Whyalla Steelworks to potentially close?

[Power Raid]

I appreciate the politeness

The loss of jobs in the auto industry in AUS is 8 times the size of the population of Whyalla......
The auto industry closure is not related to quality. The auto industry is backed by the local government in EVERY producing country. Either by import duty, minimum local content requirement, number of brand restrictions etc. Holden/Ford/Toyota can sell the same number of cars in Aus and have the commercial advantage paid by the country that produces them. Profit per car sold in AUS for the 3 companies will increase after 2017. They make money building cars here. They will make more building them elsewhere. There is a reason why most other countries in the world beg and plead for an auto industry. And its not the monetary situation.

It doesn't matter if the Aus steel is of a higher "perceived" quality. The cost and/or delivery issues result in it costing more/equal to the foreign import.

My point was that the public want the government to stipulate using a more expensive material in order to protect a local industry (both in this case and in the case of Subs / Destroyers). But they did not want to do this with the auto industry (which employs plenty more than Arium/subcorp combined)

Perhaps because we subsidised the car industry for 50 plus years and the cost benefit didn't stack up.

The car industry like the steel industry needs to be vertically integrated with massive economies of scale required.

You also need cheap power. SA can not offer this without pollution. China can offer this with pollution but that doesn't matter as much on their hierarchy of needs.

 

[Taylor]

Perception is only valuable if people are willing to pay for it, which tends to go out the window when the numbers get too big.

There could be a mandatory Australian content for all construction, but then the consumers will be paying to support industry - so I expect them to also demand that industry is run as efficiently as possible - which leads us back to the real crux of the issue:

Can the rest of the world produce equal quality product and deliver it to Australia for less than it costs to get that from an Australian supplier?

 

[Power Raid]

Fair enough


Fair enough, at least your consistent with your arguments.

I don't know why you expect this to happen though, when the international trend is towards tighter boarder controls.

Without looking I bet more people move between nations for work or living than ever before in history.

The tightening of borders is simply due to economic refugees wanting to participate in the society protectionists and racists want to lock them out of because of where they live.

 

[Power Raid]

*except for refugees.

nope, including refugees

the difference between my view and those currently advocating open borders is I believe in a sustainable immigration policy. As part of that you need a sustainable global economy allowing all people to participate no matter of their race or where they live. That will reduce to economic disparity globally and you won't see war or mass refugee or economic refugee waves.

here's to sustainable immigration policies, common sense and anti-protectionist/ racist economic policies

 

[Benno355]

Thanks for the response, You are coming at me from the wrong angle.

My response was tailored to the fact that rightly or wrongly public perception is that foreign cars are better, ergo the confidence in Australian car manufacturing diminished (and they had some incidents which dissipated confidence in them). I agree Car Manufacturing should be kept around, not just for the cars, but also the other manufacturing companies that benefit from the work. I know of many companies that started off making parts for cars and have transferred into other manufacturing sectors and done quite well.

In regards to Australian steel, the public perception through not just the Manufacturing industry, but the wider general public is that Australian steel is better. Ergo theres more of a push to retain/protect Australian steel from Joe Public, which in turn disseminates pressure onto local& federal government and the manufacturers, which is why you see the clarion calls from politicians of all guises to protect Australian steel.

I firmly believe the economic multiplier of having a large industry in town (especially in towns such as Whyalla, where I lived), where if you werent working for Arrium you were working for an industry that relied on them to finance the town and create growth potential. Evidence of this is that it has a Tafe, a University campus and other creature comforts such as movie cinemas, plenty of gyms, numerous bars and restuarants) and a freaking warship in the town that was named after it as a reminder of the importance of manufacturing to the ongoing viability of that town.

Apologies for the long winded rant here.

I understand your point of view. I think we are both saying that a perceived higher price has cost both industries greatly. Whether the perception is correct in relation to value for money is a subjective one.

 

[Benno355]

Perhaps because we subsidised the car industry for 50 plus years and the cost benefit didn't stack up.

The car industry like the steel industry needs to be vertically integrated with massive economies of scale required.

You also need cheap power. SA can not offer this without pollution. China can offer this with pollution but that doesn't matter as much on their hierarchy of needs.

The cost benefit to the government and country most definitely stacks. Public pressure and continuity of policy required the government support to be reduced to zero. Zero government support caused the cost/benefit to then no longer stack with the OEM's when compared to other countries. All OEM's were sustainable in AUS. But could make more money building cars OS and importing to AUS.

Anayway, back to Arrium....
The government policy is to back a free and open market. If this stays true, then I don't believe a bailout or a requirement to use local steel should or will be implemented.
Australia does not play on a level playing field. Cost of labour, the cost of safety, the cost of government regulations and the cost of energy are all prohibitive to a steel industry. If we want to be able to export "stuff" under free trade, then there are certain industries that will die off in the process.

