This website uses cookies to ensure you have the best experience. Learn more

Global Financial Crisis And The Blue Scope Steel Australia And New Zealand

2813 words - 12 pages

BlueScope Steel Australia and New Zealand (BANZ) is a manufacturing company that produces a range of flat steel products for the Australian and New Zealand domestic market. BANZ was formed in July of 2011 which saw the amalgamation of company sections; Australia and New Zealand Steel Making Business (ANZSMB), LYSAGHT and Distribution Business. This amalgamation was followed by a major organisational restructure which ultimately led to the closing down of Number 6 Blast Furnace and resulted in around 800 job losses at the Port Kembla works and 200 job losses at the Western Port works in Victoria. The aim of this project is to outline the rationale for the restructure and to provide a ...view middle of the document...

Over a 9 month period prices plummeted from around $1000USD per tonne to around $400USD per tonne. Coupled with this diminished steel price a number of other nations, such as China and India, were begging to increase their own steel production. In China alone, steel production increased from 23.7 million tonnes in 1977 to 683 million tonnes in 2011. Also, local steel consumption in China has increased to 400kg per person per annum. As of 2011 the Port Kembla works (the largest steel producer in Australia) was producing around 5.2 million tonnes and local consumption was around 350kg per person per annum.

This increasing demand for steel in Asia highlights the second major challenge that presented itself to the industry, the enormous increase in the cost of raw materials. The production of steel requires to primary materials; iron ore and coke. In 2005-2011 Australia experienced its ‘mining boom’ due to a strong demand from Asian nations for high quality coal. This high demand had a two-fold effect on steel production. The increased demand drove the price of coal, the primary material in coke, extremely high and also greatly increased the price of the Australia dollar. Along with this, the world experienced the ‘global iron ore price revolution’ which saw the price of iron ore rise from $20USD/tonne in 2000 to $140USD/tonne in 2010. Showing a massive 700% increase in as little as 10 years. Another major factor which also led to complications with raw materials was the change in pricing process. Until late 2010 all iron ore and coal suppliers utilised an annual pricing scheme. This set raw materials prices for the length of the year. When this year was finished a new price was negotiated and set. This allowed steel producers set prices for long periods and added an element of greater stability to the company and thus the share prices. However, as of late 2010 some major raw material providers, such as Vale (one of the three largest iron ore producers in the world), began to set prices quarterly. This approach allows raw material producers to negotiate more frequently with customers and thus, gives them greater opportunities to increase the cost of raw materials. This ‘global iron ore price revolution’ was experienced worldwide and all steel producers suffered to varying degrees. Nevertheless, for an already struggling business, this only intensified pressure.

The final challenge present to the company was the high value of the Australian dollar (AUD). It has already been discussed above one of the major influences of this, that being the mining boom, but it was not detailed how this adversely affected an already suffering business. A high AUD decreases the international competitiveness of any exported product from Australia. For BlueScope this meant that in a market which they were already struggling to compete in, due to the excess of cheap Asian steel, they would now be placed at a further disadvantage due to an increased cost being placed...

Find Another Essay On Global Financial Crisis and The BlueScope Steel Australia and New Zealand

The Global Financial Crisis Essay

618 words - 2 pages The global economic crisis beginning mid-2007 was and still is an unsettling event in the history of the world economy. But politicians today, and in fact, many major corporations of the world have found that it was beneficial simply to ignore it. But in October 2011, the world saw one of the largest uproars ever seen in the face of the economic crisis. From New York to Rome, the public voiced dissatisfaction with government policy fueled by

The Global Financial Crisis Essay

2812 words - 11 pages books. Buti, M. (2011). European Economic Forecast. European Commission. Das, D. K. (2004). Financial liberalization. In D. K. Das, Financial Globalization and the Emerging Market Economies (p. 57). New York: Routhledge. Mezzadra, A. F. (2010). Financial Crises. In A. F. Mezzadra, CRISIS IN THE GLOBAL ECONOMY (p. 70). Los Angeles, CA 90057: SEMIOTEXT(E) ACTIVE AGENTS SERIES. O’BRIEN, R. G. (2011). Financial Assets. In R. G. O’BRIEN

The Global Financial Crisis

1000 words - 4 pages The global financial crisis has brought wide-ranging changes to consumer spending behaviour and consumption patterns throughout the world with the economic downturn impacting on the spending and purchasing power of people. The findings of a study conducted by Booz and Company in 2008 on consumer spending behaviour revealed that, firstly, the unprecedented confluence of the dramatic rise in oil prices, the substantial deterioration of housing

