BlueScope may have just announced a profit of more than $350 million this week but CEO Paul O’Malley said the steelmaker wasn’t out of the woods yet.
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Mr O’Malley and chief executive of the steelmaker’s Australian and New Zealand operations Mark Vassella were in Wollongong on Wednesday to update both BlueScope employees and the public on the company’s next moves.
It follows on from public meetings last year to spell out the situation BlueScope was in and the two options available to it – cut $200 million from the business or close down the Port Kembla steelworks.
The company adopted the $200 million in cuts – dubbed Plan A – and kept more than 4000 jobs in the Illawarra.
Mr O’Malley said the next step is to retain the benefits of those savings and look to make more in the future so it was worthwhile to invest in the steelworks at Port Kembla.
“When we announced Plan A the profits were always going to improve by $250 million because we were always going to get that through costs-out or closing the steelworks and importing steel,” Mr O’Malley said.
“So we’ve done the first step, which is getting the costs out, that’s essential for the Port Kembla steelworks.
How do you separate BlueScope from the Wollongong community?
- BlueScope CEO Paul O'Malley
“Now keeping the costs out is equally essential. If we can keep the costs out - like CPI - and sell product domestically then the future is positive and not negative.
“We’ve got to make sure we deliver returns, to make profits to employ people and also justify a future reline [of the blast furnace].”
Mr O’Malley said the each year costs escalated from between $30 and $60 million, because of everything from rising energy prices to salary increases, and the company needed to find productivity improvements to offset those increases.
While it may come as a surprise to see a corporation visiting a city to inform the community of what's going on, Mr O’Malley said “you’ve got to respect the places you operate”.
“One of the reasons BlueScope does really well in Asia is because we became part of the community," he said.
“How do you separate BlueScope from the Wollongong community?
“My personal view, the view of the board, the view of the management team is that you’ve got to be available to the stakeholders.”