BHP could profitably keep its Newcastle steelworks open, according to ROY GREEN of the Employment Studies Centre at Newcastle University. Â鶹´«Ã½ Weekly's ANDREW TSIREPAS and ALEX BAINBRIDGE spoke to him about the implications of BHP's claims that "commercial reality" will dictate the future of Newcastle's steelworks and thousands of jobs.
Green points out that "commercial reality is determined by the main players in the market, in this case BHP, which has enough resources and enough commercial ability to create a market in Australia. The tendency at the moment is to create a sense of fatalism in the community; 'commercial reality' will ride over them like some juggernaut. I think the notion should be contested.
"Commercial reality is not some objective proposition external to the company. It is determined by the decisions of the company itself. For example, the Newcastle blast furnace has had very little investment over the last 20-30 years. When compared with a state-of-the-art blast furnace overseas, it is clear that the company has allowed this furnace to become uneconomical.
"If the company is prepared to make an electric arc furnace in Newcastle an economic proposition, it can be done. It can use the briquette production that has been feeding BHP's south-east Asian expansion. There is no reason why steel production ventures cannot be maintained here."
In 1995, BHP management indicated that they were likely to close the blast furnace within six or seven years. At the same time, they gave a broad hint that it might be replaced by an electric arc furnace (a new form of creating steel from scrap metal instead of ore), allowing steel making to continue, but on a smaller scale requiring only 1000 of the 3000 workers currently employed there.
Then, in mid-1996, Ron McNeilly, head of BHP's steel division, announced a major review of BHP's steel operations. BHP now has no commitment to continuing any form of steel making in Newcastle.
Closure of BHP's steel production will have an impact wider than just the workers employed in steel. Green points out: "BHP is not just a steel maker; it is also a manufacturing facility. It has a number of facilities in Newcastle which do various other things, such as the number two bar mill, which produces finished steel products for domestic and international markets." BHP's manufacturing facilities use raw materials from the blast furnace.
Newcastle already has above-average unemployment and few opportunities for young people and women, Green pointed out. "A blow of this size is going to have a major depressing effect on the whole Newcastle economy", he said.
According to a study released last November by the Hunter Valley Research Foundation, the closure of the Newcastle steelworks could cost the Hunter Valley 8200 jobs. The study considers both the initial impacts of the steelworks and the flow-on effects on smaller businesses and the rest of the economy.
Reminiscent of the 1983 Steel Industry Rescue Plan in which the government massively subsidised BHP to restructure its operations in Newcastle, sacking thousands of workers in the process, government officials at various levels are again talking about incentives to BHP and other businesses to keep steel making in Newcastle.
The state minister for Hunter development, Richard Face, announced on January 15 that the state government is considering "incentives" to encourage the development of an Austeel mini-mill in Newcastle. The Austeel mill would, however, employ only 500 people.