The Guardian January 31, 2001

Steelworkers' Strike: "We have had a gut full"

Paul Matters

On Tuesday January 23, 800 steel maintenance workers at BHP's largest 
steelworks downed tools and walked off the job for 48 hours, as the fight 
for job security intensified. After a decade of job losses and huge profit-
making by BHP their anger boiled over. BHP's latest attack on jobs involves 
a proposal to contract out up to 800 maintenance and emergency service jobs 
at its Port Kembla steelworks on the South Coast of NSW.

BHP's industrial relations strategy is in crisis at Port Kembla, as the 
steelworkers strike against the threat of massive job losses.

The steelworkers first struck on November 10 last year against BHP's job 
shedding plans.

BHP has intensified the exploitation of its workforce and increased the 
profit share to senior managers and shareholders at the cost of jobs and 
increasing poverty in the steel regions.

It defends its actions with the familiar rhetoric of capitalist 
globalisation. BHP Steel chief Kirby Adams sermonised, "We can't hide 
behind some fence called Australia and do it differently."

Chief Executive Paul Anderson, who is paid $7.4 million per year in salary 
and stock options and is expected to leave Australia with at least a $40 
million payout when his finishes with BHP, said he had a "long-term 
objective of reducing costs in real terms by a couple of percentage points 
a year over the next four or five years."

The job shedding has not been confined to the steel industry. In the NSW 
coalfields, which supply the Port Kembla steelworks, BHP has also engaged 
in extensive mine closures and job cuts.

Since the middle of 1997, 800 mining jobs have been cut from the Southern 

In January 1998, BHP announced a further 140 job cuts in its Eloura, Appin, 
Tower and West Cliff mines.

At Blackwater in Central Queensland, mineworkers are fighting moves by BHP 
to sack some 200 employees in a regional community already hard hit by 

In the Pilbara in Western Australia, BHP has embarked on another anti-union 
offensive with the aim of excluding the union and replacing collective 
agreements by individual contracts.

In fact BHP is doing nothing differently to any other big corporation. It 
is pursuing a classic multinational strategy of capital accumulation and 
exploitation. And in the last ten years it has been spectacularly 

Bloody Huge Profits

In the decade since 1989, BHP has made $4.1 billion profits (excluding 
abnormal items) from steel workers.

In the last financial year BHP's steel profit was $410 million, an increase 
of $142 million, a staggering 53 percent increase over the previous year.

Anderson unimpressed said, "These results fall far short of what our 
shareholders have a right to expect."

This was the year that BHP closed the Newcastle steelworks throwing 4000 
workers on the dole queue and sold off its Long Products operations.

In 1995, the authoritative Fortune 500 survey rated BHP Steel in the 
top five most profitable and productive steel companies in the world.

How have these massive profits been achieved?

Profits in capitalist society are unpaid labour. Profits are created 
because the wages paid to workers are less than the value in the goods and 
services produced by them; this surplus value is the source of capitalist 

This exploitation of steel workers is the basis of BHP's massive profits.

In 1999 when BHP's steel profits increased by 53 per cent its total steel 
sales only increased by 2.3 per cent to 8.5 million tonnes.

This level of steel production and sales has been fairly constant over the 
last ten years. So the huge leap in profits cannot be explained by 
increased market share and higher steel sales.

BHP's profit explosion has been achieved by an intensification of 
exploitation of steelworkers.

This has been achieved by two means.

1. Reducing jobs and work re-organisation

From 1990 to 1999 employment in the Australian iron and steel industry fell 
from 41,792 to 29,126.

In the Port Kembla steelworks, employment levels in the last ten years have 
been cut from approximately 10,000 workers to 5,950 today. There were no 
major technological changes in this period to account for such a huge job 

Work reorganisation, particularly multi-skilling, the imposition of 
increased work functions, added responsibilities and speed-ups have been 
used to make up for the smaller workforce and generate increased 

2. Increasing the hours of work

While the Australian Bureau of Statistics calculates average hours worked 
by full-time workers in the manufacturing industry, surprisingly and 
perhaps significantly, it does not publish such figures for the steel 

The average wage during the ten-year period has been calculated by the ABS 
to have increased by 84 percent, indicating extremely high overtime levels 
in the industry.

The introduction of 12-hour shift systems, with heavy obligations on 
workers such as in the Blast Furnace Team Work Agreement has contributed to 
longer hours being worked.

Growing job insecurity also places pressure on steel workers to work while 
the work is still around.

