Thread: The Whyalla steel works must be saved, at any cost

It's madness. And it all starts from the top.



When life itself seems lunatic, who knows where madness lies? Perhaps to be too practical is madness. To surrender dreams ? this may be madness. Too much sanity may be madness , and maddest of all: to see life as it is, and not as it should be!

― Miguel de Cervantes Saavedra, Don Quixote

Somebody mentioned low interest rate environment as a good thing for the economy and if the domestic steel companies can't make money in this low cost of money era.... but is cheap money a good thing? Yes and No. No if you have money on term deposit earning interest! Yes if you have an overdraft - if the bank borrowing rate is lower..

IMHO low cost money is a result of low demand for money. Currently the "unemployment rate" for international money is sky high. How many large cost projects do you see around the place? I see a lot being "shelved", not going ahead. A typical large company account would be telling the board of directors "We can get the loan cheap but the number of customers we are looking for to make a profit/to be viable, are not to be found, "until things pick up". Thats the problem.

Business confidence (and the optimism of the merchant banks who run the project feasibility study before handing over the loan) has taken hit after hit. The closing or downsizing of so many large domestic factories and mines (who are or were the clients of the so called service economy, eg., mining conveyer belt maintenance) has hit confidence for six. The freight and semi trailer service industry can also give you the hard facts on that aspect of the economy. (Cummins USA, have had three bad years in a row and are not in a good way as well).

As for Whyalla... I lived in Newcastle for 20 years of more and saw similar declines there. First the floating dock. Bradmill. Osram. Loco and Ship engineering. Various mines. The smelter. All the flow on effects.

Are we all following down the path of Detroit? The pessimist would say yes.

The optimist would look around for opportunity. Whats on the horizon? The trend is robotics. But thats all in asia and silicon valley. Or is it?

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I don't think it's "madness" at all, it is REALITY.
There have been many companies "go down" in this country, over the last twenty years & longer,.. that is a fact, we all know that. Arium is another one, and it won't be the last, unfortunately.
And so, some say, the Govt should assist,...all of these companies?...over the last twenty years or so that this has been happening? How does that work, where do the dollars come from?
The simple fact is that these industries are UNCOMPETITIVE,..We cannot compete, because maybe, just maybe, we have priced ourselves out of the market? Maybe our COSTS are too high?....Does anyone think that this is possible.
We have the best democratic living "conditions" anywhere in our part of the World"....No doubt about that, but if these "conditions" equate to higher costs/uncompetitive industries relative to our neighbours/competitors, what is the answer?.....I don't know, but I do know that I believe that this country is in a lot of trouble, and I also know, that many many Aussies, DON'T WANT TO KNOW,..."She'll Be Right Mate". Well I'm here to say, "She Won't Be" IMHO.
Pickles.

Originally Posted by Pickles2

G'Day Frantic. Do I want Arium to stay operational?...Of course I do.
But it's been in the Press today, that this has been coming over a number of years, bad management & unprofitable practises, and now affected by a Worldwide drop in steel prices.
There has been an attempt to refinance recently, BUT WITHOUT EVEN TALKING TO THE BANKS!
I'm not really a "numbers man"as you say, but it's been the same with Ford, Holden, Aluminium plants, etc etc, we could go on & on, but the Govt just cannot support all of these industries. I mean everytime something like this happens, some say, "The Govt should support it",... but it simply can't, ....if our industries cannot support themselves, well they are not going to survive,...I think that applies to any company.
Just wait until you see the results from the big banks in a month or so?
I think You & I have discussed before, & I've mentioned, "Unsustainable"?....maybe that is coming home to roost, & it ain't just industry,..it's a lot of things. People want more & more, but no-one wants to pay more, & no-one wants to pay more tax.
Things are not looking good in this Country,...anywhere, IMHO..
Pickles.

