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BlueScope's multimillion-dollar cuts will have a big impact on the region's economy, says Illawarra Business Chamber chief executive Deborah Murphy.
On Monday, BlueScope chief executive Paul O'Malley announced the company was looking at two options.
Option A would see $200 million cut out of the business, including 500 jobs. If those savings could not be made, then option B would be chosen - the closure of the steelworks.
Ms Murphy said though option B would be devastating, option A would hit the region as well.
"If you think about it, it's taking $200 million out out the Illawarra economy," Ms Murphy said.
"But it's a survival approach and I think it's really good that BlueScope has made a commitment to try and continue raw steel production, and they've been open about under what terms they want to do that."
Ms Murphy said it was also good to hear from BlueScope after more than two months of silence to get "some clear, measurable milestones and a time frame".
Were the second option to come into play, Ms Murphy said the economic effect would not just be felt within the steelworks.
"There's no doubt if plan B was put in place, it'd be a major negative impact on the region," she said.
"Our members, especially, would feel quite a bit of that pain. They're already being impacted on directly because of the uncertainty from their own perspective. They have for some time been working with BlueScope to identify cost savings and how they can work smarter and better with BlueScope."
Now that BlueScope had explained what its options were, Ms Murphy said it was time for everyone in the region to pull together.
"All stakeholders now need to work collaboratively so that we don't get to plan B. That involves the government, who have been having constructive talks with the company, and also the unions.
"They're a critical player and we'd urge them to work constructively with BlueScope on truly saving our steelworks, and that means working with them on where the company is right now with these cost-saving initiatives," Ms Murphy said.
Australian governments need to work more closely with all sectors of the steel industry and not just the main players, according to an industry body.
The call from the Australian Steel Institute comes in the wake of BlueScope’s announcement it is looking to cut $200 million in costs, including 500 jobs across its Australian operations.
Institute CEO Tony Dixon said the focus should be on ways to benefit the entire industry, which he said included steel distributors, fabricators, shop detailers, paint shops and galvanisers, as well as professional engineering and design services.
‘‘It makes abundant sense to ensure that procurement engages locally from the very start of the supply chain so benefits can reach the spread of trades that contribute to robust supply,’’ Mr Dixon said.
‘‘The continuation of a strong and vital industry is best assured when government and industry work cooperatively as embracing established capability is in the national interest.
‘‘The best place to start would be by listening to the policy concerns of the steel sector and take an active interest in the steps it is taking to keep as competitive as possible.”
Mr Dixon said a system already in operation in Victoria should be introduced.
He said all major government projects in Victoria need to have an Industry Participation Plan (IPP), which allows for the stipulation of local content in each specific project.
‘‘That criteria should go beyond up-front price to include factors such as quality, whole of life costs, contribution to local employment and skills, contribution to taxation revenue and other benefits to the domestic economy,’’ Mr Dixon said.
The Property Council of Australia says the Illawarra economy is more mature and robust than in the past and still in a position for future growth, despite uncertainty over the steelworks’ future.
The Property Council’s Illawarra region director Peta Fitzgerald said while BlueScope had made no decisions in relation to its operations, it was important to remember the strength of the Illawarra’s economy lay in its diversity.
Ms Fitzgerald said the region today was vastly different to the Illawarra of the 1980s and the region’s reliance on a production-based economy and ‘‘blue-collar’’ occupations had drastically reduced.
She said during the last decade there had been major growth in employment in service-based sectors such as health and education and that growth was expected to continue.
Ms Fitzgerald said the Property Council had released some Greater Illawarra research that identified the five most important industry sectors for local jobs were health care and social assistance, retail, education and training, manufacturing, accommodation and food services.
‘‘Our economy has definitely transitioned since the 1980s and we are seeing the likes of the University of Wollongong, IRT, the port of Port Kembla and major property companies becoming increasingly important in creating local jobs in the Illawarra,’’ Ms Fitzgerald said.
‘‘While we are seeing a decline in the manufacturing sector we can expect to see increased industrial activity linked to Port Kembla and a growing transport and logistics sector. Construction and related jobs are also set to rise off the back of a strong property investment market. We are also seeing skills shortages in building and construction, and motor and electrical trades so there is a definite opportunity for people to transition from declining sectors into key growth areas for the Illawarra.”