Since the global economic crisis began, there has been a sharp fall in global demand for steel, resulting in more competition between steel makers.
This competition will place considerable pressure on Australian steel makers BlueScope and OneSteel. Australian steel producers are also facing the potential financial impact of attempts to cut CO2 emissions.
In response to these pressures, on April 17 the Australian Workers Union (AWU) launched New Steel Plan: Our Vision for Australian Steel in the 21st Century.
AWU national secretary Paul Howes, in promoting the plan, has said failure to support the steel industry could potentially cost 500,000 jobs.
The current crisis in the steel industry has its roots in the global resources boom over the past decade. During this boom, there was a substantial rise in the productive capacity in the steel industry. New small producers entered the market — particularly in India and China.
Despite expansion, production peaked for US steel makers at 97% of capacity in June 2006, remaining as high as 94.6% in December 2007. By March, it was down to 35.11%.
In Australia, says the AWU, production has fallen from 85% of capacity in the 2006 June quarter to 75% of capacity in the 2008 December quarter. Expectations are that it will fall to 71% for the March quarter.
In response to the fall in production, steel makers — like other manufacturers — have begun to shift workers onto shorter shifts. Socialist Alliance member Garry Holiday, who is an AWU assistant delegate at BlueScope's Western Port steel refinery at Hastings, said workers are on average working 60% of their previous hours.
In the medium term, steel producers will be looking to shed jobs. To offset this, the AWU proposes a 10-point plan. It aims, among other things, to:
•increase domestic sales by creating a mechanism that gives preference to Australian-made steel;
•have the Australian government take action against international steel makers "dumping" — ie selling steel at much lower prices — in Australia; and
•support productivity growth, wage restraint and jobs by using new technology.
The AWU's plan is modelled on the steel plan adopted by the Hawke Labor government in 1983, which the AWU says "secured
our local industry for the past 25 years".
However, this plan, which was implemented during a similar period of high excess capacity coming out of a resource boom, led to more than 10,000 job losses in the steel industry.
At the same time, Australian steel producers were making significant gains in labour productivity and lifting their international competitiveness.
It is clear that the AWU's proposed new plan will have similar results. Holiday said: "The hoped for results are contradictory. They are supposedly aimed at protecting jobs. However if you look at the tables provided in the plan, the goal is increased labour productivity. So the goal is to work less to produce more. I'm not sure that is supposed to produce or protect jobs.
"I was talking to a delegate from a contractor at Western Port about the plan; he was not impressed at all. He said 'they want us on the dole queue'."
Much of the AWU's plan is about the broader impact on the Australian economy from maintaining a steel industry, rather than the direct impact on steelworkers themselves.
The plan suggests that for every 1000 tonne cut in steel production, there will be 60 jobs lost, and the government would lose $1.97 million in tax revenue.
However, if steel production is going to be maintained through growth in productivity, then it is likely that there will be poorer outcomes in terms of job generation from the steel industry.
The AWU's plan gives first priority to steel producers' profits.
"In producing the plan, the AWU leadership is attempting to demonstrate that it is a 'responsible union' to employers, not only in the steel industry but in other sectors, such as the aluminium and the civil construction industry", Holiday said. The AWU wants to be the union that employers prefer to deal with.
Environmentally friendly steel?
The AWU portrays the steel industry as environmentally friendly. In a March 25 Australian article, Howes said steel was environmentally friendly as it 100% recyclable and, like aluminium, was used in the construction of solar panels and wind turbines.
The steel plan expands on this, outlining how the steel industry could potentially help to cut total greenhouse gas emissions through process and raw materials enhancement, energy and materials recycling and waste and emissions cuts.
The AWU leadership is correct to say the steel industry is under pressure, as a collapse in employment looms. It is also correct that these sectors can potentially contribute significantly to cutting greenhouse gas emissions.
However, in acting as an advocate for steel companies, the AWU puts the company's profits before workers' right to employment and decent wages as well as a liveable environment.