See this is the thing pickles , our car industry was and still is sustainable, just not allowed to be competitive and nowhere near "a level playing field ". A vast majority of any euro model is sold in far smaller numbers in their home market than any of our remaining 3 manufacturers cars. They only achieve the required volume via exports. Ditto all the Utes we buy, but here's the other MAJOR DIFFERENCE, the EU and USA give through direct and indirect help about 2x the amount your complaining about. Thailand has a 7year ZERO TAX deal to all manufacturers resulting in massive expansion and skilled employment and training. But we've lost that industry.
One steel have their own ore mine, basically at their door and between them and Bsl produce about enough to cover the local market. Because of imports both are forced to loss making exports.

what costs have increased at a much higher rate than others over the last few years.. ?

Originally Posted by Pickles2

I don't think it's "madness" at all, it is REALITY.
There have been many companies "go down" in this country, over the last twenty years & longer,.. that is a fact, we all know that. Arium is another one, and it won't be the last, unfortunately.
And so, some say, the Govt should assist,...all of these companies?...over the last twenty years or so that this has been happening? How does that work, where do the dollars come from?
The simple fact is that these industries are UNCOMPETITIVE,..We cannot compete, because maybe, just maybe, we have priced ourselves out of the market? Maybe our COSTS are too high?....Does anyone think that this is possible.
We have the best democratic living "conditions" anywhere in our part of the World"....No doubt about that, but if these "conditions" equate to higher costs/uncompetitive industries relative to our neighbours/competitors, what is the answer?.....I don't know, but I do know that I believe that this country is in a lot of trouble, and I also know, that many many Aussies, DON'T WANT TO KNOW,..."She'll Be Right Mate". Well I'm here to say, "She Won't Be" IMHO.
Pickles.

Originally Posted by frantic

See this is the thing pickles , our car industry was and still is sustainable, just not allowed to be competitive and nowhere near "a level playing field ". A vast majority of any euro model is sold in far smaller numbers in their home market than any of our remaining 3 manufacturers cars. They only achieve the required volume via exports. Ditto all the Utes we buy, but here's the other MAJOR DIFFERENCE, the EU and USA give through direct and indirect help about 2x the amount your complaining about. Thailand has a 7year ZERO TAX deal to all manufacturers resulting in massive expansion and skilled employment and training. But we've lost that industry.
One steel have their own ore mine, basically at their door and between them and Bsl produce about enough to cover the local market. Because of imports both are forced to loss making exports.

Why if that is the case was the car industry continually wanting government subsides if it was sustainable ? I am not being argumentive, but I have never read anything that would suggest anything like that statement. It seemed to me that when the government said no more they all said they are unsustainable and left.


Cheers Ean

"EU & USA",...MASSIVELY bigger economies & population than us, (Economies Of Scale?). We can't "subsidise" anything, because we ain't got the dollars....Our economy simply isn't big enough.....I say our economy is "stretched to the limit"......I don't like to say it, but I reckon it is, in fact, thinking about it, actually it's worse than that, it's overstretched.
Just have a look at the budget, ..Aussie is spending more than it earns, every day. The dollars just ain't there, they just aren't.
Frantic, you & I have spoken before, we've even agreed on a couple of things. Pumping money in is not the answer,...if we can't produce a product that is competitive to the world market relative to other producers, pumping money in ain't gonna work, ya're just throwing good money after bad.
What is the answer now, IN REALITY?....I don't know.
Regards, Pickles.

Originally Posted by Pickles2

"EU & USA",...MASSIVELY bigger economies & population than us, (Economies Of Scale?). We can't "subsidise" anything, because we ain't got the dollars....Our economy simply isn't big enough.....I say our economy is "stretched to the limit"......I don't like to say it, but I reckon it is, in fact, thinking about it, actually it's worse than that, it's overstretched.
Just have a look at the budget, ..Aussie is spending more than it earns, every day. The dollars just ain't there, they just aren't.
Frantic, you & I have spoken before, we've even agreed on a couple of things. What is the answer now, IN REALITY?....I don't know.
Regards, Pickles.

Sadly we live it a country that cant accept the user pays system. Sooner or later things are going to have to give 1 way or the other.


Cheers Ean