Shed Industry Struggling

Posted on : February 21, 2013

There are more and more concrete examples that the shed industry and the broader steel industry are struggling.

  • On the 01/03/2012 RimShaw Enterprises Pty Ltd, Trading as BuyaShed was placed into Liquidation.
  • Capital Steel Buildings was placed in Voluntary Administration, with the first meeting of creditors held on 6th of February 2013.
  • The fate of Capital Steel Buildings will be decided before the 9th of March
  • Who will be next over the next 6 months?

Senior Analyst from IBISWorld, Craig Shulman has said it is likely that that CSB has been hit with lowering demand levels and rising costs in the steel industry.

“Over the past five years structural steel fabrication in Australia has declined at an annual rate of just under 1%… This has been influenced by the weak domestic demand related to the construction industry, volatility in steel prices which have raised costs and the introduction of the carbon tax” he says.

Shulman says the declining growth rate of the steel fabrication industry in Australia is likely to continue, signifying the potential administration of more steel companies.

This is a concern indeed and this raises the risk to the consumer of more Shed Warehouse type scenarios.  In addition this is tragic for the  the distributors who are also struggling to make a living,  without worrying about  a potential liquidation.  CSB currently has 17 distributors and we hope they are doing ok.

It is not over for CSB yet, as it should be noted that just because a company is in Voluntary Administration does not mean that the company is bankrupt (in liquidation).

Voluntary Liquidation

 

Given that the company had the first meeting of creditors was on the 6th of Feb, this  indicates that an Administrator will have been appointed at the latest of the 29th of Jan and the Meeting to to decide the company’s future will be before the 9th of March.  The three outcomes are that the Creditors return the company back to the control of the directors, the creditors accept a deed of company arrangement or the worse fate being liquidation.

We will follow the outcome of this very closely.

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Alternative to the CO2 Carbon Tax for the Steel Industry

Posted on : July 18, 2011

The current development of furnaces for steel manufacturing is changing – but not in Australia. BlueScope and One Steel cannot compete with the giants in Asia, USA, India and Europe.

The answer is a non coal fired furnace – called an Electric Arc Furnace – the images below are copied from mainly sites in China and India. The use electricity to produce molten iron used every day in the steel industry.

 

Electric Arc Furnace

Electric Arc Furnace Diagram

Electric Arc Furnace 2

Electric Arc Furnace 3

As you can see this is not dissimilar to providing the required temperatures to liquefy Iron Ore Oxide to Iron (steel) plus lots of other very technical processes. But the great thing about this it reduces the CO2 emissions by 50% plus (to be confirmed) but the source of power is excluded in this exercise. All of Chinese, Indian, American and European Steel producers are going down this avenue. It will become the dominating source of steel while the CO2 emissions are a problem to the globe. Why is Australia not looking at this technology – because coal is cheaper than the extremely high power charges already being charged? With the introduction of the Carbon Tax on Power Stations and Steel Manufacture – this technology will not be available to Australia and we will become the third world manufacturers (polluters of CO2) and eventually shut majority of these manufacturing companies down.

WHY? Because power is already expensive and will become more so with the CO2 Tax Introduction. How does Australia make power? The majority is coal and the government will make a fortune in revenue from this CO2 Tax along all supply lines. Why would they invest in alternate sources of power that do not produce any CO2? Because there isn’t a tax on it yet! What is this magical power supply that doesn’t emit any CO2?

 

Nuclear Power Stations

The below is a photo of a power station in Europe (includes Russia) that are simply producing large amounts of energy without the CO2 poisoning of the atmosphere.

Nuclear power plant

How do these magic power stations work – people in Australia haven’t seen one here because they are banned and will be for a long time with the sentiment that has been placed in this country since the early 1970’s. Nuclear Energy is very different from Nuclear Bombs! Have a look at the world today that uses nuclear power.

 

 

 

 

 

Nuclear power plant usage

 

The grey areas (that include Australia) have no reactors – WHY? Because of the fear that we will all die if something goes wrong. Nearly 40% of the world’s landmass population has access to nuclear power! We don’t and will not until there is a big shift in the acceptance by the Australian public of this power source.  If education is the key – then lobby groups from manufacturing industries will have to provide the input to start this process.

 

Australia Needs Affordable Power to Sustain its Economic Viability in Steel Manufacturing.

How can BlueScope and One Steel change (or even afford to research and develop) to this new technology? The simple answer is they will not. The CO2 Tax has just wiped it off the R&D board’s agenda at the annual production sustainability meeting. Australia cannot supply power for this process without utilising coal or gas. Wind, Solar, Geothermal, Wave and other renewable power supplies don’t compete with the economical supply of base load power that exists in Nuclear Power Supply.

