Human Resource Management Issues at the Port Kembla Steelworks

Elaboration , 2015 , 10 Pages , Grade: 2

Business economics - Business Management, Corporate Governance

The steel industry in the world has, in the recent past, had its fair share of challenges. The Australian steel industry, in particular, is an embodiment of such problems. Among other obstacles, such industries face climate change challenges, human resource and constraints associated with the raw materials.

Looking back at history, however, the steel manufacturing in Australia has never had it smooth. The genesis of the trouble that has plagued the industry ever since is the inauspicious beginning following the 1840’s discovery of iron deposits at Iron Knob, SA. As a result of poor quality of the iron ore and the coke, the steel imports from Britain presented stiff competition. As such, the Australian industry stalled in the 1870s. But at the onset of the twentieth century, the industry rose from the dust due to the increasing demand for steel. Among other steelworks that went into operation at the time include the Port Kembla industry in the New South Wales. But as such events as the first world war set in, the demand for steel overly burgeoned almost tripling the initial demand. As such, most of the aspects and factors of production in a larger industry were overlooked. Staffing, production, availability of raw materials and market availability were some of the overlooked aspects at the time. Such negligent would later come to haunt the Australian steel industry leading to the closure of some of the most steelworks.

The challenges, primarily human resource, are the basis for the following discussion

TABLE OF CONTENTS

1.0. Introduction

2.0. History of the Steel Industry
2.1. Port Kembla Steelworks
2.2. Importance of the Steel Industry in Australia

3.0. The Global Financial Crisis and its Effects on the Steel Industry
3.1. Role of Unions
3.2. Closure of the Company
3.3. What an expatriate manager must prepare for

4.0. Conclusion

Reference List

Human Resource Management Issues at the Port Kembla Steelworks

1.0. Introduction

After staying in operation for close to 100 years, the Port Kembla steel plant is finally on the verge of closure. In a revelation that shocked many a regular worker, BlueScope Steel threatened to shut down the company if its workforce did not accept retrenchment. That is just the tip of the iceberg. Most importantly, it is a manifestation of the overlooked problems that have been affecting the plant for years. In what most researchers view as “gross negligence” and poor management, the industry’s major woes are primarily human resource related. Needless to say, if the management decides to employ a new manager, they will have to grapple with similar challenges. The situation may prove even more difficult for an expatriate from, say, the US. As Erik (2013) noted, the United States’ steel industry particulars have been weak for the past eight months. As opposed to the Port Kembla steelworks, the upset in the United States industry is due in large part to the changes in the global steel consumption. Fortunately, the situation is improving and then near future is bright for the US steel industry. With such a background, it is justifiable to speculate that an expatriate from a country whose recent situation has been similar to that of the Australian industry would save the falling steel, manufacturer.

For the most part, as already mentioned, the general view is that the company may collapse due to human resource issues. While some researchers have proved the lack of a culture of engagement in the plant, motivation and performance, and leadership building have also affected the industry’s growth. With that in mind, the following report seeks to go beyond the usual in a bid to critically examine the operations of the Port Kembla steelworks. Specifically, the purpose of the report is to identify and analyze the human resource management challenges facing the steel production plant. Besides, I will examine the history of the plant and the entire industry in Australia and attempt to relate it to the prevailing human resource crisis in the industry.

2.0. History of the Steel Industry

2.1. Port Kembla Steelworks

A briefer version of the Port Kembla steelworks has been presented above. However, this section presents a more elaborate version of the same. As Bernie (2010) posited, William Sandford is the pioneer of the Australia’s steel industry. He is made, at the Eskbank ironworks in Lithgow, the first heat of steel. The Hoskins Family later, in 1907, acquired the plant and drove it to fame by 1919. At this time, the plant was solely looking up to the Port Kembla District for coal its coal supplies. On the other hand, BHP’s steel making success was unrivaled and growing. In light of that, Hoskins picked Port Kembla for its operation where they began production in 1928. After establishing itself at the new location, Hoskins ceased their productions at Lithgow. At this time, Australian Iron and Steel Limited (AIS) was battling the financial crisis. The company was, as at the end of 1935, entirely owned by acquired and owned by BHP. The new owner of the enterprise provided the necessary financial requirement for the improvement of its working. As small as it was, the Steelworks made colossal contributions to the first World War. To support the operations and enhance the company’s stability, BHP selected Port Kembla in 1946 for construction of the hot strip mill, the first of its kind in Australia. After years of operation, BHP Steel eventually parted ways with BHPBilliton group. In 2003, two years later, BHP became BlueScope Steel.

2.2. Importance of the Steel Industry in Australia

According to Pillay (2010), the iron and steel sector in Australia is a vital building block for a plethora of activities in the economy. First, and probably obvious, the steel provides a construction material, development of resources, infrastructure improvement and supports the locomotive sector. Besides, the industry also plays a pivotal role in steel recycling. On a larger scale, the industry offers employment opportunities to more than 24,000 people with more than $1.5 in wages annually (Hobbs 2008). However, when the direct and indirect jobs are combined, the figure quadruples to an excess of 91, 000. At the same time, the steel industry, just like any corporate institution, participates in a blizzard of corporate social responsibility activities throughout Australia. Among the activities the companies involves in include sports. Also, some of the firms offer education sponsorships at all levels thereby supporting Australia’s education system. In this regard, while the industry makes an immense contribution to the economy and the GDP of Australia, it also impacts positively on the lives of the natives.

3.0. The Global Financial Crisis and its Effects on the Steel Industry

Pillay (2010) asserts that the Global Financial Crisis (GFC) begun back in 2007. As at 2008, the situation had moved from bad to worse causing a decline in stock prices worldwide. Major financial institutions like the Lehman Brothers among other collapsed amidst the crisis. The Australian market was not an exception to the economic turmoil. In 2008, the GFC caused the Australian building construction commencements to decline by 10% (Hobbs 2008). For the subsequent years, the total building output continued diminishing. In as much as the situation is gradually growing better, some of its effects are still felt. Concurrently, the GFC caused the adoption of some corrective measures throughout the globe that will also affect the steel industry negatively.

One such measure is the change in pricing of raw materials. Described as a universal iron ore price revolution, the price change poses enormous impacts on the steel industry throughout the globe. John (2011) supposed that all the raw materials with the iron core as their chief component account for up to 60 percent of the cost of steel. Consequently, a transition in the price of the iron core directly affects the price of steel. The steelmaking costs are, and will be more volatile in the coming future if the current trend continues. So, for BlueScope, and such companies, the current tough times may last a little longer. However, that is not worse than the ripple effect that the price change has caused. The financial year 2015-2016 has seen up to 1.7% decline in the global crude steel production (Pillay 2010). Perhaps, the price change coupled with diluted demand for steel are the primary cause of the global steel output. With regards to the situation, many, if not all, of the companies operating in this sector can barely support their operations. In Australia, for instance, the BlueScope’s' more than 91,000-member workforce is at risk of losing their job. Suppose the company does not collapse, at least half of the workers face retrenchment since reduced production translates into less demand for labor.

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• Grade: 2
• Author: Jonathan Deaux (Author)
• Publication Year: 2015
• Pages: 10
• Catalog Number: V379528
• ISBN (eBook): 9783668586789
• ISBN (Book): 9783668586796
• Language: English
• Tags: steel, industry, australia, climate change, financial crisis