The Global Financial Crisis and The Regulation of Investment Banks

1271 words - 6 pages investment banking fields and their operations. Many new regulations have been put in place both in Europe and United States to govern the day to operations of the investment banks and try to minimize chances of having future financial crisis. The industry of investment banking is quite dynamic. The investment banking industry in the United States has seen dramatic changes since 2008 following the global financial crisis. For example out of the top

The Problem with Banks and the Global Financial Crisis 2008

1128 words - 5 pages themselves for the future. The system of banks, promotes the consumption and therefore improves the economy of the country. However, banks also hold a great risk. The Global Financial Crisis in 2008 was caused by the decline of the bank the “Lehman Brothers Holdings Inc.”, because the costumers could not repay their debt to the bank. The decline of one bank often leads to the decline of other banks, because banks interact with each other by

The contemporary Great Recession and the global financial crisis

953 words - 4 pages Since the advent of the subprime crisis in 2007 that it is commonly believed to have led to the Great recession and to the present global financial crisis, these issues have been subject to much research. In fact, no one can claim that the Great Recession and the global financial crisis have been under-researched. In fact, the new world recession has been analysed from different angles and perspectives. Historians, economists, financial experts

Bank CEO Incentives and the Global Financial Crisis

3331 words - 13 pages financial crisis. They conclude, “This evidence recommends that CEOs took exposures that they feel were profitable for their shareholders ex ante but that these exposures performed very poorly ex post. Fahlenbrach and Stulz discover no evidence that the incentive arrangement of senior management lead to risk-taking that benefitted themselves at the expense of stakeholders or shareholders in the firms. Instead, they argue that given the important stakes

Why Canada should unite with Britain, Australia and New Zealand to form a Super-Commonwealth

531 words - 2 pages this reason I believe that it is only by through collective action with our traditional friends in the Crown Commonwealth who share our same values, history, culture and language such as Australia, Great Britain and New Zealand, that Canada will be able to preserve its voice and identity.Living in Beijing governed by an increasingly repressive and militarily strong Chinese regime threatening the peace and stability of the region and diminishing

Global financial crisis

831 words - 4 pages There is no smoke without fire. The global financial crisis caused from hundreds of thousands of decisions and changes from different areas. The America government, Wall Street and the Rating Agencies put on this world-shaking show together. And to be more specific, the top officials in politics and finance pull strings behind the senses. Applying Mintzberg’s ten management roles model as a frame, the America government, Wall Street and the

A DISCUSSION ABOUT THE FAILURE OF FINANCIAL ENGINEERING AND CORPORATE GOVERNANCE AS A CAUSE OF THE GLOBAL FINANCIAL CRISIS

1494 words - 6 pages In this paper, an analysis of how the failures in financial engineering and Corporate Governance have been closely related with the recent Global Financial Crisis is carried out. The Real Estate Bubble in 2006 leaded to the Subprime Mortgage Crisis in 2007 which expanded from the United States to the whole world generating the biggest financial crisis since the Great Depression of the 1930s. There are multiple factors that originate a crisis

Global Financial Crisis

2164 words - 9 pages important financial institutions was a key cause of this crisis with the elements of ethics and accountability. This report’s conclusions were apparent where few new leads were given to what led to this global crisis. Everything that was said has been speculated in the past 3 years but the only difference is that the report provides legitimacy. Works Cited http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName

Similar Essays

The Many Languages Of Australia And New Zealand

1716 words - 7 pages As of 2013, there are many languages spoken both in Australia and New Zealand. Having a history dating as far as the 18th century, both countries constitute the Austral realm. Within its many aspects, one of the most notorious is its language. Known by the humorous effect some of its sentences and words provoke in people, the language of the Austral realm has helped shape the identity of Australia as well as New Zealand and has become an

Volcanoes In Australia And New Zealand

1397 words - 6 pages Why doesn’t Australia have volcanoes and New Zealand does? Australia doesn't have any active volcanoes because Australia is on one single tectonic plate (see picture) There is currently around about 57-65 volcanoes in Australia and out of these, only one is active. No eruptions have been recorded in the past century. Volcanoes occur on the tectonic plate boundaries. Because Australia is in the middle of the Australian plate and it is impossible

The Global Financial Crisis And Its Impact

2217 words - 9 pages 1.0 The Global Financial Crisis and Its Impact The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In

Comparison Between Australia And New Zealand?S Non Verbal Communication

1660 words - 7 pages different from buildings in Australia and Britain. This was partly because New Zealand has always had a relatively small population and lacked the resources or concentrations of private wealth that would support the building of larger, finer buildings.Presently, Australian architecture has an international style of large cities in the company of towering structures of concrete, steel and glass similar to those in other countries. However, some