ABC Illawarra radio - the future of steel

17 September 2015

PETER RILEY:Stephen Jones, the federal Member for Throsby, joins us now. Good morning.

MEMBER FOR THROSBY, STEPHEN JONES:Good morning, good to be with you.


RILEY: You say that tariffs and subsidies are not sought by the company and they are not the answer, why not?

JONES: The problem with tariffs is that they have a number of reactions. First, inside the country they basically just pass the cost on from one part of the production chain to the other. So in the case of steel you have fabricators buying steel off BlueScope, their costs go up so it makes it much more difficult for them to compete internally. Their clients, the companies they are making the equipment for, they say - your stuff is too expensive, we will just go for the imports. It just kicks the can down the road, if you like. There are a lot of fabricators in the Illawarra who would be impacted by that. As far as subsidies go, they are a short term measure. There are arguments for that in some circumstances, but they are not sustainable in the long term. That is one of the areas where we are critical of importers for bringing in cut-price, subsidised steel. You can't argue on the one hand that we want to crack down on the dumping of subsidised steel into Australia and then start subsidising it ourselves. Yes, we should be stopping the dumping, yes we should be responding to subsidised, imported products but we should not be doing it ourselves.

RILEY: It's been said by many that one thing that would help is that the Federal Government and the NSW State Government should mandate the use of Australian-made steel for their projects. You say in your article that that is a useful idea but that it is no silver bullet and that the majority of the repair work, if the steel-making is to continue at Port Kembla, needs to be done by BlueScope itself. So what do they need to do?

JONES: They have got to be able to convince their bankers, their shareholders and their board that they have a viable steelmaking business going forward. Having an anchor client like the commonwealth government, state governments and local governments - that is important. But if you look at the total amount of steel that they are consuming in any one year, it isn't huge. Paul O'Malley from BlueScope reckons it could be as much as 300 or 400 thousand tonnes a year. Now that is a couple of months production and you can't build a profitable steel industry around a couple of months production. You have got to be able to sell your product throughout the year at a profit. That means ensuring that we have the best equipment, the most productive workforce and the best materials in the world going into our steel and producing high quality steel that people want to buy at a competitive price. O'Malley reckons he can do it, I hope he is right because I want to see us continue to make steel in this region for many years to come.

RILEY: Arthur Rorris the Secretary of the South Coast Labor Council was with us about fifteen minutes ago. He says that there are concerns around with many of the workers saying that all of the people who are talking about this - those who can make a difference here - are talking almost as though they are planning a funeral and a wake and that the demise of steelmaking is a fait accompli. How do you change that attitude around?

JONES: Well, we've got to think that we can do it. I've been saying for many months now, you start with an end-point that you want to continue to make steel in the Illawarra with a profitable business model and you work backwards from there and say - what have we got to do to make this happen? What are the changes that need to be put in place, not at any price, but what are the changes that need to be put in place to make that happen? We have got to continue to pay decent wages, to have decent health and safety standards and have decent environment standards, they are just givens. I think we can do it and should be able to do it. Look, when it comes to Port Kembla steelworks you have many people saying that it is an older, inefficient plant. But it actually sits in the middle of the pack when you look at the efficiency scales around the world. We are far from the best but we are certainly far from the worst as well; we are in the middle of the pack. As a relatively small market we consume about four million tonnes of steel a year, in China they produce about 800 million tonnes a year so we are a small market and an isolated one. We have to be efficient in what we are doing down here. I think we can do it and I also make this point that it is critical to the Illawarra. Yes we have new industries coming in, we've got the university, we've got the services sector and we've got tourism too. But manufacturing and engineering industries have to continue to be a part of the economic base of this region; because once you lose those skills and capacity, they are gone forever.

RILEY: Just very briefly Stephen Jones, if the power of positive thinking works and -

JONES: I'm not saying it is positive thinking, it is positive deeds as well. Government has a role to play, the local community has a role to play. The company, and this is where the big piece fits, the company has the major role to play.

RILEY: Alright so it is a good thing that Ian Macfarlane is coming to town to listen. He is making no promises and he is not bringing any money to hand out but he is at least willing to listen.

JONES: I welcome the fact that he has come here. There are some simple things that need to be put into place. I'll finish on this point, we need a plan for the steel industry but we also need a plan for the region. That includes looking after the people who have jobs now. I'm all for us having an economy that produces jobs in the future for our kids. But we have got to look after the workforce now as well.

RILEY: Alright good luck with the challenges ahead. Stephen Jones, the federal Member for Throsby.