Working together to save our steel industry

steel-mill-616526_1280.jpgIt's a joy to be out and about with my Senate colleagues on South Australia's Eyre Peninsula. The diversity of scenery, industry and enterprise makes this one of my favourite parts of my home state.

Whilst agriculture is still one of the most important contributors to the local economy, there are other established and emerging businesses that give great optimism for the future.

In Port Augusta, world-leading technology is enabling Sundrop Farms to be one of the most efficient truss tomato growers in the world.

Port Augusta is also the site of new solar thermal power technology investment running into the billions of dollars, offering power and jobs to thousands.

Port Lincoln is best known as Australia’s pre-eminent Southern Bluefin Tuna fishery but the innovation extends way beyond tuna farming. The fishing industry here has pioneered all sorts of aquaculture and is now exporting products and expertise across the world; they are value adding to abalone, kingfish and mussels.

Coffin Bay oysters are a brand name unto themselves and have an unrivalled reputation for being clean, green and delicious.

They are just some of the towns and a few of the great success stories in this part of the world.

However, it's not all sweetness and light on the EP. The city of Whyalla, comprising almost 23,000 people, is undergoing one of the most difficult economic times in its history.

Whyalla is the birthplace of the Australian steel industry and Arrium (and its associated companies) employ around 30 per cent of the town’s workers. They supply around 70 per cent of Australia's domestic steel needs and generate billions of dollars for our economy.

They are also in administration and that casts a massive cloud over the future of Whyalla. People are worried about their jobs, their families and their houses. The stress of uncertainty is contributing to unhealthy outcomes and increasing demand for financial and health counselling. And that's with the steel plant still operating.

If the administrators are unable to find a buyer for the plant and decide to shut it down, the consequences for Whyalla would be catastrophic.

There would also be big impacts for the state and federal governments.

That's why the South Australian Liberal Senate team have met with the administrators, the local council, industry and community groups to find the best way forward.

It's clear to me that it is in our national interest to see a viable domestic steel industry continue. We simply cannot afford, strategically or economically, to rely purely on imported steel for our national needs.

That's why I am wholeheartedly backing a plan to keep Arrium operating and viable for decades to come. The costs of not doing so are simply too great - not just for the people of Whyalla, but for all Australians.

It is heartening to see industry and workers, administrators and government, pull together for the common good. Unfortunately, this level of cooperation is all too rare and it has taken a near catastrophe to make it happen.

There is still a way to go in providing a positive outcome for the people of Whyalla and Australia's domestic steel industry, but based on what I have seen and heard in the past few days, I am optimistic we can get a great result.

And that will be good news for all of us.

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  • commented 2016-06-10 22:01:49 +0930
    Putting scarce resources into failing enterprises is never in the national interest. The car industry is a classic example of wasted resources. The root cause of Australia’s production problems is the cost. Australia is a high cost ,low productivity economy. There is no happy ending. Costs need to be reduced and that means tackling the unions to increase productivity.I would implement an economic zone, which would protect companies from union destruction and would lead to an increase in productivity, thereby reducing the need for taxpayer money to bail out inefficient enterprises. Good case studies would be Singapore, UAE and Hong Kong. I believe that S.A has also got very high electricity costs due to expensive electricity generation.If we want cheap electricity, we need nuclear power like Europe and the U.S.
  • commented 2016-06-10 04:12:12 +0930
    Dear Mr. Bernardi,

    Unfortunately, with the boundaries wide open for imports from countries that produce ceap steel, I do not see what would be the sollution to save this enterprise. It does not matter how much we increase efficiency because the discrepancy between the salary of an Australian and a Chinese or Indian is too big. Not counting the discrepancy in expenses for OHS and QA in Australia and other countries. Without protecting internal market, at least for the big gouvernment & private projects, I do not see ANY AUstralian manufacturing to survive. All manufacturing will be and it is shifted in 3rd world countries.
    I have not seen in your article any sollution being proposed.

    Kind Regards,

    Oliver Cibi
  • commented 2016-06-09 15:25:41 +0930
    “Port Augusta is also the site of new solar thermal power technology investment running into the billions of dollars, offering power and jobs to thousands.”

    … and offers 3-5 times the job losses in other industries critically reliant on cheap and reliable power for their competitiveness and survival – companies like Arrium, just 70 kms down the road, that see the writing so vividly on the wall (even if the IR issues get resolved).

