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Journal of Emerging Technologies and Business Management

Abstract

The outloakfor the steel industry has weakened significantly, due to cyclicalfactors associated with sluggish global economic activity and industry-specific structural problems such as overcapacity It appears that adjustment pressures are growing significantly and will have to be worked out in the coming years. There are many ways in which the industry can adjust, but one possible near-term scenario involves further price and profitability suppression, production declines resulting in low capacity utilization rates across the board, andpossibly plantclosures amongst the least efficientfirms. There will be growing social and human costs associated with the current market downturn, and governments should prepare effective programmes to help steel workers, who are laid oflin the process, adapt to these changes. Alternatively, government interventions may help the industry “muddle through" the crisis, but these would be expected to lead to more market distortions that would eventually create even more severe adjustment challenges in the longer term. A move by Tata Steel, the second largeststeelproducer in Europe, to end operations in Britain because ofheavy losses is the latest in the growing list of the casualties of China's economic slowdown. Tata Steel has decided to sell or restructure its poorly performing UK steel business, giving up its nine-year fight to salvage the operations ofthe business itbought aspartofthe takeoverafCorus at the heightofthe commodityprice boom in 2007

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