Making the Case for Importing Cheaper Fabricated Steel

There is a major issue raging throughout Australia – in the offices and conference rooms of fabricated steel manufacturers and the construction companies that have, in the past, hired them. Simply stated, it is as follows …

Is it reasonable, or anti-Australian business, to purchase cheaper fabricated steel products from overseas companies in China primarily, and in other Asian countries, as well? Consider it a good question because the answer is anything but simple.

Want proof? Prominent members of the Australian steel manufacturing industry have called publicly for protectionism and for heavy import taxes on out-of-country steel purchases. That is, of course, a form of protectionism.

Some steel manufacturing spokespersons have demanded that the Australian government legislate in favor of local manufacturers by creating tough “anti-dumping” regulations which, if enacted, would severely hurt overseas manufacturers and encourage Australian construction companies to “buy local.”

Union representatives for Australia’s construction workers have chimed in, too, publicly stating that a major construction project – the federal Climate Change Department building – is being built with imported, and budget-friendly, Chinese aluminum.  Their comments – and complaints – were reported on in all Fairfax news outlets.

The result of this overseas purchase has been all too obvious: Australian aluminum producers have been forced to the sidelines, watching in frustration as a major construction project – and Australian currency – has been awarded to a foreign company.

And yet, the controversy continues. In fact, Ian Cairns, National Manager – Industry Development for the Australian Steel Institute (ASI) told Manufacturers Monthly that he believes there are many reasons why big companies are buying fabricated steel overseas for their major construction projects. However, the key reason is cost. It’s just cheaper to buy fabricated steel from foreign producers.

But – and this is a big but – Australian manufacturers need to “share in the pie” or an entire industry may go into a permanent funk. As a result, the Australian government has recently appointed a special manufacturing envoy to intervene on behalf of local manufacturers and help them get contracts from the many major Australian companies that have been buying foreign fabricated steel products.

Interestingly, these companies (some of which are likely to be recognizable to you) include BHP Billiton … Rio Tinto … Woodside Petroleum and many others.

Most industry observers and insiders are hopeful that government intervention, while modest and a sense of “what’s good for Australia” will motivate companies to purchase at least some of their fabricated steel from deserving Australian manufacturers.

But … this article also intends to make the case for “buying cheaper overseas” (see the headline above). The fact is that the Australian government has always looked carefully at price (the cheaper the better) when making purchasing decisions – for fabricated steel … for other products, as well.

That said, it seems only fair that Australian companies have the right to do the same. And, if they continue to do so, they will save money on their construction projects … and prompt local steel manufacturing companies to become more competitive.

That’s two good reasons why it is acceptable for construction companies to buy – and use – imported fabricated steel products.

Here’s another reason. Australia is a big country.  There are almost always lots of construction projects taking place – everywhere. And that means there is enough business for everybody – foreign companies and, most importantly, Australia’s great fabricated steel producers.

Articles such as this and others that impact Australia’s steel fabricating industry are always available – and easy to find – right here at E-fab.com.au. Visit us every day.