Recycling Older Steelworkers: Post-redundancy Job-mobility Experiences of Workers from BlueScope Steel Port Kembla.

Author:O'Brien, Martin
  1. Introduction

    The current Australian steel-manufacturing industry is a minnow of its former self. It peaked in 1974-75 with 37,800 employees supplying approximately 2 per cent of the world's crude steel production; Australia now produces 0.3 per cent, with fewer than 5000 employees (International Iron and Steel Institute 1978; World steel Association 2016). The process of workforce reduction in steel manufacturing has been characterised by concentrated periods of mass redundancies. For example in 1981 the BHP Port Kembla steelworks, the largest in Australia, employed 20,350 workers. Between May 1981 and May 1983 this workforce fell to 14,400 via voluntary retirement, and retrenchment as a result of a global steel crisis (Mangan and Guest 1983). Over a similar time period, another 4100 jobs were shed from the smaller BHP Newcastle steelworks (Gordon and Gordon 1986).

    Such mass workforce retrenchment and redundancy phenomena were certainly not restricted to Australia, with the (then) European Economic Community shedding 125,000 steelworkers, and Great Britain 84,000 in the period 1974 to 1980 (Kelly 1988). Similarly, mass redundancies have been documented across numerous industries including car manufacturing (Bailey et al. 2014), clothing and textiles (Bezuidenhout et al. 2007), and the airline industry (Weller2012). The often sudden and dramatic effect of retrenchment and redundancy on individual workers, families, and the community has led to a rich literature documenting post-redundancy outcomes. A common finding throughout these studies is relatively poor job mobility for redundant workers in general (Jones 1989; Turnbull and Wass 1997), but particularly for older workers (Walker et al. 1985; Oesch and Baumann 2015) Older workers, on the standard OECD definition, are those older than 55 years (Blondal and Scarpetta 1997).

    Against the backdrop of a high exchange rate, increasing input costs, and a worldwide oversupply of steel (Silva and de Carvalho 2015), on 21 August 2011 BlueScope Steel (formerly BHP) Port Kembla announced that it would be exiting the export market. This entailed shutting down one of its two remaining blast furnaces, forcing the redundancy of 800 employees. The current study captures and analyses the post-redundancy labour market outcomes for these steelworkers over a period of 18 months from their redundancy. We attempt to capture job mobility--broadly defined as the post-redundancy dynamics in labour force status--with a particular focus on issues influencing successful employment transitions. The important issue of capturing these employment dynamics necessitates the use of longitudinal data, which we deal with through using survey instruments at two time points. These quantitative data are then augmented by qualitative interview data from a subset of respondents. We document issues surrounding the redundancy process, confusion, and ambiguity relating to subsequent labour force status, and features of job search and mobility.

    In line with the important focus on older-worker disadvantage in past redundancy studies, the plight of older workers is a central focus of this study. In this respect, a unique and encouraging finding from our research--compared to past redundancy studies--is the relative success of workers aged 55 to 59 in obtaining re-employment over the longer term. We attribute this to a combination of favourable labour demand conditions in skill-related industries, older workers' initial attitudes to unemployment, and their willingness to switch job-search strategies. It is expected that findings from this study will contribute directly to the strand of literature that analyses the post-redundancy employment dynamics of older workers following redundancy; and it will inform policy makers' responses to regional structural change.

  2. The Rise and Fall of the Port Kembla Steelworks

    One hundred and sixty-two hectares of industrial land at Port Kembla were purchased in 1921 by Charles and Cecil Hopkins from the family of the pioneer explorer and politician William Charles Wentworth. Australian Iron and Steel Limited (AIS) was formed in 1928 to operate the Port Kembla steelworks, taking advantage of the deep harbour and geographical proximity of nearby coal mines. The No. 1 blast furnace was blown in on 29 August 1928, with steelmaking commencing in 1931 (Australia's Industry World 2016). AIS was acquired by the Broken Hill Proprietary Company Limited (BHP) in 1935 to complement its Newcastle steelworks, and enabled the commissioning of the No. 2 blast furnace in 1938. Other notable events included the addition of the basic oxygen steelmaking in 1972, continuous slab casting in 1978 (Donaldson 1981), and the commissioning of the No. 6 blast furnace in 1996. In 2001, BHP announced that it would be merging with the mining company Billiton, and thus BHP Steel was to become a separate company, changing its name to BlueScope Steel in 2003 (BlueScope Steel 2016).

