The EU's inaction on Liberty Steel could alienate tens of thousands of workers and fuel right-wing populism
Can Europe's leaders prevent disaster and make good on their just transition promises?
Liberty Steel’s blazing furnaces are uncharacteristically cool as a crisis has stopped much of the company’s operations across Europe. From the city of Galați sitting on the Danube in Romania to the Czech Republic’s steel heart of Ostrava, the situation at Liberty Steel is dire.
Nestled in the north-eastern corner of the Czech Republic just a few kilometres from the Polish border, Ostrava is a city that has been defined by the industrial revolution.
Since Iron ore was first found hidden underneath Ostrava in the 19th century, the city has served as the beating industrial heart of the Czech Republic and has produced steel for many years. Today, this heart appears to be failing.
Ostrava’s crisis
The sprawling steelworks of Ostrava are owned by the company Liberty Steel, which owns steel production facilities from the United Kingdom to Australia. For years, the company’s leadership has been accused of severe financial mismanagement and even fraud, the consequence of which spells an uncertain future for sites in Romania, Hungary, the Czech Republic, Italy, and perhaps even more countries.
The story is almost too cliché for reality - a steel mogul who was once heralded as the “savior of British Steel”, ends up buying steel sites across Europe and runs them into the ground, allegedly committing financial fraud on the way and fleeing the continent to Dubai afterwards.
The list of cuts, layoffs, and paused operations at Liberty Steel locations in Europe are almost as long as the list of suppliers not being paid, employees being kept in the dark, and cases of lacklustre financial transparency reported at the company.
In one example, Liberty Steel failed to make payments to its sole energy supplier, Tameh Czech, resulting in the supplier going bankrupt. According to the trade union confederation IndustriALL Europe, the situation at Liberty Ostrava alone could jeopardise at least 30,000 indirect jobs and over 900 small- and medium-sized enterprises depend on the site.
Across Europe Liberty Steel employs around 20,000 workers. Its site in Częstochowa Poland has declared bankruptcy while the company’s workers in Hungary have gone on strike after not being paid.
In an article that’s going to be published in EUobserver next month, I talk about the crisis and its causes in more detail, such as describing how the collapse of its biggest lender (which is also suspected of significant financial fraud) led to the current situation.
But in this article, I want to talk a bit more about the longer term consequences that could result if the EU fails to act and what Liberty’s crisis means for Europe’s rising populism and the just energy transition.
By failing to come up with a solution, the EU is aggravating deindustrialisation which we know fuels far-right populism. At the same time, if the sites are to close, Europe could lose one of the brightest opportunities for its leadership in a decarbonized future.
This could be a moment of political and environmental significance that reveals whether or not Europe’s leadership is up to the task of recognizing previous mistakes and will make the necessary decisions to protect Europe’s workers.
After all, how can we expect these workers not to develop a profound distrust in European politics if this crisis isn’t averted? Moreover, campaigners and organizers in the environmental movement have been talking for years about the just transition and not leaving anyone behind - but how can we possibly argue that we’re fighting for a just transition if tens of thousands of workers are ignored?
The European Union has been a part of the crisis from the very beginning
The steel sites that are currently at the brink of collapse weren’t always owned by Liberty Steel. Before 2019, the sites were owned by the Luxembourg based ArcelorMittal, the second biggest steel company in the world.
ArcelorMittal wanted to purchase the Ilva steel site in Italy (the country’s largest and the centre of an ongoing environmental scandal). However, the European Commission wanted to prevent ArcelorMittal from having too large of a market share of the European steel sector. As a consequence, ArcelorMittal was forced by the EU to sell off some of its European sites.
Ultimately, Liberty Steel group was chosen by ArcelorMittal as the preferred buyer and the European Commission approved the deal. The acquisition included sites in Belgium, the Czech Republic, Luxembourg, Italy, Macedonia, and Romania and impacted at least 15,000 directly employed workers.
There were problematic signs from the very beginning.
Before the final deal was made, IndustriALL Europe wrote a press release expressing some significant concerns on the deal. In short, the unions were demanding transparency on Liberty’s plans for the sites and to be kept in dialogue since the purchase would have major consequences on workers.
Now, with the sites in a desperate situation, workers are furious at the fact that the European Commission forced and approved the sale, and is now doing little to nothing to hold Liberty accountable for the potential job losses that resulted.
Perhaps even more scandalous is the fact that the European Union has made explicit statements about its support for the steel industry for the future of Europe’s decarbonized industries. Sure, the European Union has created just transition funds and drafted a “steel action plan.”
But the European Union’s claims about its promises to ensure that the just energy transition will “leave no one behind” ring rather hollow when Liberty’s tens of thousands of workers have been left vulnerable - in no small part due to a transaction that the the European Commission signed off on.
Steel and the Just Transition
Globally, the steel sector contributes more emissions than the entire European Union combined (an estimated 7% of total global emissions). At the same time, steel is an essential part of the just transition since it’s a fundamental component in many of the technologies needed for decarbonisation.
