The Whyalla steel works must be saved, at any cost

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Originally Posted by Pickles2

Lets be honest with each other people, even if we don't agree with each other.
Lets not just talk about steel, because the issue isn't confined to steel, Arium is just the latest in a long line, going back many years, before Mitsubihi folded etc, and people said the same then, and before that there was Sidchrome,..how long ago was that,....still going of course, still making a good product, but not in Aus?....like I said, arium is no different to any of the companies that have folded or gone overseas,..why?....Because they are uncompetitive in Australia. In many cases, there was nothing wrong with the product, ie Sidchrome, but they couldn't make it in australia & be competitive.
Its the same with all of 'em, the cost of making stuff here is simply too much.
Aluminium, oil refineries, etc etc, all gone,....why is it,..because our product is too dear,..there is cheaper stuff about, just as good. I don't like it. Look at the clothes you wear, Don't know about you guys, but most of mine comes from China or Indonesia,...why is that?..We used to have a good textile industry here, where did that go, & why?
Like I said it's happened, & it'll keep happening. We have simply priced ourselves out of the market, and people that's why it's happened, buyers did not want to pay the cost of Aussie made goods,....if they had've, those goods/factories would still be here.
Pickles.

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You would do well to actually read the articles on the subject. The situation is not as simple and clear cut as you put. It is a simplistic view of a complicated problem, but I can see where it comes from, it's an understandable view. Throwing our hands in the air, and crying " the sky is falling" , is not the way to move forward. More than ever, Australia needs people with vision, and confidence, supported by Government , to focus on new industries, such as renewable energy, and to do what is necessary to modernise existing industry to allow them to be more competitive. We need less people like big Clive, and more ethical and honest entrepreneurs , whose motivation is not greed. It's funny, I've read where high workers wages is the problem, but not once has a manager taken a major pay cut. And, while we see CEO's take home millions of dollars [ Quantas, Aus. Post, Westpac,for example, ] to expect workers to work for the wages of Third World countries is laughable. There is a solution, but it means we all have to work together, with a common purpose. Good luck with that. Cheers.

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Originally Posted by Eevo

and over 10 years, how much will it take to prop up the business?

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Let's see, their looking for about $60 million in savings inside the plant a year, so a $600 million cost to " prop up " a business:confused: that put $5000million (5billion ) in your pocket directly over the same time .
I'm ignoring the welfare bill of over $1 billion if you shut the company, are you?

Ean, your talking in cost per unit for labour, so in your case it's similar to what happened to bonds and yakka who moved all production offshore as 30-50% labour cost per unit meant they could charge the same price but make higher profits. ;)
Cost per unit for cars and ,back on topic , STEEL, are below 10% depending upon the level of processing. Bsl report was below 5% per ton to slab stage.
This means if a foreign govt gives its exports a 5-10% bonus or incentive then both the labour and transport is free.

We are going to pay dearly in the future for importing poor quality. Across the harbour a new grain terminal by qube imported steel as "cheaper" now about 3 months after finish they have to spend 3 times the difference in repairs as all the bolts and numerous other parts are not to correct spec. Do a google on win stadium awning, imported structure that was new but snapped it's mounts in a mild breeze and had to be repaired. I talk to local miners whose companies have bought chutes etc where the wear plates are supposed to be say 30mm thick for wear and repair, the cheap import is actually 10+ layers of cheap strip/ thin plate welded together which means it's buggered much quicker and harder or not worthwhile to repair. I could name more structures but :censored: it

If someone had $200m and they put that in something that returned $1200m in a couple of years, what would it be called?

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Originally Posted by frantic

Let's see, their looking for about $60 million in savings inside the plant a year, so a $600 million cost to " prop up " a business:confused: that put $5000million (5billion ) in your pocket directly over the same time .
I'm ignoring the welfare bill of over $1 billion if you shut the company, are you?

Ean, your talking in cost per unit for labour, so in your case it's similar to what happened to bonds and yakka who moved all production offshore as 30-50% labour cost per unit meant they could charge the same price but make higher profits. ;)
Cost per unit for cars and ,back on topic , STEEL, are below 10% depending upon the level of processing. Bsl report was below 5% per ton to slab stage.
This means if a foreign govt gives its exports a 5-10% bonus or incentive then both the labour and transport is free.

We are going to pay dearly in the future for importing poor quality. Across the harbour a new grain terminal by qube imported steel as "cheaper" now about 3 months after finish they have to spend 3 times the difference in repairs as all the bolts and numerous other parts are not to correct spec. Do a google on win stadium awning, imported structure that was new but snapped it's mounts in a mild breeze and had to be repaired. I talk to local miners whose companies have bought chutes etc where the wear plates are supposed to be say 30mm thick for wear and repair, the cheap import is actually 10+ layers of cheap strip/ thin plate welded together which means it's buggered much quicker and harder or not worthwhile to repair. I could name more structures but :censored: it

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I have said all along that this issue needs government support , I just don't believe you have an open cheque book approach.
I was responding to your comment about cars being built in Thailand compared to else where, in Thailand the labour cost of assembly is maybe as low as 5% in countries like Australia it could be 10% so if you are assbling 1 million cars it's a huge expense even tho it's only 5%.

