The steel industry, once the mainspring of economic activity, has been in decline in most advanced nations since the first oil shock of 1973. In that year, world steel output was almost 700 million tonnes1 of which the European Community (EC), the USA and Japan accounted for 410 million tonnes, or 59 per cent. World output was at a similar level (711 million tonnes) in 1984, but the production of the three regions had fallen to 279 million tonnes (43 per cent). The decline in output was particularly apparent in the UK, where production fell from almost 27 million tonnes at the start of the period to less than 14 million tonnes at the end.2 Figure 4.1 shows the movements in steel output and consumption in the UK, beginning in 1970 when both were at their highestever levels. There have been cyclical variations in demand and output as shortrun changes in economic activity have occurred, but plainly the trend has been downward. Production exceeded consumption by a considerable margin at the start of the period, but this has been reduced as imports have risen in relation to exports.