As de-industrialisation grips southern Australia, Whyalla, and its Arrium steelworks, are the latest victims.
Whyalla, South Australia: Raylene Mullins, 64, is leaving.
It was a Tuesday afternoon and things were scattered throughout the house she and her husband and partner of 50 years, Alan, rent in the town. Ever since Alan lost his job at Arrium, there was no reason for them to stay.
The Mullinses aren’t the first to leave, and they won’t be the last. Arrium ran the steelworks out that way, and once the company went into voluntary administration the whole town had been wondering what would come next.
A future without the steelworks was once unthinkable in the 23,000-person town. So was a Whyalla without Raylene Mullins ever since that day in February earlier this year when she walked right up to the Prime Minister, Malcolm Turnbull, during a press conference and, without fear, gave him a lesson on the way of things.
Turnbull had planted his feet in the town to announce that a rail upgrade would be brought forward to assist the struggling steelworks. Arrium was in financial trouble, had been for a while, and though it hadn’t yet entered administration, it was the closest thing the company was going to get to a bailout under a federal Coalition government.
Raylene already had the words formed in her head, she told me while we sat in her backyard one afternoon. For a long time she had been watching the factories close down and go offshore. It was this thing happening to the country; something big and potentially bad.
A future without the steelworks was once unthinkable in the 23,000-person town.
Things had changed a lot since Malcolm Fraser, the last prime minister that Raylene remembered with any warmth. He may have been an Oxford-educated career politician, but he was raised in rural Victoria and went back to the farm after he retired. Fraser was the reason Raylene had voted Liberal almost all her life.
‘[Fraser] worked with his hands,’ she said. ‘He knew what he had to do for the country.’
As far as she’s concerned, everyone who has come after has just been in it for him- or herself. It had been that way for so long that Raylene’s faith had begun to waver. That’s why she defected to Nick Xenophon at the recent federal election.
Her feeling is that the major parties have stopped talking to ordinary people, and when they try it is with a degree of condescension. During her exchange with Malcolm Turnbull he listened politely and didn’t interrupt. Manufacturing was dead in Australia, Raylene told him in front of the nation’s media. Australia had killed it through the relentless pursuit of free trade agreements. She told him a country needed to make stuff to keep people employed – and in case there was ever another war.
‘You can’t just have health jobs and office jobs,’ she said.
‘I understand your concern, I really do,’ Turnbull responded. ‘But our future is bound up with open markets.’
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Truth is, the rust had set into Whyalla long before anyone knew it was there.
Steel had always been Whyalla’s business. Steel built the roads out there. Steel built the houses. Steel brought in the people. Steel made the factories and drove the trucks. On bad days, steel seemed to hold up the sky.
The town’s infant steelworks opened in 1941, alongside a shipyard, during World War II, and Whyalla’s people went to work building the warships the country needed to drive fascism out of Europe and the Pacific.
After the war, they built merchant ships for BHP, and when the plant was upgraded in 1958 it became one of the largest steel production sites in Australia.
Nineteen-seventy-six was Whyalla’s golden age when its population swelled to 33,000. Two years later, the shipyards closed, putting 1800 people out of work. The town plunged into a local recession, and South Australia’s third largest city began its slow downward slide until that fateful day on 7 April 2016 when Arrium, the entity that owned the steelworks, went into administration.
That was the day of the crash. A Thursday. The Whyalla steelworks employed about 20 per cent of the town. Everyone knew the prognosis was bad, but none had a real sense of it until Dr John Spoehr of Flinders University released an impact study in May that found the end of the steelworks would hit harder than the decline of the auto industry in Detroit.
‘In some ways Whyalla captures all our worst fears because it is so concentrated and so intense,’ he told me. ‘I’ve used the “Detroit” word, but in some ways, Whyalla is in a much more precarious situation than Detroit because it’s much more isolated. It doesn’t have the advantages Detroit has in size, even though Detroit was dependant on the auto-making industries.’
So how did it happen?
In a word: hubris.
During the height of the mining boom when the price of iron ore was over $100 a tonne, company management didn’t just want to make steel, it wanted to mine the ore too. Arrium had invested heavily in high-stakes mining operations across South Australia’s iron triangle while it worked the machines at the steelworks into the ground.
The end of the steelworks would hit harder than the decline of the auto industry in Detroit.
According to the oral history of the workforce, no one in management seemed to want to shut the place down to make any upgrades. They were making too much money.
When the mining boom ended with a whimper and the price of iron ore fell, the company had to keep those old machines pumping just to cover costs. Steel was in oversupply around the world, the threadbare machines were no longer globally competitive and all the bad decisions made during the time of plenty started to be felt across the entire operation.
This is evident in the deal Arrium struck when it took over Southern Iron in October 2011. The company had bought the ore mine from WPG Resources and had to renegotiate a contract with US firm Genesee & Wyoming, which ran the rail link from the mine to the town.
Under the arrangement, Arrium agreed to take what the mine sent down, or pay a penalty. In negotiation, Arrium fiddled with the volumes, but not the length of the contract, which it was agreed would run until 2017.
When the ore price fell again and Arrium had to mothball the mine in January 2015, it was still expected to pay $70 million under the contract for a service it was not using. Rumour has it, the guys paid to run the rail line were turning up to work just to sit in the lunchroom and do nothing.