 

[Demosthenes]

The problems facing Australian steel companies don't have much to do with how they are run, or Australian government policy. The simple fact of the matter is that there is a ludicrous level of overcapacity in the global steel market. That is almost entirely the fault of Chinese central economic planning. Chinese steel companies aren't really making any money either, but there are political reasons why necessary rationalisation hasn't occurred.

This isn't a problem that Arrium or BlueScope or the government can solve. Until China fix their production problems and stop dumping product on the international market, making steel isn't going to be economic anywhere in the world.

 

[The_Reaper]

Are the Whyalla steelworks even capable of producing the steel necessary for subs?

 

[cartwright]

The problems facing Australian steel companies don't have much to do with how they are run, or Australian government policy. The simple fact of the matter is that there is a ludicrous level of overcapacity in the global steel market. That is almost entirely the fault of Chinese central economic planning. Chinese steel companies aren't really making any money either, but there are political reasons why necessary rationalisation hasn't occurred.

This isn't a problem that Arrium or BlueScope or the government can solve. Until China fix their production problems and stop dumping product on the international market, making steel isn't going to be economic anywhere in the world.

Which is why enacting anti-dumping is perfectly reasonable step to take in the current market.

 

[Demosthenes]

The Australian government can't stop steel being dumped on the global market.

If you're advocating protectionism then that's stupid. Artificially driving up domestic steel prices will just harm the rest of the economy, and do little to help steel companies who are reliant on exports regardless.

Sent from my STV100-3 using Tapatalk

 

[Ratts of Tobruk]

The Australian government can't stop steel being dumped on the global market.

If you're advocating protectionism then that's stupid. Artificially driving up domestic steel prices will just harm the rest of the economy, and do little to help steel companies who are reliant on exports regardless.

Sent from my STV100-3 using Tapatalk

Anti-dumping regulation is no different to anti-monopoly regulation. The free market, if left completely 'free', will not do the right thing by consumers and other businesses. China won't continue to sell Steel at current prices. There's an over-supply.

Do we really want to make long-term industry-altering decisions due to short-term economic situations? (like how we gave away our car industry in the midst of the AUD running at well above its regular rate)

 

[Gough]

The car industry was sacrificed for these FTAs, which has wedged the government, and left them unable to support the Whyalla refinery, even if they wanted to.

 

[Max zero]

Anti-dumping regulation is no different to anti-monopoly regulation. The free market, if left completely 'free', will not do the right thing by consumers and other businesses. China won't continue to sell Steel at current prices. There's an over-supply.

Do we really want to make long-term industry-altering decisions due to short-term economic situations? (like how we gave away our car industry in the midst of the AUD running at well above its regular rate)

I would argue Australia's lack of international competitiveness is a long term issue.

If you want to buy overpriced local goods go for it I won't stop you.

 

[Ratts of Tobruk]

I would argue Australia's lack of international competitiveness is a long term issue.

If you want to buy overpriced local goods go for it I won't stop you.

Do you know what anti-dumping relates to? And re: cars, the intl competitors have govt subsidies. How is Australia meant to compete without?

Australia was producing over 200,000 cars a year until the Liberal Govt called it a day on the industry. Plus there was associated industry. It was over 300,000 cars until it looked like the higher AUD was hanging around. Of course consumer choice still comes into it and there should've been more innovation, but that's something the Labor Govt was asking for when negotiating. Now we lose out on the income tax returns of all those workers and have to hope their jobs are replaced. It is the US's inability to find jobs for lost manufacturing workers that has left a bunch of people voting for Trump.

To most of us, that is hard to understand, yet there are people in Australia who support Gina Rinehart's request for workers who only cost $2 a day.

 

[Max zero]

Do you know what anti-dumping relates to? And re: cars, the intl competitors have govt subsidies. How is Australia meant to compete without?

Australia was producing over 200,000 cars a year until the Liberal Govt called it a day on the industry. Plus there was associated industry. It was over 300,000 cars until it looked like the higher AUD was hanging around. Of course consumer choice still comes into it and there should've been more innovation, but that's something the Labor Govt was asking for when negotiating. Now we lose out on the income tax returns of all those workers and have to hope their jobs are replaced. It is the US's inability to find jobs for lost manufacturing workers that has left a bunch of people voting for Trump.

To most of us, that is hard to understand, yet there are people in Australia who support Gina Rinehart's request for workers who only cost $2 a day.

Think about what dumping actually means. It means that China is producing so far above demand that they are basically giving the product away. This is the product you think we can even try to compete on? One that is so freely available that it is almost given away? Sounds like a great long term market to get into.

Maybe people only get $2 an hour because we have more people then jobs to fill? Maybe we should pay everyone a $100 an hour then no one will be poor right?

I am not against the idea of a basic wage. To be honest we its not far off what we do now with regards to pointless busy work in the public service.

 

[coerced]

The problems facing Australian steel companies don't have much to do with how they are run, or Australian government policy. The simple fact of the matter is that there is a ludicrous level of overcapacity in the global steel market. That is almost entirely the fault of Chinese central economic planning. Chinese steel companies aren't really making any money either, but there are political reasons why necessary rationalisation hasn't occurred.