    The PA solar plant is tantamount to building a green “mosque of conquest”, and almost in view of Arrium – such chutzpah.

    And that power cord from Victoria that connects our state (SA) to its now only source of reliable power is becoming less bankable by the day with the Andrews Govt further fast-tracking the phasing-out of La Trobe Valley brown-coal power.

    Not sure which will fall over first re SA’s new subs deal – the French nation or first-world-like power supply in SA.

    These cancers seem to be getting beyond chemo.
    Gratz.
  • commented 2016-06-09 13:41:35 +0930
    Our home made steel is far superior to imported steel and the jobs created are to important to see go overseas. In my opinion ALL national government works and infrastructure should be using ONLY Australian steel full stop, it’s like Aust Army boots being made overseas and not here, it is ludicrous, our government needs to support local homegrown businesses and their products wherever possible and by that I mean, if we make it, we buy and use it… Cheers Cory and mate keep up the great work, your not standing alone mate 👍🇦🇺
  • commented 2016-06-09 12:29:29 +0930
    Like the car industry I should image the unions have priced another industry out of being competitive. The way “wages” have been allowed to escalate in the last couple of years is mind blowing. Here in Victoria we have a dispute between the MFB and the CFA. The list of EBA demands is paramount to gluttony. Once again a union run state and the UFU are about to cripple an industry.
  • commented 2016-06-09 07:44:56 +0930
    With the car industry about to disappear and probably no whitegoods being manufactured here, who is going to use this steel. Australia should retain at least one car manufacturing capability and Holden is the most likely. They have the greatest range of the locals.
    Australia needs a major rethink about our future ! Kind Regards, Bryan Mulholland.
  • commented 2016-06-09 07:44:53 +0930
    With the car industry about to disappear and probably no whitegoods being manufactured here, who is going to use this steel. Australia should retain at least one car manufacturing capability and Holden is the most likely. They have the greatest range of the locals.
    Australia needs a major rethink about our future ! Kind Regards, Bryan Mulholland.
  • followed this page 2016-06-09 07:41:24 +0930
  • commented 2016-06-09 06:56:46 +0930
    Cory, joint ventures with ore buyers has often proved to be successful on equity holdings 51% Australian and 49% off-shore, perhaps Gina Rhineheart could be approached to take on a substantial interest for the national good as she is a very well placed to supply ore.
    The east west rail link proposal linking the Pilburrah with the Bowan Basin is a brillian move and would take very little to complete the Southern link to Whyalla.
    To achieve an efficient industry Unions and their nefarious activities must be strictly controlled. A good example of union management is the way the USA brought the Longshoreman’s Union and others to heel – in short negotiate terms and conditions, agreement tenure 3-4 years, total strike ban during tenancy of the agreement with severe penalties on strikes and lock-outs including jail in conjunction with substantial fines for defaulters, and at the end of the agreement unions and employers sit down and negoriate a new agreement or reinstate the existing.
    The governemnt in both State and Federal need to toughen up and start singing from the same song sheet on union management!
  • commented 2016-06-09 01:47:36 +0930
    The Australian Government needs to Buy it… and make steel. Create employment buy building a second fast train track linking Port Augusta with pert and then Port Augusta with Brisbane, Sydney Melbourne and Adelaide. Not to forget Tarcoola with Darwin. Make this a National Service for the Nation Task in Construction. Apprentice ships in many different jobs can be taught AND help Build the nation. Drag some of these moslems Off their Bloody Arses and send them out there along with many of the unemployed here in Australia under 30 years of age. Either they take part of dock their Centre Link payments. STOP being a Pussy Foot Government and not just think of yourselves like you all have been doing. You lot too can get off your fat arses and DO something for the future of Australia. That’s what we vote you in for…. but this election will be different. NOT One of those whom I meet and chat to online support the major parties.. We are going for the lesser Parties, Myself a Liberal Voter all my life will be changing direction away from Liberal and casting my vote else where… Why you may ask.. well Turnbull was not the prime minster I voted in last election – I and many others do NOT trust turnbull.. simple as that. Even though you seem to be a nice bloke you still are Liberal and wont be getting my vote – that is if I am able to vote for you.
  • commented 2016-06-08 20:54:08 +0930
    Cory , I f it such an important industry, could it be bought and run on a 50/50 basis by the SA state and Federal govts.————John
  • commented 2016-06-08 18:44:53 +0930
    Our Steel Industry can be saved and greatly expanded have been calling for the solution for over two decades but there has just been deaf ears in our Parliament and blank minds as they have not examined the options.
