Australian Projects Should use Australian Steel 2

Wednesday, April 13th, 2016
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The NSW government is being urged to ensure Australian steel is used in all of the state’s construction projects amid the Arrium crisis.

The troubled miner and steelmaker went into voluntary administration on Thursday, putting up to 7000 jobs at risk – including 2800 in NSW.

“The potential collapse of steelmaking in Whyalla shows why NSW parliament can’t delay and must immediately legislate for local steel procurement,” Greens MP David Shoebridge said.

Mr Shoebridge said a recent Greens bill that placed a mandate on government infrastructure projects to use locally manufactured steel would secure the future of BlueScope Steel’s Port Kembla steelworks in the NSW Illawarra region.

“We want to bring the bill on for a vote in May when parliament returns,” he said.

“The NSW parliament has an opportunity to lead the way, and an obligation to adopt this as a template for procurement bills around the country to protect our steel industry.”

Mr Shoebridge criticised the government for using “steel imported from Spain” for major infrastructure projects such as the CBD and South East light rail developments.

“The cost of saving a few dollars by buying steel dumped on the Australian market by international companies is being paid by workers, their families and the communities who will all suffer if the domestic industry is allowed to fail,” he said.

BlueScope Steel’s 4500 workers and thousands of others in the Illawarra won a reprieve last year after the state government gave the troubled steelmaker $60 million in payroll tax relief.

Port Kembla workers also agreed to 500 job cuts, wage freezes, and workplace restructuring to help save the plant.

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  1. Barry Smith

    Subject to the obvious requirement not to breach free trade agreements, this is a sensible idea.

    Whilst it is important as a general matter to avoid protectionist measures, there would be nothing wrong with having governments alter procurement policy in such a way that the wider benefits of using locally produced steel and maintaining a viable domestic steel industry are taken into account. These include not just the economic activity generated by the industry itself, but also the strategic importance associated with avoiding reliance upon overseas manufacturers such as China for a material which is so critical to sectors such as defence and the built environment.

    When talking of avoiding protection, it must also be remembered that China offloaded a net of more than 108 million tonnes of steel onto world markets in 2014 – much of which was no doubt subsidised.

  2. David Chandler

    Sourceable published a more expansive discussion on this subject recently. The reality is that like so many of construction inputs these days Australian consumption is minor in the global scheme of things. For steel I understand less than 3%. It is hard to maintain a competitive, innovative industry based on this minor role in the global scheme of things. Alas the steel industry is a product of its own making. An unsustainable industrial culture and a rotation of managers that were more rentals than proprietors. All on a gravy train that made them uncompetitive and expensive. Irrespective of China steel's role in this we cannot have it both ways. We live for now exporting iron ore and coal. We had better use that time to work out what we will be good at in a global construction market. This will not play out on our home shores. And we should not be using tax payers money to create a false new dawn for an industry whose boat has already sailed. We still have some world class light steel industries and roll form. These are worth investing in, but they will require those businesses to understand that they must play a bigger hand in customers getting a better deal. The use of limited material warranties voided by the breaching of vendor specifications or non-compliant installations is not sustainable. The customer value proposition needs to be calibrated. Don't think that these shortcomings are not being resolved elsewhere, just like in every other industry that has modernised. Imagine a Toyota customer ringing up their dealer to complain about their tyres falling off and being told to ring Dunlop, or a part in a piece of life saving medical equipment failing in surgery and Phillips telling the family to ring Samsung?