BlueScope, AirFrance – is excess capacity causing job losses? and other questions.

Air France workers ripped the shirts off their managers’ backs when the company said it would fire 2900 workers if unions did not reach an agreement for voluntary layoffs. Ferry workers blockaded the port of Calais with demands to save up to 487 jobs under threat at bankrupt MyFerryLink.

By contrast BlueScope steel workers in Wollongong voted for a deal that will cut 500 of the 5,000 jobs at the plant, and includes a 3 year pay freeze.

So workers reacted differently in France and Australia. BlueScope and Air France-KLM both say that because of international competition, they are heading out of business without the cuts.

There was much talk of the unity, courage, self-sacrifice, bravery and commitment of the BlueScope steel workers, their families and their union, when they voted for the conditions that BlueScope management put forward for steel production to continue. The BlueScope workers directly, and the entire working class of the Illawarra were held to ransom – it would be devastating for them to lose 5000 jobs in an area where 10 000 people are already unemployed, including 18.4 per cent of young people aged 15 to 24.

Casting the best possible light on the BlueScope deal, John Buchanan sees “unions and managers at BlueScope’s Port Kembla plant creatively struggling” for renewal.

The Australian Workers’ Union’s hope for longer term saving of the plant and jobs is partly based on a report commissioned from BIS Shrapnel, which found that it would cost governments much less to buy Australian steel than to pay for the consequences of closing Australian steel manufacturing.

The AWU Port Kembla Secretary Wayne Phillips said “here’s our demand of the Baird Government: the workers here today have accepted very real pain – real sacrifice. So meet us halfway. Help support our jobs and back a Victoria-style local steel procurement plan.” The Labor Member for Shellharbour Anna Watson called on the state government to waive payroll tax for BlueScope.

What pressure will the unions and Illawarra community use to shift Baird from his clear preference for non-union employment and subsidising operators only if they are replacing public sector provision?

Leverage will be difficult to exercise when the union is trying to keep costs down for BlueScope and if they feel bound by the call of BlueScope Steel CEO Paul O’Malley “What we are saying [here] is that if we can create one team, we can save the steelworks. But the class warfare has got to disappear.”

How genuine is BlueScope management about “one team”? The AWU needed independent advice “as to whether the company’s ultimatum [on the prospect of closure] was genuine”. Was this independent advice based on direct union access to BlueScope accounts? What commitment is there for sharing full details of the company’s finances with workers, including details of executive pay and extras?

John Buchanan identifies the competitive pressure on BlueScope steel. “The steel industry has been awash with excess capacity for decades. First Japan, then Korea and most recently India, Brazil and China have each – at different times – taken on traditional suppliers and succeeded spectacularly. With the serious slowdown in Chinese growth, the fragile situation of recent years has been become critical.” Buchanan contrasts experiences of capacity reduction in the 1980s in the US where “one of the key responses was for employers to demand, and unions to accept, huge cuts in labour standards. This involved things like reductions in annual leave by at least two weeks per year and pay cuts of up to 25 per cent. This concession bargaining merely delayed large-scale scrapping of capacity – but the erosion of labour standards endured.”

How will everyone in “one team” BlueScope know when the workers’ sacrifices have been sufficient and their pay levels can be restored?
Given that international competitive pressures and the longer term threat of closure are not about to go away, will the AWU be trying to work with steel workers internationally on minimum labour standards levelled up to a higher playing field for all?
Will Air France workers fare any better than BlueScope workers in saving jobs?

The global excess steel capacity is excess for lack of sufficient “effective demand” i.e. demand that can be paid for and so return a profit to invested capital. This is not necessarily the same as there being oversupply for lack of need, in a world where so many do not have money to pay for uses of steel for purposes such as housing, transport, energy, machinery. Steel can also be recycled and is used in renewable energy capture, such as wind turbines.

Who in the world could benefit from steel and how could it be provided to them outside of the market when they can’t afford to pay?
How can steel manufacturing be used to combat rather then make climate change worse?

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