BLUESCOPE STEEL TO REMAIN IN BUSINESS BUT AT THE EXPENSE OF 1,000 JOBS
Monday, August 22nd, 2011BLUESCOPE DECIDES NOT TO CLOSE UP SHOP BUT AT THE EXPENSE OF 1,000 WORKERS JOBS
BlueScope Steel considered shutting down its entire manufacturing operations before opting for today’s rationalisation plan that will axe more than 1000 jobs.
The nations biggest steelmaker confirmed it would abandon its export business, in a move that will require its blast furnace capacity at Port Kembla to be halved, and a Hot Strip Mill at Western Port to be shut down.
Bluescope shares extended their recent losses today, losing 4.5 cents, or 5.7 per cent, to 74.5 cents. The stock has lost 67 per cent of its value this year compared with a 14 per cent fall for the ASX200 share index.
Bluescope chief exective Paul O’Malley said the changes would cost 800 of the 3100 jobs at Port Kembla, and 200 of the 1000 jobs at Western Port, with most of those workers to be gone by October.
But the job losses won’t end there with Mr O’Malley saying that significant numbers of contractors would also lose work.
”Contractors will be affected, and we can only make estimates on that … but in total it may be in the order of about 400 contractors who certainly won’t be working at the steelworks,” he said.
Mr O’Malley said the axed workers had an ”iron clad” guarantee of being paid out their entitlements, and would be treated with ”respect” throughout the process.
The changes come after a lengthy review which Mr O’Malley said considered all options, including a complete shutdown of all manufacturing, or a joint venture with foreign companies.
He said Bluescope had settled on this plan – which effectively reduces the company back to a domestic producer – because it would make the company viable in the current difficult economic circumstances, and very profitable if conditions improved.
”Moving to a complete shut is absolutely the wrong decision for the company, the shareholders and Australia, which is why we are going on the path we are going on,” he said.
The company reported an underlying loss of $118 million for the year to June, which ballooned to $1.054 billion once asset writedowns are included.
The poor result was caused by the high Australian dollar, a global glut in steel production, poor demand for construction in Australia and extremely high costs for steelmaking ingredients like iron ore and coal.
The company said it was also on the look out for acquisition opportunities in the iron ore sector - following rival OneSteel’s move today to increase its iron ore exporting business from six million tonnes per year to nearly 10 million tonnes per year.
The company stressed the changes had nothing to do with the Federal Government’s planned carbon tax, and Prime Minister Julia Gillard indicated Bluescope would be allowed to receive some of its planned support funding earlier than originally planned.
The Victorian and NSW Governments, in concert with the Federal Government, were also moving yesterday to mobilise support packages in the Western Port and Illawarra regions
Sourced & published by Henry Sapiecha
Henry Sapiecha