    In 1980-81 it was estimated that the Port Kembla steelworks employed over 70 per cent of the local Wollongong workforce, either directly or indirectly (Kelly 1988). As documented above, the global steel crisis of the early 1980s resulted in a workforce reduction at the steelworks of approximately 30 per cent. The impact on the local labour market was obvious, with the number of unemployed people registered locally with the Commonwealth Employment Service increasing from 7711 to 21,415 between March and December 1981 (Mangan and Guest 1983). However, after this the steelworks' employment trends were characterised by a gradual decline (Donaldson 1985). By 1990, employment at Port Kembla had dropped to 9500 (Lamont and Robin 2012), and it halved over the subsequent decade to 4705. Employment fell below 4000 for the first time when the steelworks was renamed BlueScope Steel in 2003, and was marginally over 3000 for the remainder of the 2000s (Langford 2011). Employment numbers were largely maintained over the period of the global financial crisis, with BlueScope choosing to reline its No. 5 blast furnace in 2009 while production was down. These official employment figures are somewhat masked by the emergence of a significant contractor workforce over recent decades. It has been estimated that between 1000 to 1500 contractors were on site on any given day in the period immediately before the downsizing in 2011 (Langford 2011).

    By way of comparison, the BHP Newcastle steelworks opened in June 1915. Due to a slump in the steel market, it closed temporarily between June 1922 and February 1923, leaving more than 5000 employees out of work. However, employment expanded to over 9000 employees during World War II, as it emerged as a major supplier of munitions. It then peaked at 14,000 workers in 1964, and fell to below 9000 during the steel crisis of the early 1980s (Watson 2008). Its closure was announced in 1997 when there were still 3900 workers, with the final 1450 workers leaving the steelworks on 30 September 1999 (Lewer 2013).

    BlueScope Steel's management announced a one billion dollar loss on 21 August 2011. Citing high raw-material costs and the exchange rate, BlueScope reacted by discontinuing steel exports, which accounted for around 50 percent of its production. The ensuing restructure would result in the loss of 800 BlueScope jobs along with an estimated further 330 contractors (BlueScope Explains: Why We Had to Cut Jobs 2011). The redundancies took effect from October 2011 to February 2012. A generous redundancy package was negotiated. It consisted of 14 weeks pay, plus two weeks pay per year of employment, in addition to a lump sum of between $7500 and $12,500 depending upon employment tenure (Paver 2011). This compares to Mitsubishi in 2004, where workers received five weeks severance pay, plus five and a half weeks pay for every year of service (Robinson 2004). Ford employees' packages in 2016 comprised four weeks pay per year of service, capped at 90 weeks, plus an additional week for every year, uncapped (Preiss and Gordon 2016).

    The Federal government response was swift. Prime Minister Gillard immediately announced a rescue package consisting of a $30 million Illawarra Region Innovation and Investment Fund (IRIIF) to encourage local sustainable job creation, with a further $10 million for Job Service Providers (JSP), directed at the redundant steelworkers themselves; workers were provided with individual case managers, a $9000 relocation allowance, a $3000jobseeker account for retraining and equipment, as well as wage subsidies (Hasham 2011). Of note is that the estimated 400 contractors affected by the BlueScope downsizing would not have access to the relatively generous redundancy payouts, but they were eligible for this $10 million labour market assistance.

    In comparison, the closure of Mitsubishi in South Australia in 2004 attracted a $40 million regional investment-attraction strategy, in addition to a $10 million labour market assistance package to assist redundant workers directly (Armstrong et al. 2008). The closure of Ford in Geelong in 2016 attracted a $29.5 million investment-attraction fund, which was announced in 2013 (Department of Industry, Innovation and Science 2015).

  3. Workforce Redundancy Research Literature

    Mass work force redundancies tend to be associated with large manufacturing firms located in specific regions and they therefore often garner both media and policy attention (Webber and Campbell 1997). Redundancy can have far-reaching effects for the individual worker, their family, and the local community. As such, a wealth of redundancy research literature has evolved, analysing the effects of redundancy from numerous viewpoints and disciplines. A cursory overview of this research reveals that redundancy has been identified as a pivotal life-course event affecting career change (Gardiner et al. 2009), retirement (Gardiner et al. 2007),financial stress (Weller 2012), health and...

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