The Role of Tata in Swansea

Given the recent drama pertaining to Tata Steel’s union action, the role of heavy industry in modern 21st century cities has been thrust into the limelight.

Heavy industry encompasses sectors such as manufacturing, construction, resource extraction and (notably for the Swansea Bay region) materials processing. These industries provide jobs of every conceivable ilk and at every level from school leavers to PhDs and manual labour to office jobs. Furthermore, spinoff jobs are created in sectors such as logistics, marketing and recruitment. The point here is that a company such as Tata Steel having a presence will provide a wider birth of jobs than, say, a web development business, due simply to the enormity of the operation. This article aims to explore how the presence of industry titans such as Tata can shape the local economy.

Economic Benefits

Job Creation:

According to government research (House of Commons briefing paper: Manufacturing: statistics and policy 2020), manufacturing jobs (such as those in provided by Tata account for almost 8% of all jobs in the UK. The nature of these industries requires (for the most part) a large workforce to keep them up and running. Tata’s Port Talbot site alone employees circa 4000 people (The guardian 2023).

Furthermore, the Port Talbot site routinely sponsors PhD/EngD students at Swansea University, consequently providing them with high-paying jobs post-study.

Increased Tax Revenue:

Increased Tax Revenue: There are three primary routes in which the Port Talbot plant generates tax revenue for local authorities and the government.

One is through tax on profit. I was unable to find hard figures during the research for this article, and Tata’s financial woes are well documented (not to mention that large companies seem to be very good at avoiding paying tax). But according the The Guardian (2022), Tata Steel UK report a pre-tax profit of £82m in the 21-22 financial year.

Second is through their employees. Tax through the PAYE system and national insurance contributions for circa 4000 employees, many of whom are handsomely paid.

Third is through other investments, such as those made to sponsor county-wide events or through Swansea University in the form of student sponsorships and the associated finances.

The point here is to explain why a local authority such as Neath-Port Talbot county would be keen to maintain a heavy industrial presence based purely on revenue.

Technological Advancements:

The synergy between heavy industry and technological progress is one of the primary driving forces behind investment in heavy industry. Macroeconomists will argue that in order to achieve economic growth, productivity must continually increase. (Basically speaking this either means more workers making more stuff, or fewer workers making stuff more efficiently). That is, of course, a gross simplification of an economic theory, but will suffice for getting this point across.

Tata is not funding countless Phd/EngD projects out of a sense of altruism. They know that by investing in talent that they can drive innovation forward and improve their productivity as a company. The currently implied implementation of the controversial electric arc furnaces at the Port Talbot site is an example of this.

Cons of heavy industry

Air and Water Pollution:

Many will remember the excitement when artwork by secretive street artist Banksy appeared in Port Talbot. While an interesting event in an otherwise quiet town, its depiction of poor air quality was not a shock to anyone. In fact, Port Talbot has been designated as an air quality management area (AQMA) due to the pollution produced (in large part) by the steelworks. (Air Pollution in Port Talbot, NHS, Ruth Tipping). Steel making in the UK accounts for circa 2.4% of all greenhouse emissions, with Tata’’s Port Talbot site being the single biggest emitter (House of Commons Library, Contribution of the steel industry to the UK economy, 2023).

Noise and Visual Pollution:

The potential escalation of noise and visual pollution in areas with heavy industry poses significant challenges to residents’ overall quality of life. Balancing industrial growth with the need for serene and visually pleasing living environments is a challenge still faced by authorities.

Impact on Health and Well-being:

Residents in industrialised areas may encounter health challenges associated with pollution, necessitating a thorough examination of health data and the associated healthcare costs. Exploring the correlation between heavy industry and public health provides a comprehensive understanding of the potential impact on well-being. The Welsh government are all too aware of this and have been monitoring health outcomes continuously and have implemented plans to mitigate the worst of these effects. (Clean Air For Port Talbot, Short Term Action Plan, Welsh Government 2012).

The Good, The Bad & The Ugly

The good that stems from the presence of heavy industry (such as Tata) in and around cities like Swansea presents itself most obviously economically. Thousands of jobs, massive economic output, gainful employment and student sponsorships all add to the prosperity of an area.

The bad presents itself negatively in the same people who argue for the good. The staff and residents near Tata’s steelworks are subject to air pollution and the idea that this once beautiful part of the country could improve other industries such as tourism are largely hampered by a heavy industrial presence.

The ugly is that, despite the good and bad, and industrial employer in the scale of Tata steel is powerful. At the drop of a hat, 3000 jobs are placed in danger and the aforementioned economic benefits are altered in unpredictable (but possibly negative) ways. A plant this size in an area as small as Port Talbot could be seen as a risky investment on behalf of the public as it is like putting all your eggs in one basket. Any move by Tata has enormous implications on the local area – which has come to light in the recent union action.

One can argue that the workers are acting as luddites hampering progress. That these industrial changes will be a net positive for the area in the end as innovation breeds growth. However, nobody can predict the future, least of all economists, and conventional wisdom doesn’t alter the fact that 3000 people are worrying for their jobs as we head towards Christmas.

The good and bad of heavy industry such as Tata at the border of a modern city such as Swansea may well be encompassed in a sense of hiraeth in its occupants, meaning that ultimately any similar industry may be welcomed to an area in time. However, the power which these sites hold over the economy and people of a city or region must be kept in check and its for local representatives to do so.