Brisbane Times reported that when Hitachi Construction Machinery went looking for steel to build the frame for its new headquarters in Wacol, in Brisbane's west, it chose a supplier in far off China rather than the Australian owned distributor next door.
The decision by the Australian company that won Hitachi's tender, Spaceframe, appears to have been made on the grounds that it is cheaper to buy steel in China, cut it to length and ship it 7331 kilometers back to Brisbane than it is to buy local.
Chinese subsidies and an undervalued Yuan are being blamed for causing Australian steel industry woes, with the lost Brisbane opportunity being presented as a test case for the embattled sector.
Within weeks, the steel framed Hitachi plant, set to measure around 10,000 square meters, will be assembled on the Wacol site. Spaceframe declined to be interviewed by brisbanetimes.com.au. Hitachi would not discuss the issue, either.
The Australian company that lost the contract, Southern Queensland Steel, confirmed the situation but directed questions to the Australian Steel Institute, of which it is a member.
The Australian Steel Institute blames Chinese government subsidies and the undervalued Yuan for creating an unfair advantage for Chinese suppliers over local companies and increasing pressure on an industry that employs about 100,000 people nationwide.
A story in The Australian newspaper on January 19th 2012 alleged that mining companies were favoring Chinese firms in steel fabrication tenders. The institute has launched a major campaign to highlight the problems posed by imported steel to local steel companies, distributors and producers.
Mr Ian Cairns, national manager of industry development for the institute, said that the scenario playing out in western Brisbane’s industrial hub was a classic example of the challenges facing local firms. He added that "Local businesses are just not being treated fairly. ‘The Chinese steel industry is subsidized by the central government. They are subsidized for electricity and gas and a whole range of issues."
He added that "They are also providing tax incentives for exports from China. It’s just not a level playing field, it's just not fair. The fact of doing business in China is cheaper than it is here, through no fault of the Australian employer."
Mr Cairns said the Yuan was undervalued by between 20% and 40%, adding to the woes of local operators. He added that "It would be like pegging our currency at around 70 cents."
He said that and Australian steel businesses suffered a double whammy on currency exchanges. Ha added that "We've got an undervalued currency from a major competitor, and of course we have a resources boom that is fuelling our currency as well, to the detriment of manufacturers. So we've got a double whammy, where you could almost argue that the dollar is overpriced by 30% and the Yuan is under priced by 30%. So before we even start competing we are 60% off the mark."
The institute recently pushed its case with the Queensland Government, claiming local steel manufacturers were winning between 10% and 12% of big projects.
In 2011, Treasurer Mr Andrew Fraser and Manufacturing Minister Ms Jan Jarratt announced changes requiring local industry participation plans for bigger projects which need an environmental impact studies.
Ms Jarratt said that "We've adopted this as standard for all major public sector funded projects under the Local Industry Policy, and these changes will see the same approach for major private sector investments."
The institute's Queensland's manager Mr John Gardner called it a start.
(Sourced from www.brisbanetimes.com.au)
