We’ve all learnt a lot in the past five weeks since the collapse of Greensill. Not least me. I’ve spent a lot of time wondering what I should have done differently, and when, so I might have avoided the current challenges the GFG Alliance now faces. As we are a family-run business I take full responsibility for finding a way through this situation. I care deeply about my people, their futures, their communities and their businesses. And I am concerned that short-term, aggressive tactics by some of Greensill’s creditors are threatening tens of thousands of long-term jobs here in the UK and elsewhere.
In the past few years, we have built an industrial group from nothing. We’ve done this by saving plants that were, on the whole, unwanted. Either starved of investment, on their last legs, closing or closed. We built a business with 35,000 people worldwide, spanning steel, aluminium and renewable energy.
Our strategy was to invest against the grain — counter cyclically — to buy assets at the bottom of the market and focus our efforts and resources on transforming them for a sustainable future. When I started this journey in 2013, Greensill was the only substantial backer that believed in my long-term approach, and it helped us to build out our vision.
Today, following many hundreds of millions in investment and real improvements in performance, most of our major businesses are now sustainable. Those efforts have allowed them to flourish as our markets started to recover following the pandemic. Steel prices are trading at a 13-year high. Aluminium prices are up about 35 per cent over the past year and iron ore is up about 75 per cent. As a result, most of our core businesses are running at near full capacity to meet strong demand. They continue to gainfully employ tens of thousands of people.
Of course, we have our challenges, and perhaps the greatest here in the UK, where our businesses have faced a dramatic squeeze from the aerospace and automotive markets, where demand for some products has fallen by as much as 60 per cent through Brexit, Covid-19 and now Greensill. We are working through these challenges with our management teams, our employees, our customers and our suppliers to help maintain operations while we negotiate new financing to replace Greensill.
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But we do now face unwanted headwinds. Financial institutions with investments connected to Greensill are now trying to bring claims against us. We will of course robustly defend our legal position, including in the courts if necessary. Our clear priority must be to protect the long-term future of our people and local communities.
These creditors are at risk of destroying their own chance of recouping value by taking these knee-jerk actions. They undermine profitable businesses and ultimately put at risk thousands of skilled, industrial jobs in communities with limited alternative employment opportunities. They are also damaging the resilience, profitability and environmental performance of UK businesses which rely on our steel and aluminium products, and are critical to the wider UK economy.
There is much at stake. In Hartlepool, for example, where we make large pipes for the oil and gas sector, we have grown production by five times since we acquired the business from Tata in 2017, and now employ 50 per cent more people. And for every person we employ in our steelworks there are several further jobs supported through the supply chain as well as more in the local community relying on the presence of our nearby businesses.
Our global refinancing is making progress — in Australia, for example, we have entered advanced due diligence with a number of interested parties to refinance our primary steel and mining operations. This would provide enough capital to repay the creditors of that business in full.
I’m ready to change. So is the GFG Alliance. We understand that the way we used to finance our operations needs to be overhauled, and we will address our challenges head on. We want to continue to improve governance and transparency. We also understand that we have a responsibility to our debt holders. But at this time of crisis, we need cool heads and collaboration, not dangerous and cavalier behaviour.
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Sanjeev Gupta is chief executive and chairman of GFG Alliance