Manufacturing is not dead, it’s just transitioning

By Mel Mac

In recent days there has been much conjecture as to who let Arrium get into over $4bn worth of debt and the usual blame games and misinformation that is the state of our modern media. Our four largest banks have unsecured loans worth $1bn that are included in this total. Last week the Industry Minister and Member for Sturt in South Australia Chris Pyne, did the media rounds explaining that the government was doing everything in its power to help Arrium. This included bringing forward a Victorian rail contract worth $80m and a government inquiry into Asian steel dumping in February this year.

SPC Ardmona recently won its anti-dumping case against cheap dumped Italian tomatoes, the Anti-Dumping Commission (ADC) and the Federal Government ruled that two major Italian exporters, La Doria and Feger, had indeed been dumping their produce in Australia. The case was decided on appeal with SPC arguing the ADC had not looked into the huge subsidies the European Union (EU) pays to Italian growers and manufacturers. As a result duties on Feger products 8.4% of the product price, with a duty of 4.5% applied to La Doria products.

Countries in Asia-Pacific produce billions of tonnes of steel and often have excess that they can sell cheaper than what their local domestic markets sell it for. As in the EU some companies engaging in dumping get subsidised via loans and tax concessions giving them extra incentives to continue the practise. While Mr Pyne mentioned protection from steel dumping from countries such as China, Taiwan, Malaysia and South Korea during his rounds he didn’t mention Japan or India. They also dump excess steel and this is of interest because we have recently signed free trade agreements (FTAs) with China and Japan and the government is looking to sign one with India in the very near future.

A senate inquiry about The future of Australian steel this month was told by the ADC commissioner Dale Seymour, that during the last few years the number of steel investigations has increased and represents 75-80% of their case loads. You can see for yourself the current cases before the ADC and what they comprise of here. Mr Seymour also confirmed that 75% of Arrium products were tied up in dumping.

In America last month the government imposed tariffs of 226% on imports of steel from China, with goods from Brazil, India, South Korea, Russia, Japan and the UK subject to duties too. UK steel industry’s largest trade union Community said:

“We are drowning in this flood of Chinese imports and the US action will only serve to divert more Chinese steel towards Europe. “Unless the Secretary of State [for Business, Innovation and Skills, Sajid Javid] is prepared to join others in Europe and stand up for our industry soon, the debate will be over as we will have no industry left to save”.

Mr Pyne has backed the Australian Labor Party (ALP) call to mandate the use of Australian steel on government infrastructure projects but South Australian senator Ann Ruston doesn’t agree, saying:

“I think we need to be mindful of the fact that we are an exporting nation, we have a very small population, we’re not going to get rich selling to ourselves, so we must be very careful that we don’t put in jeopardy our trade arrangements overseas”.

Mr Pyne also alluded to future submarine work for Arrium but they make “long steel” products which is mainly steel reinforcing bars and beams for homes and buildings whereas “flat steel” is used for submarine hulls. We have produced our own steel for submarines before with Australian company Bissalloy Steel Pty Ltd producing 8,000 tonnes of it in the 1980s-90s for the Collins submarines with research and development provided by BHP.

International investors are showing a keen interest in Arrium with Flinders University Professor John Spoehr saying he wouldn’t be surprised if a Chinese company was investigating taking it over and that:

“We will see various different possibilities unfold over the next few weeks and months as various different global players either look to genuinely invest or they are interested in asset stripping, which is really the last thing we want to see occur in relation to Arrium’s future”.

The New South Wales government procured 6,500 tonnes of steel for $8.3bn from Spain for the Sydney NorthWest rail project a couple of years ago. AWU National Secretary Scott McDine said the decision was a ‘disgrace’ and that:

“Australian steel should be used on taxpayer-funded infrastructure projects — that must be the the default position … Victoria is building its multi-billion dollar level crossing project with Australian steel, and the South Australian government mandates the use of Australian steel on taxpayer-funded projects”.

“The NSW Government should hang its head in shame for rejecting Australian workers in Whyalla in favour of Spanish steel”.

AWU Acting SA Branch Secretary Peter Lamps said:

“The Federal Government created 3000 Spanish jobs that could have gone to South Australia when it handed the contract for two replacement supply ships to Europe this month.” And that: “Every other steel-producing nation in the world has measures in place to ensure local steel is given preference”.

Australia Institute chief economist Richard Denniss has said that a real FTA would be one sentence: “there will be no trade barriers between countries”. This is a fair point to make and with recent events the public is right to question what exactly are in these FTA’s signed in such secrecy and in our names.

The ADC has said it has been laden with steel investigations for the last few years and Arrium and its financial woes have also been known for some time. The big four banks should answer as to why they provided $1bn between them in unsecured loans. And the government needs to explain why it hasn’t acted sooner and whether it was the same reasoning as applied to the near death of SPC Ardmona and the demise of Holden manufacturing in Australia. Manufacturing isn’t dead, it’s transitioning, and deserves local government’s support as well as federal government and some of the profits from our infrastructure and property boom in New South Wales in particular. Australia and its manufacturing infrastructure as well as the jobs that go with them need protecting if we are to make it through the digital disruption unscathed. And lastly a nation surrounded by water that continually sends its manufacturing offshore is not a smart one but a dumb one with all of the knowledge that leaves with it.

This article was originally published on Political Omniscience.

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