British Steel has not succeeded in getting emergency government funding, an eventuality that has led to its closure and unfolded the potential scenario that 25,000 people could end up jobless.
The order placing Britain’s second largest steel producer under liquidation came from the High Court and will see the liquidator take control of operations at the company’s main site based in Scunthorpe.
For now, that means employees remain on the steel maker’s books.
Britain’s Business Minister Greg Clark announced that the company was open to buy offers, but the opposition Labour Party asked the government to revert the company’s ownership back to the public.
There are about 20,000 people who are depended on British Steel supply chain and 5,000 are its employees in Scunthorpe.
Greybull Capital, an investment firm that acquired the company from Tata Steel for £1, has tried to stabilize the company to no avail, largely due to uncertainty surrounding Brexit.
In 2018, the company laid off about 400 people banking their decision on the weak pound and Brexit vote unpredictability. Such affected its order book adversely. However, in 2017, the company reaped profits after its name was changed to British Steel.
The company’s shares have gone down in the past three years as a result of the increased cost of raw materials and the declined demand. The trade tariffs have also hindered the availability of cheap imports from getting to the U.S.
Britain’s steel has not been churning profits of late, with high taxes, energy expenses and roof-high labor costs among other factors, exerting a lot of pressure on steelmakers.
According to the former chair of the International Steel Trade Association (ISTA) Jeff Kabel, the government currently cannot have any input on the steel sector because of the Brexit.
British Steel is liquidating days not long after Germany’s ThyssenKrupp and Tata Steel of India abandoned plans that would have seen them merge into E.U’s second largest steel company. The failed plans have since left the E.U. steel sector at the risk of economic downfall. The fate of Britain’s steelworks in Wales which is owned by Tata Steel is also unknown.