New Zealand Steel’s blue collar workforce has agreed to forego annual bonus payments during unprofitable years to allow the Auckland-based unit of ASX-listed Bluescope Steel a fighting chance as it seeks $A50 million in annual savings.
With the workforce also taking just a one per cent pay increase over two years it was "a very good outcome" from a collaborative process, NZ Steel chief executive Andrew Garey told BusinessDesk.
The new contract wasn't due until next May and the early resolution recognised that "the business was facing a pretty dire scenario".
Bluescope announced in August that earnings before interest and tax from New Zealand operations sank a loss of $A30.3m in the year to June 30, from a $A73.6m profit the previous year, and that the company was seeking "game-changing" restructuring in both its Australian and New Zealand operations to combat the impact of low global steel prices.
The Engineering, Printing and Manufacturing Union announced last week that it had reached a new employment contract that would "allow the company to focus on becoming sustainable and resilient for the future, protecting jobs and the steel-making industry in New Zealand".
The two year deal "gives the company certainty about its costs and ensures good job security for the workers," EPMU organiser Joe Gallagher said.
"It also helps NZ Steel achieve its goal of $A50 million in sustainable savings."
The company is still seeking to cut as many as 100 jobs in both its blue and white collar workforces, which operate the Glenbrook steel mill, the Pacific Steel operation, bought from Fletcher Building last year, and ironsands exports.
It is also renegotiating arrangements with suppliers and making improvements to its industrial processes to achieve efficiencies.
The company was targeting up to $A25m in savings from workforce changes, with the new collective agreement delivering around half that and further restructuring anticipated to deliver the other half, said Mr Garey.