MoD buys steel firm to secure component supply

Will Green is news editor of Supply Management
29 July 2021

The UK Ministry of Defence (MoD) has announced it will be buying a steel company to “secure the supply of components”.

The MoD will pay £2.56bn for the entire share capital of Sheffield Forgemasters International Ltd (SFIL) and intends to invest up to £400m over the next 10 years for plant, equipment and infrastructure.

Unions welcomed the move after the pandemic “showed us the danger of relying on fragile overseas supply chains”.

The MoD said: “SFIL is the only available manufacturer with the skills and capability to produce large scale high-integrity castings and forgings from specialist steels in an integrated facility to the highest standards required for these programmes.

“Furthermore, SFIL’s ownership will not prevent other UK-based manufacturers bidding for MOD contracts, which will continue to be run in an open and fair competition.”

SFIL said the deal recognised the company’s “status as a strategic national asset” and would enable it “to be a reliable and secure supplier to defence for the long term”.

Roy Rickhuss, general secretary of the union Community, said: “We see this move as a recognition of the importance of the steel industry to our country’s economic future. The pandemic has showed us the danger of relying on fragile overseas supply chains, so we are pleased to see a viable future secured for Sheffield Forgemasters.”

Steve Turner, assistant general secretary for manufacturing at Unite, said: “It brings to an end years of instability for this historic 215 year-old company, but is also a sign that government is maybe finally waking up to a crisis of its own making. 

“Critical infrastructure industries like steel function better in public hands and advanced economies like our own need to have stable, secure domestic steel production capabilities to protect our national security interests as well as to compete in global markets.”

The deal is subject to a three-week offer period and will be completed on 19 August 2021.

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