Liberty Steel asks customers to pay up front
- Published
The UK's third-largest steelmaker is asking some customers to pay up front as it struggles with cash flow.
Liberty Steel is under pressure after its main financial backer Greensill Capital went bust two weeks ago.
The problems are most acute in its specialty steel division, which supplies big aerospace customers hit by the coronavirus crisis, among others.
Liberty said demand for some products in that division had fallen by almost two thirds.
The company is in a fragile financial position, and the government is standing by to intervene, if necessary, to put it on public life support.
So the idea of paying up front may be unattractive to many customers who might reasonably fear their money and their deliveries could get frozen in any future insolvency process.
However, sources close to the company insisted that the specialist products Liberty produces - particularly at its Stocksbridge plant near Sheffield - are hard to source from other suppliers at short notice.
Liberty owns 12 steel plants in the UK, including at Rotherham, Motherwell and Newport, and employs 5,000 people.
The collapse of Greensill Capital earlier this month sparked grave concerns about the future of those jobs.
Responding to House of Commons questions, Prime Minister Boris Johnson revealed on Wednesday that Business Secretary Kwasi Kwarteng had met with Liberty's management three times in the last few days. That is on top of three prior meetings in the two weeks before that.
Mr Johnson said the government was engaging with the company and that it was committed to buying more steel made in the UK for a major infrastructure building programme over the next few years.
He mentioned HS2, Hinkley Point nuclear power station and an expansion of the UK's offshore wind sector.
Mr Kwarteng will answer an urgent question on the future of Liberty in the House of Commons on Thursday.