NSW Treasurer Gladys Berejiklian was at the company’s steelworks at Port Kembla, just south of Wollongong, on Monday morning after brokering a deal that allows BlueScope to defer payroll tax of up to $60 million over three years.
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Low steel prices and weaker demand in Asian export markets due to overcapacity have forced Australian steel companies to cut costs to survive.
“We applaud the contribution by our employees, site management and the combined unions in helping to secure $60m per annum in labour cost savings”.
BlueScope earlier this month reached agreement with unions and employees at Port Kembla for a three-year wage freeze and the shedding of 500 jobs, an essential step to achieving a $200 million cost cutting target.
BlueScope also announced plans to buy out Cargill’s 50 per cent share of the North Star mill in the United States for $US720 million. Automaking and construction accounted for 80 percent of North Stars end-markets this fiscal year, BlueScope said in the presentation.
The steelmaker said it had exercised its right of last refusal, matching an offer from an unnamed third party.
Paul O’Malley, BlueScope managing director and chief executive officer, said “North Star has delivered consistent financial performance and strong returns on invested capital to BlueScope”.
“In New Zealand, at Glenbrook Steelworks, good progress is being made on the delivery of the targeted $NZ50 million savings, but there is more work to do”, he said.
“These measures will help BlueScope maintain its Port Kembla operations amid tough global business conditions”, she said.
The past few months had been hard for BlueScope workers as their jobs hung in the balance, said the AMWU NSW secretary, Tim Ayres.
“Workers are now keen to get on with the job of improving the productivity of the operation and delivering a world-class product”.
“I wanted to make it very clear that this was a specific package given the unique situation BlueScope finds itself in, and given the unique number and scale of jobs at risk – we’re talking 4,500 jobs”, Berejiklian said.
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BlueScope, which also boosted its first-half underlying earnings forecast by 40 percent, excluding the impact of the acquisition, rose 13 percent to A$4.60 at 10:02 a.m.in Sydney, trimming its decline this year to 19 percent.
