Wed, 22 May 2019 | ADMINISTRATION
News that British Steel is to be placed into the hands of administrators comes as no surprise as it was always going to be a tall order to secure more funding from the government. In the event, the government said no to a £30 million lifeline loan, which would have represented a high risk. British Steel had only just borrowed £100 million from the government in April.
EY accountants are currently finalising the insolvency process, but whether the this will protect the livelihoods of around 5,000 workers is doubtful.
British Steel's supplier chain is also going to be badly affected, with several contractor firms expected to also hit the wall.
Larger suppliers, like Hargreaves Services Plc, are expected to weather the storm, though not without a significant knock to revenues and pretax profits. Hargreaves employs about 170 people directly supporting British Steel operations.
All in all, there may be as many as 20,000 supplier chain jobs at risk.
Effects will also be felt on a local level. The base of British Steel's operations is Scunthorpe in North Lincolnshire. The town and its small businesses will undoubtedly suffer and residents have spoken about the potential for it to turn into a ghost town.
Apparently the private equity owners Greybull Capital had turned the business around (they had bought the business for one pound in 2016) to the point that it recently returned a profit following a rebranding.
Brexit has been blamed for a the slowdown in orders from Europe, although it could be a case of not being competitive enough against the giant Chinese steel manufacturers.
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