BlueScope threat 'goes to the heart of Wollongong's identity'

When BHP decided to close its Newcastle steelworks in 1999, the announcement was clear, brutal, and complete with an expiry date.

But as BlueScope continues its decades-long contraction at Port Kembla, and if it were to actually close, it would be a death that would come from a thousand cuts.

Wednesday’s reaction to the company’s threat that steelmaking may cease was partly one of shock, but also suspicion, and wry realism. For many who vented their spleens on social media and the Mercury’s website, news of a closure had been coming for long time.

Except that wasn’t the news – just a threat that the company may stop making steel here, and import the hot rolled coil from which it makes its other flat and prefabricated products. There was also the prospect of more cuts to come.

Talk of closure is nothing new in the resources or manufacturing industries. Wollongong Coal threw the same threat around when it asked its workforce to take a pay cut. BlueScope’s chairman said the carbon tax would ‘‘destroy manufacturing’’ during that debate.

This latest threat has come during negotiations with workers for a new enterprise agreement. The company is seeking major reforms to working conditions to cut $50 from the cost of making each tonne of steel.

BlueScope said much of this in a statement to the stock exchange sent mid-Wednesday, that in the negotiations it was ‘‘seeking a game-changing approach that will significantly reduce costs’’.

This would reduce the workforce again, perhaps significantly.

An attempt to combine trade and plant operator positions has been fought by the AWU in the Fair Work Commission but it is unlikely to go away.

Many people don’t take the threat of closure lightly because they suspect it could already be on the cards.

And while this week’s chest-puffing may turn out to be just the product of negotiations, this region is understandably sensitive to any suggestions about the steelworks closing.

That’s because of the families relying on income from a job at or around the steelworks, certainly, but also because it goes to the heart of Wollongong’s identity.

BlueScope still wields significant power in Wollongong but it is not the commanding influence it once was when the Illawarra ‘‘marched to the beat of the Port Kembla steelworks’’, in the words of former Mercury journalist and history writer Michelle Hoctor. 

In the 1970s the steelworks had 23,000 employees and after 50 years of growth had a glow of immortality. There would always be a steelworks at Port Kembla. Motorists avoided the steelworks at shift change time because of the flood of cars. The football team was named after the steelworks.

But the BlueScope workforce is now less than 10 per cent of that 1970s figure.

Some of the cuts have been drastic – like in September 1982 when BHP announced 5857 jobs would be axed before Christmas, or in August 2011 when BlueScope decided to halve steel production, closing its No.6 blast furnace and cutting close to 1000 jobs.

Other cuts, through the decades, have been more gradual – part of, as the company calls it, a constant process of review.

Technological improvements have reduced the need for human labour. Other job losses have been driven by efficiency demands and cost-cutting, as BlueScope competes in a market flooded with cheaper steel made in China, India, Korea, Brazil and so on.

And unlike BlueScope’s sibling Arrium (formerly OneSteel), spun off at the same time from BHP, BlueScope has never owned the mines it relies on for its raw materials. These, plus a high Australian dollar, combined in 2011 to force BlueScope out of the export market.

BlueScope has managed to stay alive through all of it, with CEO Paul O’Malley even saying in February’s profit announcement that it had benefited from the hard work done in recent years.

So for many whose friends and families were involved in the ‘‘hard work’’ of redundancies, hearing talk of closures once again was tough. They might be laid off, they might be struggling, but they weren’t going to let anyone take them for fools.

Wollongong has been trying to come out from under the steelworks’ wing and move on to a future as more than a company town. Much of this has been driven by necessity, as the number of people employed by the steelworks decreased. But at the same time the number of people employed in retail, by the growing University of Wollongong, and in the health, IT and education sectors, has been increasing.

The United States’ steel city, Pittsburgh, knows this process well. The collapse of the steel industry in the late ’70s, which also hit Port Kembla, left Pittsburgh reeling. But since the crash it has turned itself around, with an economy based on health care, university research and ‘‘green’’ industries, and a population similar to Wollongong’s.

In Newcastle, many had suspected the closure was coming after a new electric arc furnace was postponed nine months before the 1999 announcement. During that closure, BHP’s head of external affairs made the extraordinary claim that Newcastle needed to grow up.

‘‘What’s happened is that the paternalistic BHP has been shelved, the child-parent relationship between BHP and the workforce and the community has been put aside,’’ he said.

‘‘This is now adult. Every person here has had to have a hard, sober, mature look at themselves, where they’re going.’’

Ouch.

In Wollongong the process has been slower.

Newcastle and Pittsburgh raise the question – will a city actually transform before it gets to the crunch? Wollongong has been trying to transform while the steelworks is still here, albeit in a reduced form. So is Wollongong keeping the steelworks on life support, or is it the other way around? It’s neither.

When BHP closed its Newcastle works the city was devastated. But over two decades since it has come back and now it is a positive, modern city, reinvigorated by its people (and of course money from the coal boom) and some significant state government funding.

If the end of the Port Kembla steelworks is actually on the horizon for Wollongong, Newcastle shows that it is possible – after significant pain that many families must endure – to regenerate from the ashes.

But given BlueScope has recently turned the corner after years in the red, it seems more likely that even if there are more job cuts, the steelworks at Port Kembla will continue to blast, limp or roll along in some form.