    We need to start with the Introduction of Bank Legislation not a Bullshit Royal Commission. We need Glass-Steagall Bank Separation this will stop the insane speculation instead OF real productivity , It will stop the Bail-In that will allow the Banks to steal Deposits and a large chunk of Australian Super, the Super Funds are already being milked by the Banks so the Money will be easy to steal then we need to Establish a national bank of public credit to replace the one that was destroyed and had its hands tied behind its backs by those in Parliament that were serving The City of London not the Australian people.
    The National Bank will finance large scale infrastructure that will rebuild our Industry as such an infrastructure plan it is not to increase our imports. For example build a High Speed Ring Rail Network that will require a lot of Steele.
    But we need to end Free Trade and other disgusting changes thrust upon us by the Keating Government. Since then the Australian Government trying to manage the economy is like trying to drive a conventional from the back seat. I can supply plenty of information that all this will work as it is not reinventing the wheel.
    But the people in our parliament stop debate on above as they Support Bail-In and are against Glass-Steagall. It’s time to put Australia first. But this not being shown on the blog will tell us where Cory stands any Minister keeps the truth about Bail-In quiet is because they support it like Turnbull & Shorten and the Senate is not a Rubber stamp for Turnbull or Shorten it is a house of review, and Senators should be doing what is best for Australia not what the part demands.
  • commented 2016-06-08 18:29:19 +0930
    I agree with many other of comments posted that the major problem with the steel works is the inefficient management who have negotiated unrealistic EBAs with the unions
  • commented 2016-06-08 17:21:16 +0930
    Personally I feel SA has been a basket case since Rann was in power. Labour has been in power for way too long & the Liberals are non existent. Its going to take a total clean out of all these self centered power hungry public servants for SA to become normal again & then that will take some years also. In the next few years I’m planning to leave this state as I have had enough. If only it was you Cory Bernardi running this state.
  • commented 2016-06-08 16:51:37 +0930
    When it comes to sorting out South Australia, it would take the likes of Essington Lewis to make any impression on the task at all. Crow eaters agonise over whether to put in a uranium beneficiation plant, or to retreat spent uranium – despite the fact that they are profitably exporting it. They have an interstate agreement not to capture any of the fresh water running into Lake Eyre. Critise Queensland when we capture river water at Cubbie Station. Are terrified over natural climate variations to the point where they prefer the most expensive electricity in Australia. Now they are facing the reality that a steel industry relies on the need for large quantities of domestic steel consumption to remain viable. This invariably involves continuing major government construction projects, supported by a steady private demand. In the absence of these prerequisites we are better off sticking to supplying the raw materials to those who do have such needs. Whyalla and SA needs to “reinvent” themselves, and quickly.
  • commented 2016-06-08 16:48:26 +0930
    The reason China has the monopoly on steel manufacturing is because the country is run by communists. The government there has regulated labor to such a level that internationally we cannot compete with the cost of manufacturing our own steel and expect to buy a car at the prices we want. Can you see this changing within the next 10 – 20 yrs? Can you see China becoming a democracy? And if its not China, India is right on its tail. They have the same disgraceful attitude to laborers. We have such a high standard of working environments and income in Australia because we value people as individuals no matter what their background or birthplace. And with that level of respect comes the high cost of labor. As gallant as the idea is, unless we have some sort of legislation which demands a greater than imports to home made ratios to steel manufacturing of goods then its never going to work. The end has to justify the means. WE have to buy our own steel and not China’s if we want to support this industry.
  • commented 2016-06-08 16:30:30 +0930
    We need at least one steel industry and one or two oil refineries operational in Australia at the minimum otherwise defence of our country will depend on other people.
  • commented 2016-06-08 16:20:16 +0930
    Dear Senator
    It saddens me to read of so much Australian industry going to the wall and unfortunately successive Governments haven’t seemed interested in preserving either the industry or the jobs. I heard one financial “expert” one day quote that manufacturing and agriculture are “yesterday’s economy”; we have to get on board the “new industries” of tourism and services. Froth and bubble in my opinion; even though they do good, they are not everlasting. Another thing that we do not do well is value adding to the enormous amount of primary product we have. With all of our wool, we sold the last machine for producing fine wool cloth and now the Italians and/or the Chinese produce the cloth from our wool and we buy it back. Senseless.
