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Arrium - Onesteel

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Tisme

Apathetic at Best
Joined
27 August 2014
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I fear when history looks back on timelines, the current govt will be labelled as one that oversaw the establishment of an industrial wasteland.

Of course the Libs will blame union wages and the need for a big stick union busting commission ... the classic Pontious Pilate response to anything that involves grubby blue collar workers who are not and never were welcome here.
 

Yes, the blame game again, totally ignoring the strategic need for a steel industry producing a quality product at a reasonable price.
 
The writing has been on the wall for steel producers everywhere, look out...there will be more to come as China dumps it excess on the world. Something like 200 million tons of excess supply...

China's Excess Capacity
Click to expand...

Blame the government though, after all they're here to take care of us after we mismanage our business's

Another thing needless to mention but scary to consider, is the poor quality of the steel....structural steel.
 
SirRumpole said:
Yes, the blame game again, totally ignoring the strategic need for a steel industry producing a quality product at a reasonable price.
Click to expand...
or the fact that the key element in price is energy which is very expensive AND dirty in Australia, thanks to both sides of politics.
I would also add that with a dollar still at 77c, good luck to compete in the international market so union or greedy bosses9or shareholders) are probably not to blame so strongly
 

The govt in the USA has a 45% tariff on imported steel that complicates its own industries.

There can be no denying that our geographical, demographical, etc situation means we must subsidise/prefer our industries if we are to be somewhat self reliant in a sea of poverty striven aggressors. Our visionaries back in the day knew this, we know this, the world knows this, even Chris Pyne knows this, Scott Morrison doesn't want to know this and somehow it's already Bill Shorten's fault .... how can any thinking person reasonably accept the ineptitude of our governance?


When the real money comes in from overseas to clean up, we will realise too late the weakness of our investment attitudes, the weakness of our leadership and the fallacy of free for all markets.

This collapse is going to domino effect right through the construction industry.... hold on tight
 
ARI is in administration because it made strategic mistakes.

It acquired iron ore mines at the top of the cycle ~2013, using debt. It even changed it's name from OneSteel to Arrium, to remind people that it was no longer just a steel business. (It also has a mining consumable business that appears to be self sustaining at the moment.)

ARI also died because it couldn't achieve the efficiency required operating in a high cost country like Australia. ARI has a half brother in BlueScope Steel, having both spun out of BHP. BSL is still alive and kicking, making steel.

No, the macro environment and other uncontrollable factors didn't help... but ARI didn't do enough to survive.

All the best to the employees... I hope there'd be fair resolution.
 

Everyone is to blame, the Governments just take the fall for it.

If you were running a business, that can't sell its product because it is too expensive, you would either outsource production, reduce costs, or close up.
Simple economics.

Australian workers enjoy arguable the best wages and conditions in the world, sooner or later something had to give.

Alcoa in W.A has just started exporting bauxite, how long before it closes its refineries?

https://au.news.yahoo.com/thewest/wa/a/31289599/alcoa-in-sw-bauxite-supply-deal/

Where this death spiral stops, is anyones guess, but blaming either side of politics won't stop it.

The unions and Government need to get together to come up with a way to address the situation. There is a need to make the most efficient use of the worlds resources, Australia will have to come up with a way to make it beneficial to value add here. I personally can't see how.

Workers don't want to live in the North where the gas is, so a petro-chemical industry can't be sourced there.
The Greenies don't want to process LNG on shore, so no value adding there.
We want, or should I say expect our lifestyle, but we aren't prepared to put ourselves out for it. What makes us so special?

The result will be a drop in living standards,IMO, how we can blame anyone except ourselves is beyond me.
 
It is inevitable there will be a Whyalla "WIPE OUT".



http://www.theaustralian.com.au/opi...t/news-story/fcbb164ecbb164cbb5e62a1f4c9b1102

It was probably the most cringe-worthy political moment of the past decade when Gillard government minister Craig Emerson took the tune of Skyhooks’s *Horror Movie and penned some new words in July 2012, with the first line: “No Whyalla wipe-out.”

He then sang a tuneless rendition in one of the courtyards of Parliament House. His purpose was to demonstrate that the carbon tax was no biggie. (Actually the exemption of the steel industry from the carbon tax was only going to last four years and would be impacting the industry now were the tax still in place.)

I’m wondering whether Emmo might consider a Nellie Melba, although* the words will have to be changed to “Whyalla wipe-out’’.

Here’s the thing about Arrium (formerly OneSteel), the company that runs the Whyalla steelworks, being put into administration — it was only a matter of time. Argu*ably, the steelworks should have been closed years ago; it is a long time since they returned the cost of the capital employed and the operation has been bleeding cash for some time.

