Daily Bulletin


The Conversation

  • Written by The Conversation Contributor

Fears abound in South Australia about the future of Arrium’s Whyalla based iron ore and steel manufacturing facilities, as the company goes into voluntary administration. In a united front the South Australian and federal governments are urging calm. The administrators say it is business as usual until a review of the company’s operations is completed, which may take up to two months.

An agonising period of uncertainty is about to unfold for Whyalla, all in the lead up to the federal election. Just how well this is handled by the Turnbull government will have a major bearing on the election outcome, at least in South Australia.

The stakes are high. With the highest mainland unemployment rate (7.7%) in the nation, the last thing South Australia needs is another major plant closure. The countdown is already on for the closure of General Motors Holden and much of its supply chain next year. This is expected to drive the statewide unemployment rate above 10% in the absence of major new investments. The possible closure of Arrium’s steel manufacturing and mining operations in Whyalla adds to these woes.

South Australia’s manufacturing sector suffered greatly from the high Australian dollar. When it broke through the 100 US cents barrier in 2011, the dollar acted like a wrecking ball through the nation’s mass manufacturing industry. The dramatic appreciation during the mining boom made our manufactured exports increasingly uncompetitive in global markets. This was on top of a more protracted problem of deindustrialisation in the sector over the last few decades where around 100,000 manufacturing jobs have been lost in Australia.

Arrium’s operations dominate Whyalla. The steelworks and mining operations employ around 3,000 people or about 25% of the total workforce. By my calculations, if both close, the flow-on impacts of up to 6,000 additional job losses would be devastating for the region. Unemployment in the steel town would rise sharply from 7.4% to be among the highest in the nation. The only force preventing that would be rapid depopulation.

Arrium, our last remaining steel manufacturer, is not the only steel producer in the world facing the threat of closure. One of the drivers of this in some jurisdictions has been the dumping of cheap steel by major competitors including China. The US was recently forced to introduce duties to curb this practice. Pressure on the Australian government to do the same, promoted the federal government to initiate andinquiry into dumping of steel in industry. The results of that inquiry are urgently needed now.

Behind the scenes frantic discussions are taking place between the federal and state governments to come up with a solution. They have to test various propositions with the voluntary administrators who in turn will be in perpetual discussions with the banks. Creditors need to be convinced that a viable plan for the operations is available. So to do the federal and state government if there is any prospect of a government financial contribution to restructuring the operations.

The state and federal governments could, for example, make a contribution to upgrading ageing blast furnaces. A national agreement between the federal and state governments to procure only Australian standard certified steel could be put in place to instil confidence in creditors.

While this is all unfolding in South Australia, it is emblematic of a wider problem facing Australian manufacturing in the 21st century, the need to rapidly modernise the sector and adopt national policy settings that recognise Australian manufacturers are not playing on level playing fields.

This necessitates industry plans and policy that recognise these realities as well as a national commitment to the centrality of knowledge intensive manufacturing in advanced economies. While some steps in this direction have recently been made we are regrettably not the driver of innovation that we need to be 2016.

Authors: The Conversation Contributor

Read more http://theconversation.com/arriums-whyalla-steelworks-another-threat-to-fragile-manufacturing-sector-57475

Writers Wanted

The Best Android tools and Utility Apps

arrow_forward

How to Find the Best SEO Services Company That Offers Guaranteed Results

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Ben Fordham, 2GB

BEN FORDHAM: Scott Morrison, good morning to you.    PRIME MINISTER: Good morning, Ben. How are you?    FORDHAM: Good. How many days have you got to go?   PRIME MINISTER: I've got another we...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Business News

How to Find the Best SEO Services Company That Offers Guaranteed Results

As a business owner, you have to be strategic about how you’ll be able to reach your target market. That is why entrepreneurs implement various marketing tactics to reach their goals. With today...

News Co - avatar News Co

Top Reasons Why Your Business Needs SEO

SEO is crucial for the ranking of a website. You may think that SEO offers greater searchability while it can do more than this. The most cost-effective tool for the survival of smalls businesse...

News Co - avatar News Co

Nisbets’ Collab with The Lobby is Showing the Sexy Side of Hospitality Supply

Hospitality supply services might not immediately make you think ‘sexy’. But when a barkeep in a moodily lit bar holds up the perfectly formed juniper gin balloon or catches the light in the edg...

The Atticism - avatar The Atticism



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion