Premier Jay Weatherill said this morning that following a $1 billion lifeline from US credit firm GSO last month, Arrium was at risk of being broken up and Federal Government support was necessary.
“This period … into early April, is a critical period,” Weatherill said before boarding a flight to the United States.
“We know we’ve got a large private equity firm which has refinanced Arrium.
“Our concern though is private equity firms do have a reputation of breaking up businesses and keeping the profitable bits and ones that are less profitable, disposing of them.
“We don’t want Whyalla to be in that situation and to avoid that we’re going to require a strong partnership with the Commonwealth Government.”
Weatherill, who met with Turnbull last night, was reluctant to detail the proposal to keep Arrium operating, but did confirm there would be “substantial” financial contribution.
“I think they [Federal Government] understand the steel industry is an essential part of our sovereign capacity of our nation to actually make things and in particular make things in which to allow us to defend ourselves, “ he said.
“It’s going to require money in one form or another but the best money is money which is purchasing structural steel, which can actually lift profits for the company, utilise an underutilised steel mill but also generate work.”
SA Labor Senator Penny Wong told InDaily the state had been let down by the Federal Government whose messages had damaged South Australian manufacturing.
Wong said backpedalling on submarine construction, defence shipbuilding contracts and “goading” Holden to leave Australia were now taking a negative economic toll on SA.
“What is needed is for government to work with the community, with business and with the people to help them through this transition,” she said.
Weatherill said the delegation to the US would learn from the experiences of former iron cities such as Pittsburgh, Detroit and Michigan – “the so-called rust belt” and “towns that have been deeply affected by structural change in the steel industry”.
“All of those places who have had to grapple with massive changes in their economy.
“[Pittsburgh] has actually risen from those challenges and now has a bright future.
“We want to speak to the civic leaders who helped make that transition. We have a lot to learn from them.
He said threats to SA’s steel industry brought economic challenges which could be considered either a threat or an opportunity.
“It is an impetus for us to actually change our economy more quickly than the world around us is changing.
“That’s what we’ve been doing – transforming our economy.
“There’s a lot more to be done and we need to draw on the best evidence around the world and places that have successfully made that transition.”
While in Detroit, Weatherill will also meet the GMH leadership team to discuss the Elizabeth plant’s final period of operation and how it will treat the community during the process.
“We’re still some ways off from the closure of the plant so there’s plenty of time to talk about the disposition of the plant close [to the end] of 2017,” he said.
“We want to insist that they treat this plant and this workforce and this community the same way as they treat this plant in the United States.
“We will be making, we think, reasonable demands of General Motors.
“The South Australian community has supported it for over 50 years and we’re asking General Motors to support the South Australian community.”
We value local independent journalism. We hope you do too.
InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.