Aerospace industry warns of supply crunch from crisis at Liberty Steel

Britain’s aerospace industry has stepped up pressure on the government to intervene to help steel plants caught up in the financial crisis engulfing Sanjeev Gupta’s business empire, warning of rising concerns over a supply crunch.

In a letter addressed to business secretary Kwasi Kwarteng, industry association ADS has warned that its member companies are increasingly concerned about the continuity of production of a range of specialist steels made at Gupta’s British plants in Yorkshire.

Liberty Steel, part of Gupta’s GFG Alliance, a loose collection of metals businesses that make up his empire, is Britain’s third-largest steel producer. 

Concerns have been rife over the fate of Liberty’s UK plants since the collapse of GFG’s main lender, Greensill Capital, last month. The focus has been on the financial robustness of two particular plants in Rotherham and Stocksbridge. They produce high-strength, anticorrosive type speciality steels for use in aerospace as well as oil and gas.

In the letter, signed by Kevin Craven, interim chief executive of ADS, a copy of which has been seen by the Financial Times, Craven said he was writing to Kwarteng to “highlight the impact resulting from the issues at Liberty Steel and to seek your urgent intervention to resolve the situation”. 

Craven went on to warn that companies are concerned about “continuity of production” of these specialist steels. While companies were making their best efforts to assist Liberty Steel, there were concerns over the availability of some steels once current stock levels were depleted.

Craven said ADS recognised the challenges of the situation but was urging the government to “support the continuity of production at Liberty’s steelworks”.

The government has made clear it is monitoring the situation at Liberty and hinted it could step in if necessary. Kwarteng said he was “very keen” to see the steel assets survive but defended the recent decision to reject a plea by Gupta for more than £170m in emergency funding, saying there were fears the money could have been sent abroad. 

“Let’s see if he [Gupta] can refinance his business in the way that he said he would,” Kwarteng told MPs. 

ADS members include large employers such as Rolls-Royce, BAE Systems, Airbus and Safran but also a significant number of smaller and medium-sized companies.

The FT has reported previously that a number of aerospace companies and customers of Liberty, including Rolls-Royce, were in talks with the group to help it through the crisis. 

The aero-engine group said it believed it had a “solution that will expedite the delivery of enough materials to support our supply chain until 2022”. The company is also exploring alternative options for the longer term. 

One industry stakeholder said one of the main concerns was about the implications for smaller and medium-sized companies. 

“It’s not simply a matter for the big manufacturers. It’s also an issue for the wider supply chain,” he said.

Sky News first reported details of the letter. 

ADS declined to comment on the letter but said it was in discussions with members over any “potential implications to our industries in the event that supplies from Liberty Steel were disrupted”. 

“It is in the interest of our industries for a solution to be found that ensures continuity of production at Liberty’s steelworks,” it said.