Chinese steel imports blamed for IMG job losses
Job cuts at a New Zealand steel firm are the result of Chinese steel imports being sold at cut-throat prices, says a manufacturers union.
Joe Gallagher, national industry organiser from manufacturing union E tu, said steel fabricator Integrated Maintenance Group (IMG) made five production welders redundant on Monday.
"They have had to lay off a shift because the orders have dried up," Gallagher said.
New Zealand steel fabricators were losing contracts because customers were buying cheaper fabricated steel imported from China, Gallagher said.
IMG would not confirm whether staff had been made redundant or respond to questions about the impact steel imports were having on orders.
Last month concerns about a glut of Chinese steel imports flooding the market bubbled to the surface when it was revealed Pacific Steel, the sister company of iron miner and processor NZ Steel, had lodged an application, under local and World Trade Organisation rules, for an investigation into alleged Chinese dumping of cheap steel on the New Zealand market.
Should the Ministry of Business, Innovation and Employment choose to investigate it could result in steel import restrictions, such as anti-dumping tariffs against China.
China is not happy with the situation and has threatened reprisals against New Zealand kiwifruit, dairy and wool exports.
Gallagher said in the past most most steel from China was unprocessed but now manufactured steel beams were being imported into New Zealand and local companies were struggling to compete on price.
"There's no tariffs on this imported product, there's no consistent quality checks," Gallagher said.
"We've got to be doing something to stem that flow."
IMG employed about 40 staff, he said.
The laid off production welders, who earned about $25 an hour, could struggle to find work at other steel plants as the market came under pressure, he said.
"This is the knock down effect of us not doing enough to protect our steel industry in New Zealand."
Industry association Metals NZ chief executive Gary Hook said China makes half of the world's steel and drives international prices.
China's economic slowdown combined with devaluation of the Chinese yuan had resulted in a global steel surplus, sending New Zealand steel prices to a 16-year low.
Many New Zealand businesses in steel manufacturing and processing would be challenged by international pricing as local buyers looked for a good deal from other markets.
"Maybe we are seeing the fist job losses as a result of a stronger offer from regional steel markets," Hook said.
China was flooding ASEAN countries with cheap steel. Those markets then looked to New Zealand to try flog off their heavy structural steel, he said.
"We are right on the back door of these markets driven fundamentally by China."
Statistics New Zealand figures show that in the year to June 2010 New Zealand imported 85,000 tonnes of steel from China worth $229 million. In the year to June that figure more than doubled to 183,000 tonnes of steel worth $446 million.
That roughly works out to about $2700 per tonne in 2010 versus $2400 per tonne today.
Steel fabricator Grayson Engineering general manager David Moore said fabricated steel from Asia was about 15 per cent cheaper than local steel firms.
Imported Asian steel made up about 20 per cent of the market in New Zealand and was being used in big construction projects such as the Christchurch Acute Services Building - the largest government project in the Canterbury rebuild.
Grayson Engineering employed 130 workers and had not made any staff redundant yet, he said.
But jobs could be on the line across the industry if the amount of imported steel in New Zealand continued to increase..
"You've got to have a certain amount of work and cash flow coming into the business to keep people gainfully employed," Moore said.
Businesses needed to adapt their operating model to meet the new conditions.
"It's a simple equation. You've got to have the work coming in to keep people busy."