No escape for Australian manufacturing with Bluescope closures; 1400 jobs axed

With more than 1000 jobs to go at BlueScope Steel, Australia’s manufacturing looks to run its course into oblivion leaving the retrenched workers and their families without much of a safety net.

Australia’s biggest steel maker today confirmed that it will shut down its number six blast furnace at Port Kembla, south of Sydney, and close its Western Port hot strip mill, east of Melbourne.

Australian Workers Union (AWU) national secretary, Paul Howes said the BlueScope closures are a “devastating blow” for the local manufacturing industry which is facing its worst crisis since the Great Depression.

"Today’s announcement is devastating for the families of more than 1400 workers who will be feeling the trauma and distress that comes with the loss of a secure income," AWU national secretary Paul Howes said in a statement.

"We’ve got to face the reality of the manufacturing crisis that’s before us. We can’t accept job losses as the norm and we can’t rely on imported goods in our strategic sectors," he said.

Australia’s manufacturing sector has been under immense pressures from the booming Aussie dollar and record high terms of trade, as well as unfair competition from illegal foreign dumping.

"Local industry is not being given a fair go to work on the mining and resource projects which are driving the dollar sky-high,” AMWU national secretary Dave Oliver said in the joint statement with Howes.

The latest BlueScope job cut sends a clear signal to the local manufacturing industry, as well as the country, that Australia’s economy cannot rely on mining alone.

“The benefits of the mining boom come with very big downsides and 1400 families today have learnt the hard way about the downsides," Oliver said.

Only recently, head of mining giant BHP Billiton Jac Nasser told media mining was not the long-term answer for Australian industries, including manufacturing.

Nasser said that while Australia is well placed to weather any new global economic turmoil, solely relying on the exports of natural resources could weaken Australia’s economic performance in the long-term. The failure to diversify beyond the sector has seen some areas of the economy flourish, such renewable energy, while others shrink significantly, such as manufacturing, Nasser flagged. He said that betting on one sector is not the answer for the country, but a better long-term strategy to balance manufacturing, resources and services will ensure continued economic activity.

One way to achieve this balance is by developing clever policies which could see Australia build its manufacturing sector up on the back of the mining boom, but only rely on it solely for its livelihood. The other Howes argued is to crack down on China’s "currency manipulation", something he adds should be right at the top of Australia’s foreign policy agenda.

Estimates suggested China was undervaluing the yuan by up to 40% which was driving export industries and jobs to China at the expense of Australian industry. Howes said Australia should make an effort to ensure China floats its currency to alleviate the pressure on Australian manufacturers and give local industry the chance to compete on a level playing field, such as introducing a sectoral support plan, which includes a tough local content policy, currency changes and a stronger anti-dumping regime.

The news that 1400 or more jobs to go with the closure of BlueScope’s number six blast furnace at Port Kembla and its Western Port hot strip mill follows the recent announcement that the steel giant will put its Australian operations under review; a move to counter the macro-economic challenges of a soaring Australian dollar and continued weakening in demand.

On 11 August, BlueScope Steel chairman, Graham Kraehe announced a A$900m writedown of its asset values and indicated a review of the company’s "domestic steelmaking production capacity" will be conducted in the near future.

In a recent report, Manufacturers’ Monthly noted that further possible writedowns could see BlueScope Steel cut production to get a strong-hold on its finances in the future; for workers, the concern resides with the potential jobs losses to come should the review conclude that the steel maker is currently operating at excess production capacity.

Australia’s other mining giant OneSteel has contemplated a merger with the bigger BlueScope Steel could make sense if the storm buffeting the local sector does not calm down. However it prefers to makes it own way, according to a report by The Australian.

There has been growing speculation that the two steelmakers will be forced to merge, combining BlueScope’s bigger, more-efficient Port Kembla blast furnaces with OneSteel’s South Australian iron ore supply as raw material, demand and currency pressures has drove both companies into structural reviews.