases sales and profits. Although the industry controls the bulk of the home market and is maintaining its share in world exports, long term prospects are not so favourable.

Based on home coking coal and a high proportion of home ore with relatively small plants, the British industry in the mid-sixties compared unfavourably with other areas with access to cheaper coking coal and ore, and which had constructed larger more efficient plants. The advantages of cheaper British coal went once American coal spread into Japan and with Polish coking coal, into Europe. Although devaluation may have redressed the price levels it is at the expense of lower standards of living for the worker.

Likewise with ore. After the second world war when ore was scarce British ore was cheap. It is no longer so. Using 1957 as a base year (100) by 1965 the index for foreign ore prices had fallen to 72 and home prices had risen to 126. Further, being richer, foreign ores requires less processing and need 6 cwt of coke less to make a ton of iron.

In the last ten years the pace of technological development in steel has been rapid. Plant sizes are expanding rapidly. British steel may be one of the six largest enterprises in the world, but it has no plants with a capacity of 4 cu. ingot tons and over, whereas America has 50 per cent, and Japan 20 per cent capacity in such plants (1968). (Is Big Best — A. Bambridge).


Large imports of ore in bulk carriers of 65,000 to 200,000 tons, plus the possibility of cheap coking coal from abroad and the need for large plants, points to coastal siting. Apart from recommending coastal sites for integrated works the Committee recommended that production be concentrated in fewer plants. In 1966 there were 34 steel works in Britain. If the committee’s recommendations come about, and something like it no doubt will, 90 per cent of capacity will be produced in some 8 to 10 plants.

Such a rationalisation will have a great effect on the levels of employment within the industry. Employment in the steel industry stood at 316,640—December 1965, a figure marginally smaller than 1957. The Report envisages a workforce in 1975 of 215,000 men, when the industry should produce a third more steel with a third less men.

Of the excess 100,000 the report states that they need not all be redundancies.

  Properly handled, normal voluntary departures should be sufficient to account for a substantial part of the reduction. Even ignoring the more volatile fringe of the labour force and considering only the relatively stable element, i.e. men over 26 with more than one year’s service—labour turnover in 1965 was 12 per cent, and this is more than three times as large as the average annual reduction envisaged in the labour force over 1965-75, which is 3.75 per cent.

If you are not a wage worker able to make a ‘voluntary departure’, for you there is the promise of reasonable increases in earnings, providing there are ’reasonable’ reductions in the labour cost per ton of steel.

But what does this really mean for the workers? First, we would say, do not be misled by this 12 per cent red herring. Annual turnover cannot be related to a reduction in the work force spread over a number of years. Secondly it is possible that in one or two areas employment opportunities will increase. In others it will decline or cease entirely. A young steelworker prepared to move might find a job in the expanding areas, but competition could be considerable. An older steelworker can see his future by observing the miners in areas where pits have been closed. Further if these plans, or something like them, are to be fulfilled, plant construction must begin shortly and the effects will be concentrated in the later years.

But if you do not get the golden handshake, the mobility bribe, your future is certain. Your productivity will have to rise, that is you are going to work harder, so that you can be paid increased wages to buy commodities the prices of which will probably increase. How well you fare will depend upon your trade union strength, which with a declining membership in a period with a full labour market, will be subject to great pressures.

Since nationalisation British Steel has not announced its plans for rationalisation. However it will have to be on the lines of that envisaged by the BISF Report. The prospects for the steelworkers are redundancy, unemployment, moving homes, harder work, struggle for better wages and conditions. The lot of all workers under capitalism. These next few years are likely to be harder for the steelworkers than any they have experienced since the war. Their day to day struggles will be more frequent and intense, and the outcome a continuing vista of repetitive struggle over the same issues—work and wages.

Ken Knight