Tata Steel is one of the world’s most geographically diversified steel producers, with operations in 26 countries and commercial offices in over 35.
Tata Steel’s European operations were not just hit hard by the recession; they were almost destroyed by it. A 30% reduction in demand for steel led to over 1,000 job cuts 2008–2013 and losses of over £840m. That struggle reached a peak in May 2013, when the company wiped £1bn off the value of its European business. Its major challenge? Crippling industrial energy prices. In fact, thanks to UK duty fees, Tata Steel (along with others in its sector) were paying 60% more for energy than their counterparts in Germany, and 85% more than those in France. These spiralling costs meant that Tata Steel was unlikely to return to growth let alone compete internationally.
Yet bizarrely steel had been ignored by the Coalition government’s industrial strategy. A personal letter from the Chancellor to Tata Steel confirmed there would be no Government help on energy costs, and that they expected the company to grow itself out of trouble.
With Tata Steel nearing disaster, Hanover's objective was to create a level playing field for UK manufacturers by securing substantial concessions from the Chancellor, specifically targeting a reduction in the industrial cost of energy for high carbon emitters such as Tata Steel before the 2014 Budget. However, securing concessions from any Government is challenging at the best of times, but when the country is facing a huge deficit with spending cuts across the board, it becomes almost mission impossible.
In March 2013, we identified industries that had similar characteristics and policy concerns to the steel industry and we named them the ‘Foundation Industries’ to communicate how central they are to the ‘foundations’ of the economy.
We urgently needed to elevate not only Tata Steel’s importance within the UK economy to the Treasury and No10, but also the importance of the wider manufacturing industry – and vitally – we needed to do it ahead of the 2014 Budget.
We therefore aimed to:
- Establish Tata Steel as the voice of the Foundation Industries.
- Change perceptions of the steel industry from that of a ‘sunset industry’ to that of a key facilitator of economic rebalancing and success in the global race.
- Highlight the economic importance of the Foundation Industries to key political figures and opinion formers.
In order to get the government to sit up, listen and take action, we needed to demonstrate that this issue extended far beyond Tata Steel alone. We tested attitudes towards our message in a perceptions audit of political, media and industry audiences. It was apparent that there was strong support for our approach.
Understanding the true economic impact
We commissioned PwC to research the economic performance of the Foundation Industries, based on our agreed definition. The research identified 31,400 businesses employing 487,000 people, generating £24.6bn GVA per year. The conclusions of the report were clear;
- Foreign competitors were not required to pay devastatingly high industrial energy costs.
- Without government intervention, the Foundation Industries would not survive, leading to significant job losses in areas with already low employment levels.
Hanover developed a political narrative to the report focusing on the role Foundation Industries played in achieving economic rebalancing across the UK. This was accompanied by a ‘manifesto for change’, explaining how government could save the Foundation Industries from failure by providing a level playing field - with particular regards to energy costs.
Launching our findings
In January 2014, the economic assessment of the Foundation Industries was given a formal launch at the View from the Shard – a structure built with Tata Steel materials. For this breakfast event, Hanover secured the Business Secretary Vince Cable as well as the attendance of over 100 key stakeholders including MPs, business leaders and journalists. Tata Steel’s Head of Public Affairs and European Chief Executive both delivered speeches alongside the Business Secretary. Comments made by all three were well reported in the broadsheet, radio and broadcast media.
Becoming the voice of the Foundation Industries
The quality of the campaign message, which conveyed an opportunity to secure the future of British industry, enabled us to reach audiences who had previously not engaged with Tata Steel, for example:
- A political contact programme enabled Tata Steel to convey their argument to No 10 advisers, Cabinet Ministers, special advisers and Shadow Ministers.
- We secured speaking platforms for Tata Steel alongside Ministers and Shadow Secretaries of State.
A media engagement programme saw Tata Steel apply further pressure on government. Gradually, the term ‘Foundation Industries’ began to enter government vocabulary, being used in debates on the future of industry, and with Business and Energy Minister Michael Fallon referencing the Foundation Industries in answers to questions (please see appendix 1).
Tata Steel became seen as the ‘go to’ company to discuss the Foundation Industries in further high level government meetings leading up to the 2014 Budget.
A Government u-turn
"A resilient economy is a more balanced economy with more exports, more building, more investment – and more manufacturing too. We’ve got to support our manufacturers if we want to see more growth in our regions."
Levelling the playing field
We set out to ensure UK manufactures could compete fairly with their European counterparts, we’ve made significant inroads, as UK energy now compares much more favourably, meaning the UK is once more a competitive place for energy intensive industries to do business.
Return to growth
This campaign has helped contribute to a complete turnaround with analysts recently reporting earnings of $87m compared to an EBITDA loss of $6m for the same period last year. Tata Steel’s European chief executive Karl Köhler said the company’s recent performance was "the best like-for-like quarter for five years".
Reaping additional benefits
Tata Steel has also enjoyed a host of additional benefits, for example employees have a better understanding of how the business is viewed by politicians/media.
This report was the first to identify and define the Foundation Industries and calculate their economic footprint. In doing so, we were able to garner support from highly influential figures from the media to the highest levels within UK parliament.
Tata Kids of Steel
We didn’t want to just use the political job-loss bandwagon – so sought a way of engaging with politicians on a different level. We harnessed a sports initiative already run by Tata Steel as a way of generating warmth between them and the politicians. We held the 100th ‘Kids of Steel’ event, a children’s triathlon participation programme, in Parliament.