Australia says on one hand – don’t use Nuclear power – but then says you pollute too much CO2 into the atmosphere – what are the steel companies going to do? Unlike TATA and other world steel giants they can’t use nuclear power from companies in China like the CHINA GUANGDONG NUCLEAR POWER COMPANY which supplies fuel (uranium fuel cells) to all of Chinas nuclear Power Stations. Where does the China Guangdong Nuclear Power Company get its Uranium Ore from? ANSWER is Australia. Aren’t we very clever? Sell it but don’t use it! The next good part of the story is that Energy Metals a 60.6% Chinese / Australian company was just granted a licence to export uranium from the Northern Territory to China for the next ten years.

 

WHY?

The questions raised are:

  • We can sell uranium for nuclear power but not to Australian companies for power production in Australia.
  • Over 50% ownership (by other countries) of uranium mines is allowed in Australia and they can sell it to whoever they want.
  • Nuclear power is very bad in Australia – but so is coal – we have to use wind, solar etc.
  • Cheap power, no CO2 polluting power (nuclear) and cheap, CO2 polluting power (coal) is not an option in Australia because one is banned and the other is taxed till it is no longer affordable.
  • How will the big manufacturers in steel, cement aluminium etc afford to develop new technology or even adapt to new technology if this CO2 tax is introduced.
  • Will everyone accept cheaper imports of overseas manufactured steel product to utilise in building etc?

How many manufacturing groups, associations, industry groups, federations, lobby groups etc are actually interested in saving this steel industry? I will be publishing a list of each group involved directly or indirectly of their involvement to date and also their intended involvement including “no comment” over the next few weeks.

This industry employs (directly & indirectly) the vast majority of Australian workers and this Tax and also the Ban on Nuclear Power will leave us behind.

I will leave you with two images – pick which ones are Australia and which one is China?

Australia

 

 

China

 

Where do we want to be in 100 years? 500 years? China is planning for the end of 3000 not 2012 like Australia.

Here’s the roofing perspective of all this – maybe pictures are easier to see the comparison?

The big question is which one is Australia and which one is China? A or B?

Picture A

Picture B

 

Email your answer to shed@shedeye.com.au and also if you require further technical data regarding this report or an RSS feed setup to your email address?

All industry Associations, Federations, Lobby Groups, Institutes or other interested parties please leave contact details at the above address.

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The End of Steel Manufacturing in Australia

Posted on : March 6, 2011

Shedeye previously printed Shed Prices to go sky High, it was clear that the steel manufacturing sector in Australia is under serious threat with the introduction of a Carbon tax on the industry.  Shedeye then showed the cold hard science behind the Steel shed industry and carbon.  Shedeye also proposed that rather than a tax, perhaps all ozzies with the room in their back yards should plant a gumtree!

Bluescope has responded to the threat by sending media releases to both the smh.com.au as reported Bluescope seeks exemption for manufacturing and www.theaustralian.com.au as reported Carbon tax plan threatens viability.

BlueScopes Steel managing director has stated

“The test has to be: can the price be passed through . . . if the price is not paid through, it is basically the end of steel manufacturing in Australia,”

and

“For emissions-intensive trade-exposed industries there should be no cost until our competitors face a cost and there certainly shouldn’t be a free ride for imports that sees manufacturers have to move their operations offshore and hide carbon in someone else’s backyard.

If the manufacturing sector does not get an exemption is the government going to impose tariffs on imported steel?  What a mess.

While BlueScope is in the business of making money and this involves lobbying and looking out for their own interests before all else, this is a clear case of the general public’s best interest.

The industry is threatened via big increases in shed prices, the disposable income of Australians is in serious trouble and even when the government starts to allocate the funds from the carbon tax (inefficiently and no doubt misappropriated), the damage may well have been done.

 

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Sheds – What happens with Carbon Tax or the ETS implementation?

Posted on : March 5, 2011

The home or domestic garage or shed has become an icon in the Australian backyard. Whether it is a normal 6 X 6 double door garage or a 3 x 9 storage shed – this industry will be affected by every single company involved in the manufacture of all the components of this iconic “SHED”.

