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  • Steel - Beginning of the End

    Beginning of the End

    First indications of the tempestuous period about to be faced by the Steelworks were seen in November 1974 when BHP's steel section showed a profit of just $550,000 for the half year compared to $9,582,000 for the corresponding period the previous year. To put it into perspective, the six monthly profit amounted to less than one-third of the then weekly wage bill for the Newcastle Steelworks alone.

     The company warned that not only had the market for steel, both inside and outside Australia, fallen, but it showed little sign of recovery while costs were rising dramatically.

    In Newcastle, economy measures started immediately. Nothing was overlooked, even to publication of the BHP News going from monthly to quarterly.

    The $54.5 million No 2 bloom mill, cold commissioned in 1975. remained idle until 1979 due to the lack of orders. 1976 saw the last bar rolled in the 18-inch mill and the 60 tonne BOS furnace commissioned.

    1977 saw the installation of a "no twist" finishing train at the rod mill and the announcement of a new $2.25 million computer system for the computer centre.

    In 1978, a corporate restructure established Divisions as largely autonomous profit centres. The Steel Divisions had full responsibility for product marketing.

    Recognising that the industrial downturn could only be weathered with the total commitment of all involved, General Manager Rod Harden broke new industrial relations ground by organising an economic briefing for union representatives.

    He confirmed that the Steelworks was very much dependent on export business to maintain its current level of operation, which was just 80% of capacity. And he warned of the emergence of SE Asia as competitors.

    Orders and prices at the end of the decade gave room for optimism, but at the time no one realised that the steel industry generally was at the start of a long downhill ride, part of a worldwide recession triggered by skyrocketing oil prices.

    The general managership of Maitland-born John Risby, from 1980 to 1986, saw a marked increase in corporate involvement in the Newcastle community although 1982-83 was one of the most difficult periods in the Steelworks' history, when the possibility of closure loomed largest. The world market was volatile. For the six months to November 30, 1981, the Division had operated at a loss of $59million - $50 an employee a week. Australia was finally feeling the brunt of a worldwide decline in steel production. For the first time employees realised that many jobs were at stake. The company was determined to modernise in order to improve competitiveness and while Newcastle capital investments totalled $57.2million in 1982, the scrapping of uneconomic capacity saw inevitable closures. Productivity increases necessary for survival demanded that Newcastle reduce its workforce to 6000 by May 1983 while maintaining production at l.5 million tonnes a year. Voluntary Early Retirement packages were offered.

    BHP Steel's situation reflected international trends, but was more worrying because Australian domestic demand had plummeted even lower than international demand.

    Saviour came in the form of the Steel Industry Plan of 1984 -1988. The tripartite agreement between Government, the steel unions and BHP, provided a five-year assistance package of bounty payments up to $71.6million a year, a quota imports and an import watch system.

    Confidence and stability were restored to the steel industry, but in return for a measure of protection, the company was obliged to upgrade and reduce costs. In Newcastle, the plan heralded an unequalled period of investment that would see $450 million spent on capital works over five years. It would also see the start of a new era in industrial relations with the entire workforce pulling together to reach one common goal - survival.

    In 1985, the $90million bloom caster and reheat furnace installation was approved. The four-strand continuous bloom caster would be the largest in the world.

    General Manager Bill Farrands signalled the move towards high grade, value added, specialist steels for the export market. The last half of the decade saw the commissioning of significant projects and upgrades.

    In June 1988, a trial shipment of 3000 tonnes of Special Bar Quality steel exported to the US was well received and an order placed for more. The turnaround had come. BHP Steel reached a record $92.6million profit in September 1988 to which the Rod and Bar Division, particularly Newcastle, was a major contributor.

    The signing by every major union in the Steelworks of the historic Newcastle Steelworks' Development Agreement signalled the start of a new consultative era in planning and industrial relations.

    The prospects for good returns on shareholder funds, industrial relations harmony and an ability to grow and meet domestic and overseas demand had never been brighter.

    The Steelworks marked its 75th birthday in June 1990 and more than 8000 people attended the celebrations. But towards the end of the year the turning economic tide of rising oil prices, inflation and interest rates was being felt and the Australian steel market was down 20% on its peak 1989 levels.

    Last Updated Monday, March 23 2009 @ 08:17 AM|13,583 Hits View Printable Version

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