BlueScope black hole: jobs cuts, $1 billion loss flagged

By Ben Langford
Updated November 6 2012 - 2:25am, first published August 12 2011 - 11:19am
BlueScope black hole: jobs cuts, $1 billion loss flagged
BlueScope black hole: jobs cuts, $1 billion loss flagged

Bluescope Steel is staring at a billion-dollar loss as it prepares to halve production at Port Kembla, enabling it to retreat from unprofitable export markets.Chief executive Paul O'Malley (pictured) has foreshadowed significant redundancies in the Illawarra but said no final decisions had been made about how to restructure the company."This is a really tough time for our business and it's a tough time for the community," he told the Mercury last night.Workers, contractors and local businesses fear several hundred, perhaps even a thousand, employees will lose their jobs.Mr O'Malley would not speculate on how many jobs could be lost."Until a decision is made it's not appropriate for me to comment."When we work through the process of considering options, and if and when a decision is made, there will be a process of engagement with our employees to ensure that everyone is dealt with as fairly as possible," he said.BlueScope employs about 3100 people at Port Kembla, plus hundreds of contractors.Older workers have already been offered early retirement, while many contracting companies have had their work slashed.BlueScope will announce its full-year results on August 22 and has revealed a $900million write-down of its coated products division, in addition to a $100million-plus loss already expected.‘‘We said we’d have a small loss - this [the $900million write-down] will be in addition to that,’’ Mr O’Malley said.The company is poised to stop steel production at one of its two blast furnaces to cut costs. Reducing production would allow BlueScope to concentrate on selling steel in Australia. The high Australian dollar has meant that much exported steel is sold into loss-making contracts.Mr O’Malley said the carbon tax was not the cause of its problems - he blamed the dollar, plus the high costs of coal and iron ore.‘‘This is not about carbon,’’ he said. ‘‘This is about macroeconomic challenges.‘‘We are losing money from our export business and we can’t continue to do that - but any decision on how to stop those losses would be a material decision and one that would have a big effect on our business and on the local community.‘‘At this stage no decision had been made because they are not easy decisions.‘‘We’ve got to look at ways of getting out of that export business. There are many ways of doing that and we haven’t decided yet which is the best way of going about that.’’Mr O’Malley would not confirm or deny that the company would soon announce a merger with another steelmaker, and said big announcements about Port Kembla would not necessarily be made on August 22.Steel production has already been cut at both of the plant’s blast furnaces and Credit Suisse analyst Michael Slifirski said the company may be forced to mothball the No6 blast furnace at Port Kembla.The speculation of reduced production has failed to impress stock market investors.BlueScope shares continued to plumb the depths yesterday, closing down 7.7per cent at 90.5¢, a new low in the years since the company was spun off from BHP Billiton in 2002.

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