More than 150 regional jobs are at risk because a multinational has chosen to use cheaper imported steel, likely from China, instead of local product to build a $360 million wind farm in western Victoria.
The only manufacturer of wind turbines in the state, Keppel Prince Engineering in Portland, says it will need to sack workers if the federal government does not step in and force Danish firm Vestas to use local content for its Port Fairy project.
Unions and Keppel Prince are pleading with the Morrison government to order Vestas to use Victorian steel for the 218MW Ryan Corner wind farm, which will provide more than half its power to the federal government’s Snowy Hydro scheme.
The federal government imposed anti-dumping measures on Chinese steel producers in recent years and is in a trade war with the Chinese government.
“We have a jobs armageddon coming in Portland,” Keppel Prince’s executive director, Steve Garner, said of the south-west coastal town, population 10,000.
“The Prime Minister has been spruiking loudly that we need to get back to manufacturing and we need sovereign capabilities. We have those capabilities and yet he’s endorsing, through the Snowy Hydro, the use of Chinese steel.
“We’ve seen dumped Chinese steel on other Victorian projects and the government would effectively be supporting Chinese firms … even though their government has hit us on lobsters and other exports.”
Federal Trade Minister Dan Tehan, whose Wannon electorate encompasses Portland, said he had expressed disappointment to Vestas about its decision. But he said the federal government did not have any mechanism to force the company to change course because the project was not funded by the Commonwealth.
“I have reminded them how important it is that backing renewables in Australia creates local jobs,” he said.
Vestas believes the Portland-manufactured tower plates cost about 40 per cent more than alternatives, but Keppel Prince believes the difference is half that. The Victorian firm sources its raw material from Australian-owned BlueScope Steel, whose complaint to the federal government prompted the Australian Anti-Dumping Commission to impose tariffs of up to 144 per cent on some Chinese steel.
The Victorian government forces companies that build state-backed renewable projects to use 60 per cent local content. Keppel Prince has won contracts on Victorian projects but the Ryan Corner project, which is not a Victoria-backed initiative, does not mandate Australian-made inputs.
The next batch of Victorian Renewable Energy auction projects will likely begin later this year, meaning Keppel Prince could be forced to stay afloat with little work for the best part of a year.
A Victorian government spokeswoman said its renewable energy program had provided Keppel Prince with work in recent years and new projects this year “will create the next wave of jobs in the manufacturing, engineering and the operation of solar and wind farms”.
A spokeswoman for Vestas said the company’s preference was to use local suppliers if they satisfied safety, quality and cost criteria, but Keppel Prince’s bid was unsuccessful. She said transport, crane work and installation would be carried out by local firms. Vestas has been contracted by Global Power Generation to build the project.
The $53 billion Danish company has previously used steel from CS Wind, which has operations in China, on Victorian projects. US authorities imposed tariffs on CS Wind imports and claimed the Chinese government was subsidising the cost of production so it could sell the product cheaper and undercut American firms.
The Productivity Commission stated in a 2019 report that Australia was one of the “most prolific” users of anti-dumping measures globally, joining the EU, US and Canada in imposing import restrictions on some Chinese aluminium and steel. The commission said in the report that “there are no convincing justifications for these measures”.
Mr Tehan said the government had strong anti-dumping processes that could be utilised in any case where there was evidence of dumping.
Australia and China have been engaged in a trade dispute in which Xi Jinping’s government has restricted exports on Australian goods including lobsters, timber and coal. The measures came after Australia hardened its stance toward China over several years by blocking Huawei from Australia’s 5G network and leading a global push to investigate the COVID-19 pandemic’s origins.
The local state MP who represents Portland, Liberal Roma Britnell, said China’s actions had caused more than $100 million of losses to western Victorian, which relied on its timber and crayfish industries. She said the Andrews government could withhold Vestas’ planning permit if the company did not agree to use local content.
Australian Workers’ Union Victorian secretary Ben Davis said Vestas was “piggybacking” off a federal government project that had provided the company with a guaranteed buyer of power, effectively underwriting the wind farm.
“The federal government is technically the client, so they could mandate local steel … and it’s shameful they would not use local suppliers wherever possible,” he said, adding Vestas operated in Australia with a “social licence” to maximise benefit to the Australian community.
Mr Davis said the Morrison government could make up the difference between the price of the local and imported steel, so long as the difference was not too large.
Federal Labor senator Kim Carr, who has served as an industry and manufacturing minister, said there was a serious risk that dumped Chinese steel would be used on the project.
“The government likes to talk to up local procurement and manufacturing but its actions fall far short of its rhetoric,” he said.
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