Increasing overtime reduces the cost of labour for BHP despite overtime 
penalty rates, because with high overtime levels less workers need to be 
employed overall.

But, BHP's drive for profits is insatiable. In December last year a 
"confidential briefing" was given by the Manager of the Port Kembla 
steelworks to the local State and Federal ALP parliamentarians.

At this meeting the political representatives of the Illawarra community 
were told that BHP's current steel profits of about $20 million dollars a 
month were inadequate and they would have to be increased to $50 million a 

None of the parliamentarians, with one honourable exception, have informed 
their constituencies of this directive, choosing to protect the 
confidentiality requirement of their political master.

So much for representative democracy.

Shareholder value rules, OK

In 1997 there was a decisive change in the corporate and financial 
direction of BHP which is of crucial significance to steelworkers, miners 
and steel region communities.

The promotion of Anderson to Chief Executive Officer signalled a new stage 
in the development of BHP as a multinational corporation, particularly in 
regard to the distribution of capital and profits within BHP and its 
approach to trade unions.

Anderson has pursued a classic shareholder value strategy of disinvestment, 
selling off sideline businesses, shutting down loss making divisions and 
shifting investment to high profit, low cost, commodity producing regions.

Wall Street's mantra of core business basics is parroted by this ex-Duke 
Energy apparachik. The stockmarket loves it.

He has increased the BHP share price, at the cost of thousands of workers' 
jobs and the future of the Australian steel industry.

What is occurring is a massive redistribution of wealth as stock values 
rise and are traded speculatively whilst poverty and despair grow in the 
steel and coal regions.

This is a trend in capitalist globalisation, when from 1971 to 1991, the 
world's 500 largest multinationals increased their revenues by 700 percent 
without increasing the number of workers they employed globally.

BHP's job cuts are not the result of inefficiencies or loss making. They 
are the result of a ruthless strategy to continually drive up profits.

Over the past three years the rhetoric of shareholder value has dominated 
BHP's senior management.

Initially, an ideology from the US emerging in the '80S, shareholder value 
principles are being used to reshape BHP, a corporation generating huge 
amounts of capital.

Previously this capital was allocated under an older capitalist strategy of 
retaining and reinvestment. This retention of capital provided the basis of 
corporate growth, through investment in capital equipment.

Two problems emerged for BHP under this regime. One was the growing 
complexity of managing an increasingly globalised and diverse corporation. 
The other was intense international competition.

Due to the huge amounts of capital tied up in steelmaking processes and the 
over-production of steel internationally, steel companies struggled to gain 
a five percent return on capital invested.

Although BHP Steel is a profitable steel company, BHP's rate of return on 
capital in mineral commodity resources, oil and natural gas is around 15 

Last year BHP's profits from oil increased by 471 per cent to over $1.1 

In the maximisation of profit and the distribution of massive portions of 
that profit to senior managers and shareholders BHP might compete with the 
other steel companies, but not with the rate of return of BHP's mineral and 
oil divisions.

Farewell to stakeholder unionism

In the steel industry BHP has sought co-operation with the unions during 
the last ten years.

A sophisticated industrial relations strategy was directed at steelworkers 
to incorporate them into BHP's objectives, to have them believe they are 
stakeholders in the company.

Consultative committees, management selected representatives, quality 
circles, work teams, worker shareholding schemes and "fact finding" 
overseas missions for union officials have been utilised to bypass worker 
resistance against work intensification and job loss.

The trading off working conditions and jobs for wage rises increased the 
pressure on workers and ultimately did not save jobs, although BHP 
propaganda attempted to link higher productivity with improved wages and 
job security.

Ten years of "stakeholder unionism" has produced an unmitigated disaster 
for rank and file steelworkers. After all the sacrifices, the loss of jobs, 
the speed-ups, one worker doing two and three jobs, there is now less 
security and more job losses than ever before.

And where will it all end? What of the future?

Listen to Brad Mills, BHP Chief Strategic Officer who was quoted as saying 
that BHP would end its involvement in steelmaking "if we get to the point 
where we thought it would create more value as an independent company ... 
the company is always looking at ways to maximise value."

A militant alternative strategy is desperately needed to protect the 
security of steelworkers, the future of the steel industry and to create 
equitable development for the coal and steel regions.

But we must begin with an understanding that there can be no co-operation 
with greed and exploitation and that finally workers have no stake in an 
unjust capitalist system that every day slips deeper into crisis.

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