From solar panels and wind-turbines to electrified public transportation, steel is expected to make up a central part of the low-carbon future.
Research shows that expanding renewable energy production is going to significantly increase demand for metals, especially steel.
There’s fortunate news - the vast majority of steel gets recycled at the end of its use and this is becoming more efficient over time, reducing reliance on extracting new materials and reusing what’s already out there.
There’s even more good news - new methods of producing and recycling steel via less emission-intensive processes are being developed and will be based on using electricity instead of heavily polluting coal.
But here’s the bad news: the steel industry isn’t transitioning nearly fast enough, and in the very place where it’s most rapidly decarbonizing (Europe), the sector is in an especially catastrophic state.
Major factors contributing to Europe’s steel crisis include cheap steel overproduction within China, a fall in international demand, exceptionally high energy costs and low steel prices, as well as an international trade infrastructure that rewards dumping and a race to the bottom in terms of labour costs and environmental standards.
While the International Energy Agency (IEA) says that Europe is moving the fastest in terms of creating near-zero emissions steel facilities, the continent is importing more and more of the steel that it uses - typically from China which currently produces a greater share of its steel via more heavily polluting methods.
Despite the sector’s current crisis, the EU still produces the second-most steel in the world at 11% of the global total, meaning that its impact on the shift towards low-carbon steel production could be significant.
Liberty Steel was, at least according to company reports, planning on installing hybrid furnaces that would reduce the Ostrava site’s emissions by 80% (at least according to the estimates supplied by the furnace’s manufacturer).
In Poland, Ostrava already operates a low-emission Electric Arc Furnace and the company has recently announced plans to install two of them in Hungary.
While promising, the consistent financial woes across Liberty Steel case doubts on the company’s ability to be a reliable partner in the future of Europe’s steel industry.
It isn’t only the just transition at stake, but the political future of Europe, beset by a far-right surge, will only be worsened unless these workers receive the necessary support by the EU and are given the opportunity for a future.
Abandon industrial workers at democracy’s peril
There is enough evidence by now to say that deindustrialization and regional economic degradation can fuel the flames of extreme far-right populism.
From the rust belt of the United States, to the ex-industrial towns of England, this is a global phenomenon.
Professor Daphne Halikiopoulou has been studying European right-wing populism for years and argues that we have to look beyond its culturally populist dimensions (nativism, chauvinism, nationalism, etc.) to understand why populism grows to begin with. She argues that economic insecurity and the collapse of public services fuel rising right-wing populist sentiments.
Dr. Halikiopoulou’s research shows that social and welfare policies, strong employment protections, decent minimum wages, retraining programs, and unemployment income support schemes have been effective in countering the rise of far-right populism.
In all honesty, this should be clear to each of us by now - when thousands of workers are left in the dark and feel abandoned by a political leadership that has made bold claims on an inclusive and just low-emissions future, of course political trust will be lost. Can you blame workers for turning to the populist right which profers pseudo-solutions when the rest of the political class chooses to ignore their situations?
And honestly, I’m disappointed that the EU’s environmental movement has not locked arms in solidarity with the continent’s steel workers. Yes, steel is a polluting industry, but that makes it all the more important to branch solidarity across movements. Saving Europe’s industrial workers and promoting a solidare political project between the continent’s environmental movements and labour unions is the only way possible.
This situation is an enormous opportunity to show what solidarity can mean - if we squander it, what does that say about our collective political solidarity?
IndustriALL Europe has been calling on the EU to make serious and ambitious plans for Europe’s steel industry to, in part, prevent Liberty’s collapse.
These plans can be found here, and consist of the following:
Stimulating demand and production in Europe which will help safeguard jobs;
Providing financial support in order to preserve skills and jobs;
Ensuring that public aid is linked to strict conditions related to employment and investment in Europe;
Focusing on the need for strategic autonomy within Europe and opposing relocation outside Europe
Ensuring that national and/or European funding for R&D, and production related to that R&D, remains in Europe;
Allowing the regaining of control over one's own production and putting an end to the transfer of strategic assets to groups whose interests lie outside Europe.
Right now, industrial trade unions and workers are fighting to try and keep tens of thousands of jobs that families and communities depend on.
What are we risking if we ignore the situation?
What can we gain if we successfully intervene?
If you’ve made it this far to the end of the article, I’m impressed and grateful.
I haven’t written much for this blog in a while - I’ve been on some other projects and travelling. I’ve been thinking and researching loads on Europe’s steel industry the past month and I’ll write another story on a city in the UK that was defined by the rise and fall of the UK’s steel industry.
For now, here’s a teaser that shows in a pretty profound way what’s happened to a steel city over the past decades, from ecstatic opportunity and brilliant expectations, to today’s much more difficult situation.
Welcome to Scunthorpe.
(And as a last note - please do feel free to share this piece and if you can afford it, throw me a paid subscription for more articles on Europe’s labour unions. I would love to be able to make some videos, conduct interviews, and write more stories on European labour unions - but all these things require money. Thanks!)