    There is a project about which I have read and which was on Landline recently and about which the Government doesn’t appear interested. It is Project Iron Boomerang. Details are here: http://www.eastwestlineparks.com.au/ . Essentially it provides an East – West rail link from the eastern coal fields in the Bowen Basin to the western iron ore mines in the Pilbara. All by a private company. It reminds me of the way the Americans opened up the West. The US Government sold the right of way and a swathe of land either side to the railroad companies who sold the land to settlers and built the railroad, the people followed and the rest is history.This “Iron Boomerang” railroad could possibly assist the Government’s proposed “opening up the North” in a big way.
    Regards
    Peter Snowdon
  • commented 2016-06-08 16:09:53 +0930
    One sympathises with the individual workers caught up in the evolution of industrialisation but the idea the Australian government should impose extra costs on the rest of the economy to subsidise a steelworks or company that has become uneconomic should be resisted. This story is playing out all over the western world (e.g. Port Talbot in South Wales) including previously here e.g. closing steelworks in Newcastle in NSW in 1999. There is a world oversupply of steel – I googled the current prices and the Industrial Metals Prices quoted (3/june/2016 per tonne) price of iron $48.2, price of steel $50 – difficult to make that work economically.
    I also sympathise with the local politicians being expected to “do something” but one assumes that the local management have tried very hard to make this work and they managed to lose $1.9 billion last year – is that the level of subsidy we are looking at. If this was a temporary turnaround situation, it might make sense but that isn’t the case.
    Perhaps Whyalla might look at how Newcastle has managed to weather this transition.
  • commented 2016-06-08 15:55:59 +0930
    Lazy compliant management with no skin in the game are no match for pushy organised Unions. This company EBA is paying unsustainable rates the likes of which were only seen in places like the Pilbarra in harsh conditions for temporary construction work.
    I blame shareholders for not ousting the directors and employees for not ousting Union reps.
    The chance is now for reality to set in and proper wages paid by sharp management, unions get out of the way and 60-70% of employees may get a job back. The biggest losers will be the shareholders and of course some of the employees.
    Read Grace Colliers Column on the subject in The Australian a couple of months ago.
    No time now for blame and victim hood. If everyone gets real we could have a steel industry if not we should not. One things for sure it will not prosper in the hands of subsidies and unions.
    Bad enough that Submarines are being asked to mandate Australian steel… Bound to be rorted if so done.
  • commented 2016-06-08 15:50:43 +0930
    For fear of seemingly supporting the idea of socialist industrial enterprises, I have to say, some industries have to be functional to support the greater good. If this requires some form of Govt support, well so be it. I would hope though that there is some innovative (don’t ask me how) way of doing this, so Tax money is not being risked; all the better. But it is necessary for us to support Whyalla. More broadly, far reaching Govt planning is necessary for long term viability of our outer regions. The SA Govt is responsible for this. A vision is necessary for the many tens of thousands living in rural SA, to provide a future for younger people willing to remain in a regional society worthy of supporting. Also, I am unsure that this Solar power industry at Pt Augusta was a done deal. The blog above from Cory seems to indicate a done deal? All politicians talk of job creation, but seemingly lacking is creativity and policy for rural SA.
  • commented 2016-06-08 15:42:38 +0930
    Didn’t know you were a socialist Cory! Human progress has always been driven by reducing the cost of production. It’s often disruptive – at one time there was a substantial industry producing whips for horse-drawn buggies, but it disappeared when the motor car appeared. Nothing lasts forever, and to try to make it so only creates distortion that ultimately is counterproductive. If cheaper steel can be imported we should most certainly do so and reap the benefit of others providing what we can’t do as efficiently. The key to a successful economy, and sustainable society, is to accept this sort of change and move onto to new things. Stop whinging, get up and go!
  • commented 2016-06-08 15:41:21 +0930
    Hi Cory
    The steel industry seems to be in the same boat as the car industry. Uncompetitive, due to greedy unions and lazy management.
    The Collins class subs fiasco was just a black hole of inefficiency that tax dollars were thrown into.
    I think for security reasons we should have a steel, shipbuilding and car industry sensibly subsidised, if necessary by taxpayers, but no open slather by unions and corporate yes men.
    Regards
    Neville Denning.
  • commented 2016-06-08 15:13:16 +0930
    Have a look at the interview Kerry Lonergan had with Shane Condon on Landline on 4 June 2016 and see someone who has vision for our country – the next step is to get rid of giving the banks the power to print money and have it reside in the government – NO NO I hear – I would like to be able to create fait money ( nconvertible paper money made legal tender by a government decree) but we have given this power to the banks. Why would you give this power to banks when they are being investigated by ASIC – like making the control of guns the domain of terrorists
