Reports of BlueScope’s demise may have been greatly exaggerated, but the manufacturing giant has confirmed it needs to save about $130 million a year with a ‘‘game-changing approach’’ to keep Port Kembla steel operations viable.
Reports emerged on Wednesday that BlueScope planned to cease steel manufacturing in the Illawarra by 2017, but both the company and the Australian Workers’ Union (AWU) were quick to deny them, clarifying the company was engaging in large-scale cost-cutting to reduce the cost of steelmaking by at least $50 per tonne.
AWU branch secretary Wayne Phillips said up to 1000 jobs may be directly affected.
BlueScope corporate affairs manager Michael Reay said no decision had been made on where proposed savings were to be found, but admitted the company was looking at options including importing steel rather than manufacturing at Port Kembla.
“We’ve got to be competitive. We’ve got to do some work, and have plans over the year to make that happen, but there are no announcements coming from us in the short term,” Mr Reay said.
He confirmed the $50 per tonne saving was a target, and said the company had projects in place to make that happen. He said $50 per tonne represented around 10 per cent of the cost of making steel, and with BlueScope producing about 2.6 million tonnes of steel a year, equalled around $130 million in proposed savings.
“If there are cost savings to be made, obviously labour will be one aspect of that, but it’s not the only cost we have,” Mr Reay said.
He said 80 projects were earmarked for review.
The company later released a statement to the Australian Stock Exchange, stating ‘‘no such decision’’ had been made on closing Illawarra operations.
‘‘Our costs of manufacturing steel are too high and we are seeking a game-changing approach that will significantly reduce costs,’’ the statement read.
BlueScope employees are in the midst of enterprise bargaining with management. Mr Phillips said the reports of closure had ‘‘scared the hell out of a lot of workers’’ and claimed the company would use the opportunity to scale back employee entitlements like sick leave.
‘‘They say they’re not in crisis mode, but they’re very worried. They have to save a lot of money, otherwise they’ll look at other ways to get steel, like importing rather than manufacturing on site,’’ he said.
‘‘If they can’t do that, the option might be to shut down operations.’’
Mr Phillips said the union planned to lobby government for assistance to keep the industry afloat, and said he would be open to working with BlueScope to ensure jobs stayed in the Illawarra.
He said ceasing steel manufacturing would directly claim up to 1000 jobs, as well as many thousands more contractors, suppliers, and people indirectly reliant on the steelworks including small businesses and caterers.
‘‘It would devastate this region. It would kill off the Illawarra. All due respect to other industries, but the Illawarra would not recover,’’ he said.
BlueScope shares rose 3.3 per cent on Wednesday, their first rise in value since June 3.
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