NZ Steel responds to global pressures



Business as usual unlikely

Excess global steel capacity and dropping demand has seen the price of Hot Rolled Coil drop dramatically in the last several months, this continues to put pressure on NZ Steel and the $50 million cost saving target they are aiming to reach.

We spoke with GM, Andrew Garey about how the company is responding to these pressures, with just over five weeks to go before the all important BlueScope AGM which could decide the future fate of operations at the Glenbrook mill.
When breaking down any major cost saving initiative there are a number of key areas where the business can save. As a company you can’t control the global markets, prices or demand. You are forced to focus on key cost saving areas and make some tough choices.
Sadly some areas are harder than others, you have to address the Human Capital or labour component, sourcing or suppliers, process improvement or streamlining and other general cost reductions or things that you can cut back on or cut out completely.
We asked GM Andrew Garey about his cost saving target and how he was going about achieving it.
On Labour, Andrew says: Great support from our workforce. We have recently reached an agreement with our Combined Union workforce to support the labour cost saving challenge. This is a major step towards achieving the $50 million cost saving target, the collaborative approach by all parties was excellent. The same can be said of our white collar workforce who have already accepted a salary freeze and bonuses being put on hold. Given the global pressures the business is facing, we recognise that we still have a lot of work to do in the coming weeks.
On Sourcing, Andrew says: We are in discussions with all of our suppliers around cost savings, we haven’t entered these discussions lightly and appreciate their willingness to support our business during these difficult times. The initial responses have been really encouraging.
On Manufacturing improvements, Andrew says: Our people are working very hard on manufacturing improvements , our challenge is to maintain those levels of productivity.
On General cost reduction, Andrew says: We have been pursuing a range of general cost reduction initiatives and general belt tightening. However Andrew says he is not in a position, at this time, to provide any more detail around the savings. He says he will be able to provide a more detailed update on progress made in delivering the $50 million savings at the BlueScope AGM in November. Andrew says “The main point that we want to assure the community is that we have a plan, we are making good progress to achieving the $50 million sustainable savings. Whilst there is still a lot of work to do, we are heading in the right direction which is good for everyone; our business, our employees and future generations, our customers and suppliers and our community.
New Zealand Steel has been part of the Franklin community for 50 years, and we want to be around for many more.”
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