Max O.
Australia's steel producing industry may soon come to an end with Arrium steel company's collapse in Whyalla. The steel company's $4.3 billion debt caused its bankruptcy and put it into voluntary administration. Now 2,000 jobs in the South Australian regional city of Whyalla are endangered, with 7,000 workers in Arrium's other plants across Australia also jeopardized.
Arrium's demise is the combined result of the 2008 economic crash and the global slump in the demand for steel. China's dominance in steel production (it produces over half of the world's steel) has resulted in it churning out 400 million tonnes per year that can't be sold. Consequently there has been a massive fall in iron ore prices from $US190 a tonne to $US55 and a 60 percent collapse in steel prices since 2011.
Finance capital puts its interests first
The company in the end was pushed into administration after its bank creditors refused a $1.2 billion proposal for recapitalisation from GSO Capital, an offshoot of the US private equity monster Blackstone. The bank creditors (in particular Australia’s big four banks) were having none of it because it they would loose 55 percent of their loans to Arrium. If it went ahead GSO Capital/Blackstone would breakup Arrium for a fast profit.
The failure of Arrium is the result of the familiar capitalist business practice of 'grow and bust'. Most of its debt came from loans to purchase overseas plants and iron ore mines after the 2008 crash on in the belief that China's enormous growth would continue to expand Australia's mining boom.
When it went into administration it was owing $AUS2.8 billion to the banks, $AUS1 billion to suppliers and $AUS500 million to its workers. At the timeIn 2000, Arrium the steel-maker was cast out and rebadged as OneSteel by BHP it was alsoand offloaded with $1 billion of the parent company's debt. OneSteel was renamed Arrium in 2012; one of its three divisions, a steel and recycling business, retains the OneSteel name.
Then In 2001, the vultures and parasites went on to mergemerged BHP with the British and South African miner Billiton and to establish the largest mining corporation in the world. OneSteel and Arrium were then divested, after squeezing massive profits from their workers for years, when their profitability declined.
If and when Arrium is either closed down or revamped the city of Whyalla will be devastated. With a population of 22,000, Arrium's steelworks is the city's major employer. Whyalla's inhabitants’ great fear is that the demise of such an important industry will see the city become a ghost town. On top of the GM Holden car plant closure in 2017 Arrium's liquidation will impose a severe economic depression on the workers in South Australia.
“Free” trade for whom?
Politicians haven't been of much use in the wake of the Arrium's Whyalla steel plant collapse. Prime Minister Malcolm Turnbull rebuffed bailing out the company, with the argument quietly whispered acknowledgement that this would breach recently-signed free trade agreements. This demonstrated the lie that free trade agreements create jobs and growth!
Bill Shorten, Federal Labor opposition leader, Christopher Pyne, Federal Liberal Minister for Industry, Innovation and Science and Tom Koutsantonis State Labor Treasurer of South Australia have all bellowed that government agencies should buy Australian made steel and said that the soon to be built submarines and frigates for the Australian Navy also should be made from Australian produced steel. Unfortunately Turnbull is right that preference given to Australian steel would breach the free trade agreements (FTAs) and result in overseas companies suing the government through the Investor State Dispute Settlement provisions. These politicians turn a blind eye to this fact and certainly don't propose Australia withdrawing from these economically disastrous FTAs.
Unfortunately some unions are not much better. Like King Canute they think they can hold back the tide of capitalist overproduction and downsizing. In the recent past the AWU have has cooperated with Arrium in convincing its workers to accept the dismantling of hard-won conditions, pay and job cuts to save the company and some of their jobs. Its leadership has argued that the Federal Government must introduce tariffs on imported steel and stop Chinese steel being dumped onto the Australian market. At the same time, it has lined up with the big four banks to change the liquidators appointed by Arrium (supported by the state government and the mayor of Whyalla) to those nominated by the banks.
The Bank of International Settlements (BIS), the banker's bank, has stated that there needs to be a day of reckoning where a huge wipe off from assets and investments needs to occur; which in effect means the closing down of plants all over the world. From the capitalist point of view, there is no alternative to the BIS plan of recovery but to slash government debts and wipe out excess capacity - close down firms, plants, machinery etc. What has happen to Greece will now occur throughout the world!
The day of economic reckoning has arrived and the union movement can't avoid it anymore. Industries are collapsing in a world wideworld-wide capitalist downsizing and shifting to the lowest wage countries. Union leaders need to honestly confront this crisis and stop deluding their membership that they can save these situations.
Time has come for workers to mobilise around nationalizing these industries and campaigning against Australia's involvement in FTAs and the Trans Pacific Partnership. Australia, already a client state of US imperialism, is losing even more of its sovereignty to foreign capital. A country and its workers need to have an independent economy that looks after and not exploits its population, including workers of other countries. That should be the mantra of the Australian union movement and it needs to show in practice that it means it.
If we are to achieve a sovereign, just and democratic Australia then big capital and business need to be brought to heel and their assets turned over to the Australian people. Such a process can only be led by the working class, the creators of wealth, and the most disciplined and highly organised class with the most to gain from opposing imperialism’s control of our economy.
To paraphrase capitalism's favourite epithet, "it’s all about the bottom line", well the bottom line actually starts with the worker creating value. No worker, no profits!
Without workers creating value, there can be no economy. The capitalist economy, which devalues workers and cannibalises its own productive capacity, has no place in a genuinely independent future Australia.
For a guaranteed steel-making industry, fight for independence and socialism!
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