So who are these companies that need to charge you more as a result of the Carbon Tax? They happen to be the biggest emitters of CO2 in Australia because we mine minerals (including coal etc) to manufacture simple things such as steel, aluminium, glass, cement, paint, timber (YES – these guys do emit CO2 to cut timber), carpet, plastic downpipes, electrical wiring, and the list is endless. All of these companies will have to increase prices in order to pay for the Carbon tax – and the answer is that you & I will pay. There is no alternative or secret formula in the production of steel for example – the operational side of steel producers are at the apex in efficiency in the world as far as CO2 emissions are concerned. Australian giant BlueScope and One Steel have the most efficient steel making plants in the World – so what happens when a Tax is added to the industry? The basic recipe for steel making is complex – yet simple in the chemical conversion – Iron Ore is represented by Fe the symbol the same as C represents Carbon – Oxygen is represented by the symbol O – and the process of steel making (Plus energy – coal furnaces) is as follows:

Iron Ore is represented by the symbol – FeO – (One atom of Iron plus one atom of Oxygen) and Carbon Monoxide is represented by CO – (one atom of carbon plus one atom of Oxygen) – this is chemistry and the conversion is represented by the following formula.

FeO + CO = Fe +  CO2 – all the numbers on both sides add up – but it is the heat required by burning coal or fuel to complete this process that the Carbon Tax will be implemented on. Because it takes 2 tonne of CO2 to make 1** Tonne of steel – the price will increase by exactly the Carbon Tax per tonne at the source. But – it doesn’t stop there – it needs to be rollformed, transported and erected. Don’t expect any change out of 16% to 30% per tonne at the end site and this is a conservative figure. Science currently does not have the answers to improve the process to reduce the CO2 emissions greatly – and the BlueScope website has plenty of information on exactly what has been discussed above. The end result is that it will be cheaper to import steel (finished product) along with all other building materials like Aluminium, cement, glass etc from countries (like China) that have no Carbon Tax.

This tax directly on manufacturing industries will be a major setback for the shed industry if they cannot afford to pay this tax – by either adaption or economically – to compete with imports. The result will be no more Australian Made – developed and innovated by Aussie industry – last but not least – a very sorry and diminished Shed Industry.

So if your shed is approximately 12 tonne of steel, concrete, plastic, glass, etc (the average weight of a 6 x 6 garage shed) – then why can’t you get a credit against this tax if you grow plants or store timber over the next five years (or whatever is deemed acceptable) to offset the emissions of the 29 to 40 tonnes of CO2 that has been released to the atmosphere to manufacture this shed.  For example a gum tree that has a height of 30 meters and a diameter of 800 millimetres and is three years old will have stored nearly 5.885 tonnes of CO2. In this case your shed would be paid for in carbon tax in 8 years approximately. It is the environment we are talking about – not CO2.

 

**Steel making requires a high heat – the furnace – they need CO for the conversion to molten Iron (the CO comes from the coal or furnace fuel) so less than one tonne is used in the conversion and the other plus tonne is used in the heat  = 2 tonnes. The price of carbon dioxide (not carbon) to make one tonne of steel – hence the carbon tax

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Carbon Tax to Send Shed Prices Sky High

Posted on : March 1, 2011

Shed Photo compliments of Alibaba LTD

How do you think the shed industry will be after you study the ramifications below?

What will be the implications on shed prices of the current governments carbon tax of approximately $20 per tonne of carbon dioxide along the supply chain of manufacturing, delivering and erecting a shed on your property. Just to explain carbon tax simply – is if you look at your electricity bill – it will show how many tonnes of CO2 you have put into the atmosphere simply by living and doing the normal things everyday. Approximately 4 tonnes of CO2 is expelled into the air if your bill is around $500.00 per quarter.

To manufacture, process, deliver and erect your shed is also putting this CO2 into the atmosphere and will be calculated accordingly, adding to shed or garage prices. The basic principles of economics will apply to all industry, transport, offices etc, so in dollar terms, you will be hit with an additional Carbon Tax amount relative to the location, power usage in all areas and the construction of your shed.

Indicators so far are expecting in manufacture and transport of 16% increase plus the additional charges the shed resellers, manufacturers, transport companies and administration will charge to cover these costs anywhere up to 20% increase in shed prices . BIG, BIG BIG and will get bigger – but don’t worry it will be on everything from roast lamb, fuel, holidays, restaurants, etc etc. Shed and Garage prices are not alone and if you are looking to save money – purchase your shed (and everything else) before the introduction of Carbon Tax but if you want to stop CO2 entering the atmosphere you must wait for the introduction of Carbon Tax!!!!!!

Will this make substitutes such as wood and brick more price competitive?  Are steel price rises in conjunction with the carbon tax going to make shed prices too expensive for the backyard shed?

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