Who should we blame for this state of affairs? The problems go back many years, but the recent turbulence in the global steel market has not helped matters. This market is seriously oversupplied (China is now a dominant producer) and prices are falling.

The entire British steel industry faces closure, including the massive Port Talbot steelworks in Wales. There have been large lay-offs in the US steel industry. Yet Arrium’s problems extend beyond the impact of this relatively recent adverse global trend.
 
Beautiful part of the country just ripe for a bit of Nuclear waste storage/reprocessing and the associated flow on 1V generation Industries. When's the date of release of the Nuc Fuel Cycle Royal Commisions findings ???
 
We export both coal and iron ore, the key ingredients to make steel.

If we can't profitably make steel in this country with such natural advantages in our favour then we've got very, very serious problems that go way beyond the impact of losing a steel works.

We'll never succeed at competing with China and only a fool would think that we will. At some point, the whole "free trade" thing will fall in a heap I expect. It's slowly but surely killing us.
 

The serious problem Arrium has is the high cost of electricity in South Australia coupled with wages for steel workers as high as $160,000 per year...This figure was quoted on Sky News tonight.

Lots of blame being laid on the company, state and federal governments and the banks....What are the unions prepared to do to save Arrium?...I don't hear the unions suggesting to its members, "Ha fellows, how about taking a cut in wages"?........No....it is all about the greedy unions....GIVE ME...GIVE ME....GIVE ME......I am sure if they were under the control of a socialist government, their wages would be cut to the bone.

If we can buy it cheaper overseas, why make it here?...That is what I was told by a Labor MP some years ago.

I am sure nobody would shop at a corner store for their weekend groceries and pay double the price if they could buy cheaper from a super market.
 
Costs in Australia are simply too high.
Cost to just employ someone.
Cost of insurance.
Cost of compliance.
Cost of electricity.
Cost of all the leech industries with their finger in the pie and associated government costs.

Add to that a bad cycle for your particular business and it's not going to end well.
 
Steel production is a great example of where Australian industry needs to become a niche manufacturer. Look at the difference between BSL and ARI. BSL is actually developing a globally recognised niche product with Colorbond, on the other hand, ARI has decided that the way forward is by being a small, high cost commodity steel producer. If you're interested in what a small, high cost niche manufacturer looks like take a look at Sweden. They're not sheltering their producers behind tariffs, they export 85% of their steel production, and import 80% of the steel used in Sweden, but they are global leaders in the products they produce.

In the commodity steel business there are smelters that can produce as much steel as the entire Australian industry, so why bother with it? It's a situation not to dissimilar to where CTX found itself a few years ago. CTX adjusted it's business model to focus on refining niche, premium fuels, and importing the rest. The SP says it all.

Here's a couple of slides on the Swedish steel industry that highlight what I'm saying...They've got less 0.5% of the global market and yet they are leaders in the niches that they operate in. To me that seems a no brainer for a country like Australia to follow.






http://www.met.kth.se/asialink/Curr...Swedish steel industry in english-Birgita.pdf
 
high quality ball bearings etc etc etc..but you need engineers, innovation, banks funding..
 

You have the wages journal of the workers at the coal face?

There are 400 workers in the mines out of the 9000 staff and it was those 400 who were asked to take a 10% pay cut back in early March.

Glassdoor show the hourly wage at onesteel of $26/hr for a machine operator and $23/hr for a mech eng intern. Business development manager $95k, marketing manager $140k.

March 2014:

 

What has Indiana and Shanghia got to do with Australia.?
 
noco said:
What has Indiana and Shanghia got to do with Australia.?
Click to expand...

It was by way of comparison. I should have included:


You'd have to index the figures to 2016 ~multiply by 1.12 so ~ $55k for worker = 55000/2000 = US$27.50/hr compared to Australia AU$26/hr
 
Tisme said:
It was by way of comparison. I should have included:



You'd have to index the figures to 2016 ~multiply by 1.12 so ~ $55k for worker = 55000/2000 = US$27.50/hr compared to Australia AU$26/hr
Click to expand...

I don't know where you derived your figures from but I would suggest you are way out from What I have learned....Can you quote a link or provide some statistics?......I think you are talking about some overseas steel mills.
 

Of course you are right, the unions have to play their part, but imo a condition of any government assistance to Arrium should be that the current management depart the scene without any bonuses and repay half their salaries over the last 5 years as their decisions got the company into trouble in the first place.
 
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