If the figures are as you quote on steel then why is it that with no transport costs due to them having their own mines can't we compete against imports? It seems looking from an outsider that the cost to run the day to day operation is to high. That is where my point on labour costs and workers demands Vs low productivity come in.
The fact that they have voluntarily called in receivers tells me the board of that company feel they are not able enough to trade out of trouble under the way they know how to do business. They need someone that looks at things differently to see if there are answers.

Just my view of course

Cheers Ean

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Originally Posted by frantic

Let's see, their looking for about $60 million in savings inside the plant a year, so a $600 million cost to " prop up " a business:confused: that put $5000million (5billion ) in your pocket directly over the same time .
I'm ignoring the welfare bill of over $1 billion if you shut the company, are you?

Ean, your talking in cost per unit for labour, so in your case it's similar to what happened to bonds and yakka who moved all production offshore as 30-50% labour cost per unit meant they could charge the same price but make higher profits. ;)
Cost per unit for cars and ,back on topic , STEEL, are below 10% depending upon the level of processing. Bsl report was below 5% per ton to slab stage.
This means if a foreign govt gives its exports a 5-10% bonus or incentive then both the labour and transport is free.

We are going to pay dearly in the future for importing poor quality. Across the harbour a new grain terminal by qube imported steel as "cheaper" now about 3 months after finish they have to spend 3 times the difference in repairs as all the bolts and numerous other parts are not to correct spec. Do a google on win stadium awning, imported structure that was new but snapped it's mounts in a mild breeze and had to be repaired. I talk to local miners whose companies have bought chutes etc where the wear plates are supposed to be say 30mm thick for wear and repair, the cheap import is actually 10+ layers of cheap strip/ thin plate welded together which means it's buggered much quicker and harder or not worthwhile to repair. I could name more structures but :censored: it

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cost a lot more than 60mil. 60mil will get you though the first month.
should we limit handouts to just the steel industry?
why not every industry?
cause its not affordable.


i dont think anyone is disagreeing that aust steel is better quality. point is noone is buying it. it could be the best steel in the world, if noones buying it....

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Originally Posted by Eevo

cost a lot more than 60mil. 60mil will get you though the first month.

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funny you carry on like this over steel and are all for mining who are given way bigger chucks of money than this year in year out.

i'll ask the question again

if you put $200m into something and you get $1200m back over a couple of years, what would you call it?

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Originally Posted by Ean Austral

I have said all along that this issue needs government support , I just don't believe you have an open cheque book approach.
I was responding to your comment about cars being built in Thailand compared to else where, in Thailand the labour cost of assembly is maybe as low as 5% in countries like Australia it could be 10% so if you are assbling 1 million cars it's a huge expense even tho it's only 5%.

If the figures are as you quote on steel then why is it that with no transport costs due to them having their own mines can't we compete against imports? It seems looking from an outsider that the cost to run the day to day operation is to high. That is where my point on labour costs and workers demands Vs low productivity come in.
The fact that they have voluntarily called in receivers tells me the board of that company feel they are not able enough to trade out of trouble under the way they know how to do business. They need someone that looks at things differently to see if there are answers.

Just my view of course

Cheers Ean

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Ill lay it out for you.
China over the last decade has gone from making about 200million tons of steel to the global number one at over 600million tons, total aussie production from both makers is about 5-6 million tons or 1%.
China for the last 5-7 years has been using less steel so they are mass exporting it to the point that during the high dollar / ore/coal prices it was cheaper to buy chinese steel than the raw materials to make it. How long would you stay open if a rival was selling a finished product cheaper than you could buy the raw materials.????
Now to start up a steelworks is not a simple thing, coke ovens , slab/steel casters, blast furnace's, sinter plants, rolling mills, materials handling, dispatch etc are all long term investments. A blast furnace usually has a campaign life of 20+years, so once blown in it never stops for 20 years. A down day is when the wind is stopped but the furnace is still 1/2-3/4 full, still red hot and still burning coke and melting ore.Now the chinese have lots of steel plants but the ideal size is around the 3-5million tons production point as otherwise the raw materials and liquid pig iron handling becomes to hard. Have a look at the planned steel plant at Gladstone, again 2 furnaces, making about 5 to 5.5 million tons a year.(what we used to do)
Up until 2011 we where exporting about 2.5-3million tons of steel slab and coil from port Kembla as we used to run 2 furnaces making over 5 million tons a year. But with the chinese dumping slab/coil globally BSL lost over a billion, result was we halved our workforce and shut one furnace which would now need a serious amount of money to restart.
All other markets except us and the U.K have put up serious limits and tariffs to stop their home manufacturing bases being decimated. Again , its being all over the news we froze our pay, in reality took a heavy cut as other items where cut, and signed an agreement for 3 years 0 pay rise to keep the place open.
Now the money BSL lost in 2011 would have paid the ENTIRE workforce in port Kembla for several years!!


