With the economic boom probably past its peak, Western Australian steel fabricators are going through a bit of a rough patch. This is not because there is not enough steel fabrication work to go round but because a large percentage of that work is been shipped offshore. There is no shortage of steel fabrication skills in WA, quite the contrary actually, but local steel fabricators can’t seem to compete on a price level with overseas steel companies.
It appears that local engineers are not getting the opportunities to participate in high-end engineering design projects even though we have some of the world’s finest steel fabricators right here in WA. The majority of projects are going overseas to London and USA amongst others. This is causing many steel workshops to close or retrench employees and run on a shoestring until the work comes in.
A good example is the Chevron financed Gorgon gas project on Barrow Island, which was expected to keep steel workshops in WA busy for years. Now, while some work has trickled into the western state, most of it has been shipped overseas, like many other projects.
Local steel workers are not taking this lying down, with strikes and protests calling for local or national government to subsidise the local industry in order to make them more price competitive.
The local steel market is critical to the Western Australian economy and the shrinking of this industry can have a number of adverse effects on the state and its economy in general. Using local steel fabricators not only ensures the local economy remains vibrant, it keeps many people employed.
Local steel fabricators are having more success in the smaller steel projects that require niche skills, which our industry has an abundance of. In addition to offering these specialised skills, local steel companies also offer lifestyle maintenance for their projects, something their overseas competitors do not.
The problem is an interesting one, because while Australian steel fabricating companies often outperform foreign companies when competing in the global marketplace, they lose out due to pricing. It’s not just Australian companies that should be using local, but our high level of skill suggests there is a huge international market that would send their steel fabrication work to our shores, if we we’re just more affordable.
Subsidised companies overseas enjoy a competitive edge and are able to outbid their competitors on price alone, because we all know that price will outsell skills every time.
There are a number of reasons for contractors and developers to make use of our local, highly skilled steel companies.
The economy
The local steel economy is huge and when contractors invest in local, the money stays here. This leads to a stronger economy, keeps people in jobs and that money is then spent at local businesses.
The environment
Using local lowers the delivery time, removes the enormous freight costs, lowers the carbon footprint of the entire project, and it means maintenance and supplies are close at hand. It also means contractors and fabricators can communicate in person as opposed to digitally.
Easy transportation
Products can be delivered via rail or road, quickly and easily. This means a much shorter supply time, and less waiting around for something to be delivered from thousands of kilometres away.
Lower inventories
Builders and construction companies do not have to hold large stocks of steel, cutting into their operation budget, because supplies are always just around the corner, usually a phone call away. They are easy to deliver, meaning companies can pay for what they need when they need it.
Clearly, the local steel industry is as robust and strong as some of its products, but it often can’t compete with other countries because their governments understand the importance of attracting steel contracts. This is an enormous industry, and the advantages of government investing in it are numerous. The implications do not just affect the bottom line; it affects other businesses, and ultimately people’s lives.
When you are looking for a steel company, you want to work with a skilled and knowledgeable company who have experience in a wide range of projects of all sizes.
