British Steel, the company from which Network Rail acquires 95 percent of its steel, has gone into receivership, citing Brexit as one of the major factors.
British Steel is one of Network Rail’s biggest suppliers and the main rail supplier for maintenance and renewals. It worked with Network Rail on the Borders Railway in Scotland. In April 2018 British Steel began construction of a new facility at its Scunthorpe site to increase its ability to help Network Rail deliver on new rail types for a more sustainable railway.
And in September 2018 Network Rail and British Steel signed a contract for the supply of roughly 200,000 tonnes (4,000km) of rail, which was to run from March 2019 to March 2021.
Network Rail has issued a statement regarding British Steel’s insolvency:
“We have been working closely with British Steel and colleagues across government for many weeks. We have done what we can to help ease the company’s financial difficulties. We have improved our order book with the company – increasing rail production volumes, bringing orders forward and committing to a long term schedule – as well as offering immediate payment to ease the pressure on cash flow. However we have today been officially informed that British Steel has entered insolvency proceedings.
British Steel is a major supplier to Network Rail, providing around 100,000 tonnes of rail a year and playing a major part in our plans to maintain, renew and upgrade the railway.
We are confident that we remain able to carry out critical work on the railway in the coming months and beyond. Longer term we have plans in place so that we can continue to deliver the reliable railway millions of people depend on every day.
We understand this is a very worrying time for British Steel employees and we will work with the liquidator and continue to offer our support.”
Although Brexit cannot be called the only cause behind British Steel’s woes, it is a major one and one that has affected others in the industry. In March this year the UK government had to pay Eurotunnel £33 million over the Brexit ferry farce. And as Railway-News reported, Eurotunnel has invested millions in Brexit contingency planning just to keep business running as normal. Eurotunnel cited the uncertainty around Brexit as the most problematic as planning for all eventualities is of course the most expensive.
In 2016 Rüdiger Grube, then CEO of Deutsche Bahn and now Chairman of the Supervisory Board for Bombardier Transportation, pulled plans to float Arriva and Schenker on the stock market to access funds, citing Brexit as the reason.
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