Subcontracting in Steel

Abstract

Research on the UK construction industry has identified growth in the use of subcontractors as one explanation for the increased number of small firms (and self-employed workers) in that industry. Other research suggests that there has been growth in the use of contractors in manufacturing industry: has the construction industry pattern been replicated in any manufacturing industry? Data from the steel industry suggests that it has: in steel the increased use of subcontractors has accompanied the increased use of contractors. At BSC Port Talbot, for example, an informal cartel of established, local contractors has been replaced by large national contractors who make use of `cowboy' subcontractors. These subcontractors are economically dependent on the larger firms but legally distinct. The fact that steel turns out to be so similar to the construction industry raises doubts about the `special' circumstances which were thought to have led to the growth of subcontracting in construction.