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Union wants government aid to save steel industry

Ray Brindal | April 17, 2009

Dow Jones Newswires

IN the face of a crisis for the Australian steel industry, its major union has called for immediate fiscal stimulus by the government to generate demand to save the sector.

Australian Workers’ Union national secretary Paul Howes said demand for steel has collapsed, threatening the long-term viability of the industry and hundreds of thousands of jobs.

“The steel industry in Australia is facing its greatest crisis ever” as a result of the global financial crisis, Mr Howes said.

“We have never seen a drop off in orders to the magnitude of what we’re experiencing now, not even during the Great Depression,” he said.

On Thursday, OneSteel, Australia’s second-largest steel maker, slashed its profit forecast for this fiscal year by almost half and said it plans to raise a minimum $559 million to cut debt.

Both OneSteel and its rival BlueScope Steel have cut output this fiscal half as global steel prices fall and demand eases and both have warned that the outlook remains gloomy.

Mr Howes said the collapse in demand raised concerns about the viability of domestic production, and said some steelworks now are almost like ghost towns.

“To keep this industry alive, we need to for a short term, to generate immediate demand and the best way to do that is through government money,” he said.

An interventionist approach to the crisis is needed that recognises the strategic importance of the industry and its central role in domestic manufacturing, he said.

Australian steel is world-class, Mr Howes said, and the industry is strongly viable and ranks among the world’s highest quality producers.

“What we don’t have is customers for our steel. No-one in the world is buying it, and we can’t sell our steel at any price to anyone, and we’ve never seen that happen any time before.”

The union’s 10-point plan, which has been developed with steelmakers, calls on the government to declare steel a strategic industry, develop a world comparator price and monitor prices for use in anti-dumping cases.

If the industry collapses, it could threaten 500,000 jobs directly and through flow-on effects in the iron ore, coal and coke industries, and downstream manufacturing and fabrication in construction and building products, Mr Howes said.

“The plan isn’t about putting in protectionist measures so much as having sensible procurement policies that ensure we get the best bang for our buck when we are developing these stimulus packages,” he said.

“Australian taxpayer dollars should be spent keeping Australian taxpayers in work,” he said, while stopping short of suggesting domestic steel should be mandated for use in private projects.