According to the organisation, new figures show a 1.8% annual fall in manufacturing output, the largest since July 2013.
While the Office for National Statistics added UK crude steel production is at its lowest since December 2008, Unite said a failure to pursue an active industrial strategy is 'dashing hopes of rebalancing the economy'.
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It added a 'hands free' approach to the industry along with a reliance on service sector growth was unsustainable and would lead to a low wage, low skilled economy.
Unite assistant general secretary Tony Burke said: "With steel in the grip of an industrial crisis these figures show that the chancellor George Osborne's 'hands free' approach to manufacturing is dashing hopes of rebalancing the economy.
"The absence of a coherent industrial strategy is exposing the UK's manufacturing sector to the whims of global headwinds and risks hollowing out skills and jobs in a key sector of our nation's economy.
"With steel communities across the UK facing uncertainty and tens of thousands of jobs in the supply chain hanging by a thread, we urge the government to adopt an active industrial strategy with steel at its heart."
(LM)
