ABC Radio Illawarra Steel industry

09 September 2015





SUBJECT: Illawarra steel industry.

MELINDA JAMES: We now have Stephen Jones on the line, good morning.

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

JAMES: Now were you surprised at this ultimatum? I mean, there was kind of a veiled threat there from BlueScope's CEO Paul O'Malley yesterday - we need to find $200 million in cuts, which will probably equate to 500 jobs within three months, or if we don't we will seriously look at closing the steelworks.

JONES: I don't think this is a time to look for scapegoats, nor do I think it is time for management, government or anyone to be pulling the wool over peoples' eyes. We know there is a difficult situation with the steel industry in this country and many other countries around the world. The problems are well known, over 800 million tonnes of steel gets produced in China every year and they are not going to be using it as much as they used to so it is going to hit the international market. So what do we do to respond? Many other countries around the world are putting in tough anti-dumping measures, including the US and in Europe. I say we should be doing the same thing, we should be toughening up our anti-dumping laws. But we also need to ensure that BlueScope in Port Kembla and our other steelmakers are productive, competitive industries on the global stage.

JAMES: What we can be sure of though, is that we are facing a few months of pretty heated discussion about conditions and wages at BlueScope steel.

JONES: I want to echo the points made by your previous caller; I've had lots of discussions with the union representatives and the workers at BlueScope. One thing I know almost to a person is that they are willing to make some sacrifices to ensure they hang on to their jobs, they have done it in the past and they are willing to do so into the future. What is required is a no nonsense negotiation, to sit down and work out where the end point is. We know that there are two scenarios and we know that one scenario is bad. There is no use sugar-coating it, a loss of up to 500 jobs is bad for the region. But the alternative is that you close the commodities side of the business. That means no more blast furnace, no more strip plant, all of that stuff means over 3,000 jobs gone. I think any right thinking person knows that we have got to do what we can to ensure that we continue to make steel, not only in this region, but in the country.

JAMES: This is no empty threat from BlueScope?

JONES: Look, I've had a look at their numbers and we've been in discussions with BlueScope and other industry representatives for three or four months now. We know that the situation is very, very tough. I'm by no means taking sides, I'm on the side of ensuring that we have a steel industry in the Illawarra. But the management of BlueScope are faced with almost four years in a row of losses and those losses have got to be paid for from somewhere, either their bankers or their shareholders. There comes a point when you can no longer convince your financiers that you can continue to pay for losses. So they have to turn it around, I know the workforce want to work with them. But it's got to be an honest negotiation and everything has got to be on the table.

JAMES: When we spoke to Wayne Phillips from the AWU just after Paul O'Malley had spoken to us - so he didn't have a lot of time to digest what he was being told granted - but he seemed to be saying that he is not going to sell his members up the river and he won't put up with any diminution of their conditions. He says that they are already working massive amounts of overtime because the workforce has been reduced to such an extent. I mean, what do you think we are going to see in terms of what workers will have to forego and what sorts of concessions workers will have to make? Do you think people will have to take pay cuts?

JONES: I'm not in the negotiations and I don't intend to assert myself into the middle of it. I know Wayne well, I know he'll do the right thing by the workers and their families; I'm confident of that. A lot of emphasis has been put on the jobs of people who are directly employed in the steelworks, but it is not just that. As O'Malley said yesterday, about half of the savings they are looking for are in their own directly employed workforce, the other half come from suppliers and better utilisation of their inputs. So it's not just the direct workers, there will be other impacts around the region. But I get back to my point, that if you start from the position that you want to be a region that continues to make steel and you want to be a country that continues to make steel, you have to figure out how you reach that end point. Now, that is not at any cost but I'm confident that the unions and all the other representatives are going to do the right thing by their workforce and by the industry.

JAMES: Just finally, one other thing Paul O'Malley seemed to be saying yesterday was that he wasn't that welcoming or encouraging of the unions' campaign to insist on at least a 50 per cent mandate of locally made steel in taxpayer funded projects. That didn't seem to be the course of action that he was encouraging for anyone seeking to support the steelworks. He was basically calling for things like tax cuts, cuts to payroll tax and that sort of assistance. We have already heard from the Premier that it doesn't seem to be something that he is considering seriously. What do you think about the unions' campaign, the progress of it and whether there is much point in continuing it?

JONES: I would prefer the approach that Labor took when we were in government that mandated big projects put in place an Australian Industry Participation Plan. That is well before all the tenders are let, they have a conversation with local suppliers and say this is how you can get a foot in the door and this is how you can get in the game. I've listened to what Paul O'Malley has had to say and other industry executives around the mandated steel requirement, it is basically a question of the maths. Governments purchase about one hundred thousand tonnes of steel per year in their direct purchasing. BlueScope produces a little over two point three or two point four million tonnes a year, so you can't build a profitable steel industry around government procurement alone. Yes it is relevant, yes I support it but that is not a silver bullet that is going to turn around the fortunes of BlueScope or any other steelmaker in the country.

JAMES: Okay, Stephen Jones thank you very much for talking to us this morning.

JONES: Thank you.