The Age reported that the drastic cuts at BlueScope Steel raise two key questions.
1. Does it matter to Australia if we have a steel industry or not?
2. If it does, is it worth trying to keep it?

We could ask the same questions about whether Australia should keep making cars. We could ask the same questions about whether we should keep manufacturing anything.

The record dollar is slowly driving Australian manufacturers out of business. With each cent the dollar rises, their import competitors become cheaper and their exports more expensive.
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From 1985 to 2005, the Australian dollar averaged USD 75¢. It has now risen 40% above that to around USD 1.05.

That shift has made imported goods 30 % cheaper and Australian exports 40% more expensive. Australian manufacturing is slowly being crushed.

Why has the Australian dollar risen so much?

Firstly, because mineral export prices have risen to record levels and the Australian dollar tends to rise and fall with them.

Secondly, interest rates are now far higher than in other AAA-rated countries, offering investors juicy returns. Also, the Reserve Bank keeps hinting that it will raise rates higher still.

Thirdly, while most Asian countries such as China keep their currencies low to boost local output, ours floats freely. The Reserve at times has intervened to stop the dollar falling, but never to stop it rising.

The Reserve is obsessed with the mining boom and thinks the big threat to Australia is inflation. To contain prices, it is reining back the other 90 per cent of the economy. Its hints of more interest rate rises keep pushing the dollar higher.

(Sourced from theage.com.au)