  • commented 2016-06-08 14:23:49 +0930
    The single greatest cause of industry closing and re locating overseas is the wages of the employees. Union pressure over the years has made our manufacturing unviable, and the consequences can be seen throughout Australia. The only way to save any industry is to lower the cost of production. Lower the wages. Nothing else will work
  • commented 2016-06-08 14:12:26 +0930
    So look forward to rdg your posts. Why aren’t there more Cory,s out there.????
    We must be a nation that can and does produce most or everything we need.
    Ridiculous for it to be any other way. Our economy, growth, jobs and producing top quality goods is paramount to us being successful. ( and independent)
  • commented 2016-06-08 14:01:53 +0930
    Globalisation and cheap steel imports have caused the problems for Arrium. This situation has been exacerbated by the unions pressing for unsustainably high wages and condoned by management generally in sweetheart deals (history repeats with the steelworks at Port Kembla in the 60’s and 70’s). However Australia needs high quality steel for infrastructure projects around the country. I understand that Melbourne’s Metro rail problems are caused by cheap steel being used in the manufacture of the carriage wheels and the resulting loss of service for prolonged periods of time. Never happened when we used our own steel. Why are we not hearing more about Project Iron Boomerang, Cory, as depicted on Landline on 5/6/16? We should be shouting these infrastructure projects from the rooftops with the coming election. And another thing: why is it we never hear anything about high speed rail between Melbourne and Brisbane? It is economically viable and would contribute enormously to alleviating the chaos in our two major cities. That’s another major infrastructure project we should be having the conversation about! We need infrastructure projects to get this economy going again!
  • commented 2016-06-08 13:22:15 +0930
    In rides the politician on a white horse crying Hi Ho Silver away! Whilst poor peons assume the hat in hand submissive posture “please senior to save my village” so prevalent in 60’s westerns…there, are you happy? I have just outed my age.
    Whyalla should not and would not be in the position they are in had government not hamstrung Roxby Downs development to the point it became unprofitable.
    Where were you then Mr Bernardi? I get that you were an opposition senator when the State labor government kept calling for ever increasing EIS requirements incurring ever increasing costs but it was then we needed to hear your voice, it was then that the closest we got was the wipeout in Whyalla comment. You are our state senator why didn’t you do something about it then?
    What was hailed as our largest mining investment has left the town shackled with debt arising from its industrial development devised to support Roxby, 100’s of acres of industrial land with roads built and all of the infrastructure left unutilised.
    Desal plant and power plant not built, airport extensions stopped, dynamite factory, LNG loading dock, ore loading facilities, housing development and investment going backwards and what do we hear from labor? A childish tune sung out of key disclaiming the damage done.
    No Whyalla does not need saving, it does not need saviours on white steeds it needs politicians who have sufficient mental horsepower to see what everyone acknowledges as the bleeding obvious and get Roxby and other developments like that happening and happening now.
    So get on with it Mr Bernardi, I have confidence that you can, get on with doing and leave the white hat and spurs where they belong in our collective childhood.
  • commented 2016-06-08 13:18:34 +0930
    In Australian private industry there are two unsustainable costs that is driving ALL manufacturing and industry away: 1) the ridiculously high minimum wage (unpalatable for everyone to hear I am sure); and 2) the ridiculous complaince costs (OHS&W, licensing and red tape). We follow the European model where the ONLY industry that can survive is that which is heavily subsidized – ultimately an unviable option as we have seen there. The US model is the more sustainable one but even there look at California. This is why the services industries are more sustainable at present (lower compliance costs), but eventually they too will fall over; firstly as the compliance mafia in traditional industry migrates to services and imposes their regime there, and finally once the minimum wage hits a limit that is unwearable.
  • commented 2016-06-08 13:09:02 +0930
    It would help if cheap (and sometimes nasty) Chinese steel had an import tariff on it. ALL imported steel must be protected by anti dumping legislation.
    ALL Government infrastructure and other work MUST use Australian steel.
    Using steel made from our iron ore, shipped two ways across the ocean is only adding to the CO2 output by burning fossil fuels to do this. Keep it in our country, turn it into high quality Aussie steel, and severely restrict imports. Then we’ll have some manufacturing back in this once-great country of ours.
    David Spong