Things Fall Apart

Having got the car home at the weekend I  booked it into the garage for repairs and service on Monday afternoon. It was returned to me yesterday afternoon ( Tuesday) repaired and serviced. It was mainly ignition problems which meant a new ignition coil assembly and a new set of high tension ignition wires. A few things besides plus a general service and new spark plugs. So the car seems to be running well, but no trips for a little while. I did call the clerk and asked if there were any papers I needed to have or anything I need to be aware of arising out of the meeting I missed. He will send me copies of the paperwork and I’ll send him  copies of the Annual General Meeting Report. I know that one of the issues discussed was the introduction of SKYPE as a means of conducting the meetings. I objected to this last time it came up and I  will object to it again, and fortunately, I am not alone in this. Those who advocate Skype do so on the basis of use for small meetings or the fact that they call their children inter-state several times a week and the system works well. Yes it does for small meetings and for individuals but in our case I do not believe that Skype should be used as it is a poor substitute for face to face meetings and useless in determining the overall mood of the meeting and at times body language is as important as the spoken word in determining the mood of the meeting. Anyway, that’s part of my view and I have no doubt the issue will be raised again in August.

The news from the Administrator of Arrium, however, is not quite so good. It is now generally believed that Arrium will be broken up and sold off. Much of the Arrium holdings are profitable but the steelworks is running at a loss and is responsible for much of the current debt. The University of Flinders have produced a projected  model of the consequences of the demise and loss of the steelworks to the region and the State.  The immediate consequence would be the loss of some 3500 jobs, but then there are the suppliers and contractors and the businesses  that supply Arrium locally – about 4000 jobs locally and regionally – so overall about 7500+ jobs. The financial consequences to  Whyalla and surrounds would be the loss of half a billion dollars in revenue. The consequences to the State is estimate at $800 Million in lost revenue. But according to Arrium there are two sides to Arrium – the good Arrium which has mining interests and two electric arc

furnaces on the East Coast that produce steel products and makes good profits selling these to the construction industry. The Bad Arrium is the Whyalla Steelworks and the South Australian Mining Operations that are burning cash faster than the Good Arrium ( Moly-Cop) can generate it. One of our major hotels has closed down and gone into liquidation as a direct consequence of the Arrium Debacle – it was the preferred hotel for visiting staff, for Arrium Functions and various courses. It had become dependent on Arrium for the majority of its business and revenue, so when Arrium  went into administration the hotel lost its main source of revenue. The banks are – at this stage – opposed to any plan that means the closure of the Steelworks – understandable self interest. What has been calculated is the proposed loss of revenue locally and State, but what has not been calculated is the loss to the banks – the actual money owed by Arrium aside.  There are hundreds of families, these families have mortgages, have loans, have credit cards. If the steelworks were to close and all these people were without jobs – and given the state of Arrium it would be unlikely that they would get anything near their redundancy entitlements – people unable to pay their mortgage. What happens? does the bank take control of this property? Well yes, I guess so. Does this then mean that the banks now have millions of dollars in property that no one wants- well can’t afford. Given that in the late 1970s / early 1980s  when BHP Steel were in trouble – the shipyards closed and the steelworks contracted, we went from a population of 36,000 to about 23,000 – the same could happen again. The Administrator suggests that  the South Australian  operation s – Steelworks and Iron Ore Mines – could be up for sale in July and he hopes to see Arrium out of the hands of an Administrator by Christmas. I sincerely hope so.