This isn't a problem that Arrium or BlueScope or the government can solve. Until China fix their production problems and stop dumping product on the international market, making steel isn't going to be economic anywhere in the world.

Brings into question why Western democratic nations allow for trade liberalisation with a centrally planned economy, run by a brutal and authoritarian regime. It's not just Arrium that has gone under, but Peabody and Arch Coal.

The companies themselves do bear much of the responsibility for the mistakes they have made, but they are playing in a market that has a non-rational actor. What is the Chinese government's motivations for producing an oversupply of steel? The realpolitik of situation suggests something more dangerous than simply regional unemployment in places like Whyalla or the Bowen Basin might be the goal.

Chinese policies and the embracing of them by neoliberals has led to a rapid deindustrialisation of the West. Why has an authoritarian regime been trusted so willingly? It has certainly made a few people filthy rich for a short time period, but what if the CPC's intentions all along was to cause the collapse of Western industry?

 

[CM86]

Think about what dumping actually means. It means that China is producing so far above demand that they are basically giving the product away. This is the product you think we can even try to compete on? One that is so freely available that it is almost given away? Sounds like a great long term market to get into.

Maybe people only get $2 an hour because we have more people then jobs to fill? Maybe we should pay everyone a $100 an hour then no one will be poor right?

I am not against the idea of a basic wage. To be honest we its not far off what we do now with regards to pointless busy work in the public service.

What the * are you talking about...

 

[Ratts of Tobruk]

Think about what dumping actually means. It means that China is producing so far above demand that they are basically giving the product away. This is the product you think we can even try to compete on? One that is so freely available that it is almost given away? Sounds like a great long term market to get into.

Yeah, probably don't try and educate people on "what dumping actually means" when it is clear you don't understand it.

 

[Max zero]

What the **** are you talking about...

Try to keep up. Maybe I can dumb it down for you.

He asked about anti dumping legislation. I explained that if a product is so freely available that laws have to be made to stop it from almost being given away then its probably not the best market to be involved in the first place.

Then I explained that the downward pressure on wages he is complaining about is simply a function of over supply of labour.

In the long term this over supply of labour will only get worse so one solution would be a basic wage. Its not that an extreme idea already since we already have a number of jobs that are unproductive and are little more then subsidised busy work.

Simple enough?

 

[CM86]

Try to keep up. Maybe I can dumb it down for you.

He asked about anti dumping legislation. I explained that if a product is so freely available that laws have to be made to stop it from almost being given away then its probably not the best market to be involved in the first place.

Then I explained that the downward pressure on wages he is complaining about is simply a function of over supply of labour.

In the long term this over supply of labour will only get worse so one solution would be a basic wage. Its not that an extreme idea already since we already have a number of jobs that are unproductive and are little more then subsidised busy work.

Simple enough?

Yeah... like it needed to be dumbed down...

No question mark... Because I wasn't asking you to simplify it... I knew what you were trying to say.

 

[coerced]

Try to keep up. Maybe I can dumb it down for you.

He asked about anti dumping legislation. I explained that if a product is so freely available that laws have to be made to stop it from almost being given away then its probably not the best market to be involved in the first place.

Strange that a market fundamentalist is telling people not to get involved in a market that is dominated by a centrally planned state. Why shouldn't Australia protect its industrial base if China cannot be trusted to act like a rational market participant?

 

[Max zero]

Yeah, probably don't try and educate people on "what dumping actually means" when it is clear you don't understand it.

Sigh.

Fully aware of what dumping is. The fact is that if incidents like this are happening now who is not to say it won't happen again? Clearly the means of production are there so how do you expect to compete long term? China can keep their subsidy train going a lot longer then we can.

 

[Gough]

What happens if some time down the track Australia is drawn into a conflict, or, heaven forbid attacked? We'll have no manufacturing industry to build the machinery of war if we keep going down this path.

 

[Max zero]

Strange that a market fundamentalist is telling people not to get involved in a market that is dominated by a centrally planned state. Why shouldn't Australia protect its industrial base if China cannot be trusted to act like a rational market participant?

So your solution is to be irrational ourselves?

China has it reasons for maintaining its subsidies (politics, social unrest, etc). Doesn't mean we should follow their lead.

 

[coerced]

What happens if some time down the track Australia is drawn into a conflict, or, heaven forbid attacked? We'll have no manufacturing industry to build the machinery of war if we keep going down this path.

It may not even be that bad. Take this Harper's piece:

It is impossible to tell how China will pull these strings. Perhaps one day soon Beijing will threaten to cut off basic supplies of drugs and electronics, in an attempt to sweep our ships and troops from the Pacific. (To understand this ploy, Chinese leaders would need only study the actions of President Eisenhower in 1956, when he drove the armies of Britain and France from the Suez by threatening to cut off supplies of money and oil.)