Yesterday, BlueScope Steel made a courageous decision to scale back steelmaking in Wollongong and abandon exporting.. This year the company made a loss of over a billion dollars and the decision could have been to close the plant. Even so - the future is uncertain and there will be dire consequences for the former employees, the host of contracting companies that served the industry - and the city of Wollongong generally.
Eight hundred BlueScope jobs will go directly and there will be an unknown cut back in the ranks of contracting firms - probably a thousand jobs altogether in the Illawarra. The company will close the number six blast furnace, number four coke battery, number three oxygen furnace and number one slab caster. Steel production will be reduced to about 2.6 million tonnes a year.
BlueScope Steel will now concentrate on keeping it's share of the Australian domestic steel market, and the government will need to be very careful in monitoring the price of Chinese and Indian steel landing in this country. They will have an incentive to dump their product below cost to try and finish off Australian steel production - and this must not be allowed to happen.
Success for BlueScope Steel depends heavily on the exchange rate of the Australian dollar - and it would be a very wise person who could claim success in predicting what that will be in the future. Hopefully, the dice may roll in BlueScopes favour, but there is also the chance that steel will never again be a profitable product to manufacture in this country.
In the short term, life looks bleak for those retrenched employees. They will lengthen the dole queue and many will have to seek work outside this region - and then there will be the flowon to business generally. It is inevitable that the rest of the community will close their purse strings in anticipation of bad times, and that may finish off a whole lot of marginal businesses hovering on the edge of profitability.
The shock wave will probably send the Keira street shopping centre extension plan back to the drawing boards - and a lot of other improvement and extension plans in this city will go on hold - until the outcome of the BlueScope retraction becomes clearer.
The government has promised financial help for the Illawarra - and it is not all gloom and doom. We should remember the cries of disaster decades ago when steelmaking ceased in Newcastle, but it would also be a mood lifter to look at that city now.
The best thing the Federal government could do to provide a long term fix would be to go ahead with the Maldon Dombarton rail line to give the Illawarra a fast and commuter traffic free rail link to western Sydney.
The future of Wollongong hinges on the industry that will surround the expansion of Port Kembla - and that can not happen unless the sclerotic road/rail system is dragged into the twenty-first century.
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