For a low-profile Indian to dream of setting up a steel plant in pre-Independence India, at a time when colonial rulers considered even private production of lowly salt an act of treason, required audacity of a very high order. But Jamsetji Nusserwanji Tata was nothing if not audacious.
Even so, so sceptical of Indian manufacturing capability were some Britons that the Chief Commissioner for Indian Railway, Frederick Upcott, made one of the most fatuous challenges ever. “Do you mean to say,” he asked rhetorically, “that Tatas propose to make steel rails to British specifications? Why, I will undertake to eat every pound of steel rail they succeed in making.”
History has no record of whether Upcott was able to digest his own words that he was compelled to eat, but it’s a good thing Jamsetji didn’t let such blustery talk faze him. For today, 109 years later, Tata Steel stands testimony to its founder’s steely resolve, its reputation as the world’s 10th-largest steel company (by tonnage) burnished by a track record of manufacturing excellence, constant modernisation, and — not least — a caring commitment to its labour force and the communities of which it is a part.
Along the way, Tata Steel has been tested several times over – by post-Independence statist government policies that fettered the private sector; by the challenges of competition, when protectionist walls fell; by the vicissitudes of global commodity cycles that sometimes turned against it; and by its management’s own rare departure from business conservatism, which manifested itself in miscalculations and overreach while going for overseas acquisitions.
But it has always emerged stronger, tempered by the fire of adversity, much like the steel it manufactures.
Early challenges
Jamsetji’s vision, and the artful manner in which he won British backing for his steel project, is the stuff of biz school folkore. In The Romance of Tata Steel, author RM Lala chronicles how Jamsetji sought to capitalise on Lord Curzon’s liberalisation of the Mineral Concession Policy, travelled to London to secure the support of Lord Hamilton, Secretary of State for India, and then went to Boston to enlist the services of geologist Charles Perin in finding mineral resources back home.
That search led him to a site near Sakchi (current-day Jamshedpur, named after Tata Steel’s founder). But raising funds proved more difficult, particularly after the Tatas drew a blank in the UK. Once Tata Iron and Steel Company (TISCO, as it was then known) was registered in 1907, the Tatas raised ₹23 million in capital, and construction got under way.
As Rudrangshu Mukherjee points out in A Century of Trust: The Story of Tata Steel, British government support, particularly the offer to buy 20,000 tonnes of steel rails every year for ten years, proved critical in the early years.
The War effort
This stat on Chinese job losses shows you just how staggering the scale of China's economic restructuring really is
A few months ago, Tata Steel announced it would close its British plants, including the Port Talbot site, resulting in about 15,000 job losses. Cheap Chinese steel "dumping" or "flooding" the market was blamed for driving down the price of the metal.
But a stat published by UBS this morning shows the scale of the problem, and how small the UK steel industry is in the big picture:
China is trying to cut 10% of its steel and coal capacity. That means 2 million steel and coal jobs will go in the next few years.
In that process, 100,000 workers were let go from a single mining company last year, UBS says.
Chinese workers are just as much victims of falling steel prices as British ones are, in other words.
The statistic also gives you an idea of just how massive China is (population: 1.4 billion), and the staggering scale at which changes there take place. Here is the context: As steel producers all over the world have ramped up production, the flood of product as steadily reduced its price. Steel prices have fallen by half since 2012, in US$ per tonne:
Source: Busiens Insider