BlueScope steeling itself for bad times

By Ben Langford
Updated November 5 2012 - 3:10pm, first published July 3 2011 - 1:08am
Capital works are being delayed and contractors slashed as the steelworks restructures.

BlueScope Steel has delayed major capital works and drastically cut back the work for external contractors in the strongest indication yet of how badly the Port Kembla steelmaker is struggling.Some contracting firms have been forced to look to other regions as they try and maintain their workload, while others are considering cutting staff.Workers at the steelworks were asked to take a week's leave in June to help limit its spending.On Friday the steelworks officially came under the new entity BlueScope Australia and New Zealand, headed by Mark Vassella, who flew in to Australia from the United States on the weekend.Within the steelworks, major projects have been put on hold, with the new $40 million steel injection station delayed indefinitely and the $66 million steam asset upgrade now not due to be commissioned until late this year.BlueScope posted a $55 million loss for the first half of the financial year and has warned of a similar result for the second half.Contractors told the Mercury work had been cut drastically, which would hurt businesses reliant on work from the steelworks.One contractor said long-term service contracts had been cut back and he had not seen such severe austerity measures from the steelmaker in decades."It's going to affect everyone. The whole community will feel it. Just about every project [is on hold]," the contractor warned."I think it's worse than when the global financial crisis hit us."A lot of companies are hurting out there. A lot of jobs are coming to an end and when that's finished, it's dog eat dog. It's not going to be pleasant."Another contractor from a firm with a long relationship with BlueScope said work inside the steelworks had been cut back to the minimum necessary to ensure safety, with no guidance as to when further work would resume.None of the contractors would be named for fear it could cost them future work.On Friday BlueScope entered a "close period", during which it will not comment on its performance until its full-year results are announced on August 22. But a spokesman confirmed the company had acted to halt spending. "While business conditions remain challenging we will continue to take prudent measures to protect the integrity of our business and that will include postponing projects and spending that does not adversely affect safety or operational security," he said."The steel ladle injection station will be delayed and the steam asset upgrade project will proceed to hot commissioning later this calendar year."All employees have been encouraged to take a week's annual leave prior to 30 June."BlueScope has been battling a combination of the high Australian dollar, steep prices for iron ore and coking coal, and low prices for its steel products. It is also bracing for the carbon tax, saying it could cost the firm hundreds of millions of dollars.The owner of an Illawarra contracting business said concern at the carbon price, still being finalised, was contributing to the pessimism - with some businesses planning to lay off staff soon."I'm a very concerned business owner who employs 70 people who I regard as close friends and I'm going to have to get rid of 10-15 of them," he said."I spoke to four or five company managers today [and] we're watching a train wreck in progress."This whole town runs on steel."

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