As a result of OTHER countries protecting their manufacturing bases China has been forced to cut production by about 100million tons , or 20x what we make here!


Now as to productivity, back when we where all one Big Happy Party;)
Port Kembla was in the lowest cost per ton 10% globally with Whyalla in the lowest 20%, this was before govt incentives and bonuses where factored in.

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Originally Posted by Eevo

cost a lot more than 60mil. 60mil will get you though the first month.
should we limit handouts to just the steel industry?
why not every industry?
cause its not affordable.


i dont think anyone is disagreeing that aust steel is better quality. point is noone is buying it. it could be the best steel in the world, if noones buying it....

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No , its being bought, just not buying locally. If the govt bought locally, both BSL and Arrium would be ok, unfortunately their not.
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Found the link to back my numbers.
Buying Australian makes sense


you still haven't answered the question .
Would you rather spend $60 million and get $500million back or "save it today" but tomorrow have to spend $100million and have a $500million hole in your income?

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Originally Posted by frantic

Ill lay it out for you.
China over the last decade has gone from making about 200million tons of steel to the global number one at over 600million tons, total aussie production from both makers is about 5-6 million tons or 1%.
China for the last 5-7 years has been using less steel so they are mass exporting it to the point that during the high dollar / ore/coal prices it was cheaper to buy chinese steel than the raw materials to make it. How long would you stay open if a rival was selling a finished product cheaper than you could buy the raw materials.????
Now to start up a steelworks is not a simple thing, coke ovens , slab/steel casters, blast furnace's, sinter plants, rolling mills, materials handling, dispatch etc are all long term investments. A blast furnace usually has a campaign life of 20+years, so once blown in it never stops for 20 years. A down day is when the wind is stopped but the furnace is still 1/2-3/4 full, still red hot and still burning coke and melting ore.Now the chinese have lots of steel plants but the ideal size is around the 3-5million tons production point as otherwise the raw materials and liquid pig iron handling becomes to hard. Have a look at the planned steel plant at Gladstone, again 2 furnaces, making about 5 to 5.5 million tons a year.(what we used to do)
Up until 2011 we where exporting about 2.5-3million tons of steel slab and coil from port Kembla as we used to run 2 furnaces making over 5 million tons a year. But with the chinese dumping slab/coil globally BSL lost over a billion, result was we halved our workforce and shut one furnace which would now need a serious amount of money to restart.
All other markets except us and the U.K have put up serious limits and tariffs to stop their home manufacturing bases being decimated. Again , its being all over the news we froze our pay, in reality took a heavy cut as other items where cut, and signed an agreement for 3 years 0 pay rise to keep the place open.
Now the money BSL lost in 2011 would have paid the ENTIRE workforce in port Kembla for several years!!


As a result of OTHER countries protecting their manufacturing bases China has been forced to cut production by about 100million tons , or 20x what we make here!


Now as to productivity, back when we where all one Big Happy Party;)
Port Kembla was in the lowest cost per ton 10% globally with Whyalla in the lowest 20%, this was before govt incentives and bonuses where factored in.

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And here lies the problem.. Why would the average consumer buy a product for double the price when they can buy what they deem to be the same product for less. Some people would say that is just business, and if they can afford to dump it on the market and absorb the losses then that's their choice.


This forum is full of threads about buying parts from O/S suppliers compared to local , this is the same thing only on a far bigger scale.


The only answer to this problem is before any $$ are pumped into saving this company the law on cheap imported products needs to change, but that wont happen so why get the government to pump 1,2,3 billion $$ in to save the company when they are going to be faced with the exact same problem a few years down the track.


I understand the consequences of not doing something and letting a whole town crumble, and certainly don't want to see that happen.


I hope there is a way found sooner rather than later to save them


Cheers Ean

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Originally Posted by incisor

if you put $200m into something and you get $1200m back over a couple of years, what would you call it?

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A shrewd investment.
The trouble is, when the government put our money into an investment, they don't get it back.
'I'm not a cowboy': Phoenix Institute investor maintains private college did nothing wrong - Background Briefing - ABC Radio National (Australian Broadcasting Corporation)

It's sad to see Arrium is suffering.
PM - Arrium administrators hold crisis meetings as politics around steel heat up 08/04/2016

But this is not the governments fault. It is the fault of "we the people". Our constant drive for the cheapest at the expense of quality.
Circuit breakers, cladding, electrical cables, and now:
Warnings people could be die because of dangerous imported steel - ABC News (Australian Broadcasting Corporation)

A phrase often said "not complying with Australian Standards".

In my industry, we comply with these standards. We have to.
But the consumer buys from our competitor who imports product that does not comply.

In short, it's our fault.