As far as the Port Kembla steelworks is concerned, the bad times are now in the rear-view mirror, according to BlueScope CEO Paul O’Malley.
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In the back end of 2015, BlueScope delivered an ultimatum to the steelworkers at Port Kembla – find $200 million in savings or the gates would close.
It was news that sent shock waves through the Illawarra, as the extent of the flow-on effects of closure were realised.
Several hundred workers left the company, but the $200 million target was reached and the steelworks stayed open.
On Monday, with BlueScope announcing a $359 million half-year profit, Mr O’Malley agreed that the worst was over for Port Kembla.
“I think that is absolutely fair [to say],” Mr O’Malley said.
“Port Kembla is through the worst of the pain – it is about the future.”
While Port Kembla’s fortunes have improved it was still in the red from time to time. However, the situation was no longer as dire as it was two years ago.
“The way I would look at it is, it goes up and down but we’ve passed the point of saying, ‘if it goes down we have to shut’,” he said.
“This is not about making short-term ‘do we keep going or do we shut?’ decisions.
“We’re producing such good momentum in productivity improvement, in cost reductions. The focus now is more on ensuring that we get a return on the capital so we can bank enough money between now and a blast furnace reline so that a reline pay for itself.”
At Monday’s briefing, Mr O’Malley said the move to reduce costs would be ongoing across the board.
He said each of the more than 100 sites in the Australian section of the business had been assigned a savings target.
The $150 million target for the first half of this financial year was reached and Mr O’Malley said a similar amount was expected from January to June this year.
A target for the Australian business of $300 million had been set for the 2017-18 financial year and, after that, to offset cost rises with “productivity improvements”.
Mr O’Malley didn’t specify whether this would include further job losses at Port Kembla.
“We’re adding labour at the plate mill, we’ve been adding labour on the core plate line but there are some areas where we’re reducing labour,” he said.
“There’s always movement at such a large organisation, but some of the productivity will come from capital investment that sees us either improve the quality or the process or does some automation.”