‘Battle-hardened’ Whyalla waits for what comes next after Greensill collapse
Whyalla is a manufacturing town, a place of hi-vis vests, of old-school manufacturing grunt. A city where, from some angles, the steelworks dominate the skyline.
Load Error
There’s a new and spectacular circular jetty that everyone wants you to see, and big plans to develop the foreshore, which slopes to a glittering sea.
People visit for the giant cuttlefish that pulsate with colour in the watery depths.
Related: Thousands of steel jobs at risk in UK and Australia amid dispute over Greensill debt
And there are those who have been here for generations, stoically enduring the endless end-of-times predictions in this Eyre Peninsula town.
This city (population 21,500) is often either a beacon or a canary in the coalmine for manufacturing.
The latest threat to Whyalla is the collapse of the Bundaberg billionaire Lex Greensill’s business. Greensill Capital – which claims 10 million customers – has gone into administration. The company begged for a financial lifeline of more than $300m from the UK government and was left wanting.
And Greensill was financing all sorts of operations around the world, including GFG Alliance, which owns the Whyalla steelworks.
The city has faced existential threats to its iron ore and steelmaking industries for decades, even before the “Whyalla wipeout” moment. In 2012 the then-trade minister, Craig Emerson, used a Skyhooks song to ridicule the claim by the then-opposition leader, Tony Abbott, that a carbon “tax” would kill the town.
Whyalla endured. But in 2016 the steelworks owner Arrium went bust. The “wipeout” headlines were dusted off and used again. Employees volunteered for a 10% pay cut to make it a more attractive sale proposition. It worked.
© Provided by The Guardian
Giant cuttlefish congregate in the Spencer Gulf. Their annual migration draws visitors to the steel town. Photograph: Wildestanimal/Getty Images
The wealthy industrialist Sanjeev Gupta, head of GFG Alliance, rode into town in 2017. He bought Arrium, saving thousands of jobs.
Whyalla itself was saved. Wasn’t it?
Some people thought it was a “saviour” story, others that it was too good to be true. The big talk about “green steel” and renewables that Gupta would fund provoked both relieved and sceptical reactions.
There has been simmering suspicion about GFG’s financial foundation. The Financial Times reported last year that, as Gupta rescued struggling factories around the world, concern was growing about GFG’s complicated and opaque finances.
The workers just want to get on and do what they’re very good at doing
Peter Lamps, Australian Workers’ Union
Then that Bundaberg billionaire went bust. His customer, Gupta, needs to find a way to replace about $4bn in funding. He has conceded it’s been pretty tough and says he was too reliant on Greensill.
But if you’re expecting a story about yet another manufacturing hub meeting its end, you’d be wrong.
The Whyalla people proverbially roll their eyes at the idea of their imminent demise. They’ve seen it all before.
Video: ‘That’s not actually how it works each-way-Albo’: Murray (Sky News Australia)
The Australian Workers’ Union – normally the first to arc up at any threat to such a loyal workforce, says the mood is one of “very, very cautious optimism”.
Its South Australian branch secretary, Peter Lamps, says that naturally the community and the workers are worried. But that worry is tempered by some hard numbers (although the actual numbers are hard to come by).
In 2016 the industry was in fairly dire straits but since then the market has picked up. Mineral prices have boomed, work orders are flowing in and the place is making a profit.
“I think it’s fair to say that the workers just want to get on and do what they’re very good at doing,” he says.
There’s a mild debate about $50m the SA government promised – years ago, under the former Labor government – to improve the site. But Lamps and others say that money is earmarked for site efficiencies, not for bailouts.
The SA premier, Steven Marshall, says he has been meeting regularly with Gupta and is monitoring the situation closely. He met with the prime minister, Scott Morrison, last week and told the ABC that GFG Alliance hasn’t asked for help … yet.
© Provided by The Guardian
Sanjeev Gupta, the head of GFG Alliance, which owns the steel plant. Photograph: Danny Lawson/PA
Marshall says that $50m is still on the table but it’s there to make the site “sustainable”, not to make the company behind it solvent.
“I’m reliably informed that production is very strong at the steel plant … The business now is in significantly better shape than it’s been in for the last five years,” he says.
The local state Labor MP, Eddie Hughes, says there’s a “degree of uncertainty” as stories rumble around and roll out about GFG Alliance’s financial woes but that locals feel some immunity.
“The order books are full,” he says. “The place is cranking. For the first time in many years the steelworks is in the black – which is not to say that it doesn’t need to be modernised. We just need to get through these current challenges.”
Hughes is relatively sanguine about that $50m – like others, he accepts that the money shouldn’t be used as a financial lifeline to GFG.
It should go to “de-bottlenecking”, he says, incremental improvements to the site’s efficiency. He’s optimistic that GFG will get alternative finance, that renewable plans including battery storage and hydrogen production and the economics of “green steel” will help, along with the push for a sovereign manufacturing industry.
(Hughes would, though, like to know what federal and state governments might do if things fall over.)
The outgoing industry minister, Karen Andrews – who is shifting to home affairs, and will be replaced by the former attorney general Christian Porter – says the federal government is “closely monitoring” the situation and talking directly to Gupta.
“It would not be appropriate for the Government to speculate about the finances of a private company,” she says. As for GFG, a spokesman says it’s working through the situation. “Steel and mining markets are strong and the integrated steel and mining business in Whyalla is profitable and continues to progress its transition strategy,” he says.
“Our plans to refinance the businesses are progressing well and we are maintaining operations as normal.”
GFG Alliance is embedded in the Whyalla community; sponsoring sports teams and Christmas carols, giving money for bushfire relief and school breakfasts.
Barbara Derham, who owns the Foreshore Motor Inn, won’t hear a bad word said about the company. Neither will the hundreds of people who’ve passed through the Inn’s doors since news about Greensill’s demise, she says.
“I run a hotel, a motel here, and a restaurant. They’ve come in, they’re all positive and annoyed with some of the headlines,” she says.
“‘The end of Whyalla.’ ‘The death of Whyalla.’
“I’ve been here since 1968 and we’ve had our ups and downs but we have great faith in GFG. I haven’t spoken to one negative person in the past three weeks.”
Derham says her plans for a huge redevelopment are continuing apace and that they’ve never been so busy.
“We’re booked out the whole of Easter,” she says.
One source says the steelworks is so profitable now that even if Gupta completely withdraws, someone else will pick it up. Others say both state and federal governments are being diplomatic for now, but might change their tunes if the UK contagion of financial failure spread here. But the general vibe is that Whyalla has enough natural and human resources to be protected from the chaos in the UK.
Before his election, Hughes spent a couple of decades on the local council and before that he was in the steel industry. He has lived in Whyalla through many of its ups and downs.
“We’re battle-hardened,” he says.
Source: Thanks msn.com