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Analyst: Despite Cost-Cutting Measures, Steel Works Unlikely to Remain Open
10/09/2015 - Wage freezes and layoffs will delay, but likely won’t prevent, the eventual closure of BlueScope Steel Ltd.’s Port Kembla works, according to a Deutsche Bank analyst.
In a research note, analyst Emily Smith wrote that the plant is unlikely to survive the collapse in steel prices, reported The Sydney Morning Herald.
"With steel spreads at record lows, we believe it is only a matter of time before Port Kembla is closed," she said, according to the newspaper.
In a bid to keep the operation afloat, union employees have agreed to accept wage freezes and the elimination of 500 jobs.
According to reports, the deal is expected to save BlueScope AU$170 million. It is seeking AU$200 million in cost savings, and it’s looking to the New South Wales government to provide the remainder through payroll tax breaks and other support.
Port Kembla is Australia's largest steel works.
BlueScope hasn’t yet committed to keeping open the steel works. Its board is to meet later this month and again in November before making a final decision.
"With steel spreads at record lows, we believe it is only a matter of time before Port Kembla is closed," she said, according to the newspaper.
In a bid to keep the operation afloat, union employees have agreed to accept wage freezes and the elimination of 500 jobs.
According to reports, the deal is expected to save BlueScope AU$170 million. It is seeking AU$200 million in cost savings, and it’s looking to the New South Wales government to provide the remainder through payroll tax breaks and other support.
Port Kembla is Australia's largest steel works.
BlueScope hasn’t yet committed to keeping open the steel works. Its board is to meet later this month and again in November before making a final decision.