A little over a year later and a month before the company would go into administration with $2.3 billion in debt, Arrium asked its workforce to take a 10 per cent pay cut.
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Acting mayor of Whyalla, Tom Antonio, never had a choice. Since Arrium went into administration, it has been his job to guide the town through the crisis. Whyalla’s local leadership had been in a unique situation after Jim Pollock resigned as mayor in May for health reasons (sadly, he died in June), leaving Tom working alongside an acting CEO and an acting NBN supervisor.
As acting mayor, Tom has been putting in 14-hour days, while also trying to keep his electrical retail business afloat. He had three sons working at the steelworks, and for a time had been trying to get the word out that Whyalla mattered. When I asked whether he was scared when the news broke of Arrium’s collapse, he didn’t quite know how to answer. He went to say yes, but caught himself quickly.
‘I don’t want to say scared,’ he said. ‘I was certainly extremely concerned. Absolutely. But I’ve taken this as a challenge.’
It sounded like safe politician speak, but there’s a damn good reason for it. For months Tom Antonio had been speaking to just about everyone who would listen about what it would mean if Australia’s last producer of structural steel closed.
He’d also been talking to state and federal politicians, who were working with the administrators, who in turn were talking to the people at the banks.
Once Tom had their attention, the next task was to make sure the townspeople knew Whyalla was not doomed or risk the town emptying out.
Two days before we spoke, the company made it known that it expected to be out of administration by Christmas 2016, while the steelworks and accompanying port would be sold off. Once that happens, Tom explained, it would mean a better future for Whyalla, as a commercial port would open up other opportunities in the region, like exporting iron ore.
The message, he said, was that Whyalla was fighting back against circumstances not of its making.
‘Things will get better,’ he said, though he couldn’t put a definite timeline on it. It could all happen next week, or it could happen in six months.
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Talk in Whyalla has a way of turning back to the town’s troubles. Whyalla’s people are angry on good days and anxious on bad days. They feel betrayed by those who used up the town during the best years of the mining boom and walked away for the worst, leaving them to clean up the mess.
And people have looked around at their town’s empty houses losing value as they sit on the market unsold. They can count the ‘for lease’ signs going up in storefront windows. Then they start wondering whether they have a future in Whyalla.
Bruce Balderstone and his wife, Lorraine, have been thinking about leaving. They own a fish‘n’chip shop, the oldest in the town. It has been around for 40 years, they tell me.
They feel betrayed by those who used up the town during the best years of the mining boom and walked away for the worst, leaving them to clean up the mess.
Up on the shop’s walls are black-and-white photos from Whyalla’s golden age, which were saved from the rubbish heap by a local historian when BHP pulled out of the town in 2000.
‘If you were in Year 12 right now, would you stay?’ Bruce asked me. ‘There’s just nothing else here.’
When I asked what his plans were, Bruce said he didn’t know. Tax time was coming up, and soon he would ask his accountant how long they could keep on. They used to employ five people in the shop, not including themselves, but they were down to three when I met with them.
If they hadn’t laid people off, they would have already gone bankrupt.
‘But I can’t sell up because no one’s buying,’ Bruce said. ‘You know, I’ve always put something away in the good times, knowing there was going to be hard times, but I never knew it was going to get this bad. Some people don’t realise how hard it is when you actually live here.’
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When she left school in 1969, Raylene Mullins started working life as a machinist on a sewing machine. She was 16 years old.
‘I can put a zip in without tacking and pinning it,’ she said. It was a point of pride.
Throughout her working life, Raylene sold Avon and Hobbytex paint and Tupperware. She worked night-shifts at Coles from six to nine, three times a week, while her husband stayed home with the kids. For a while she did repairs on the clothes at a dry cleaners in Victor Harbor, and in 1987 she started driving.
At first everyone told Raylene a woman couldn’t drive a school bus, but she did it anyway. Later, in 2003, she wanted to drive taxis, and the same people told her she couldn’t do that either. Raylene is short and doesn’t approve of swearing; there was no way she could deal with the drunks and deadbeats late at night.
Raylene didn’t care. ‘That’s life,’ she said. She drove taxis for ten years.
Driving taught her how to get the measure of people. She had only six runners during her career, and she knew it was about to happen every time. Driving also meant she talked to people, got to know them, and that’s how she collected stories about engineers who couldn’t engineer, teachers who couldn’t teach and lawyers who couldn’t lawyer.
At the same time, she watched the local factories close down, one by one, as Australia traded the tangible for the intangible. The everyday items people used – the paperclips, the rubber bands, the zips, the garden shovels, the dinner plates, the furniture, the bricks, the clothing, the hats, the buckles, stuff of every size and shape – all started to be brought in on the back of a ship.
What if you can’t afford an education in this new Australia? What if you make a mistake? And what if you just don’t work that way?
What Raylene has witnessed is the Great Transition: the move from making things to the ‘new economy’, which concentrates economic activity in east coast metropolises like Sydney or Melbourne, where people work on laptops in innovation hubs or trade bonds. The jobs of the future are health and tourism and services.
If this isn’t a pathway, people might try construction or flipping houses in real estate thanks to negative gearing, a feature of Australian economic life, which has been described as a Ponzi scheme by leading economists such as Yanis Varoufakis.
Raylene Mullins just called it a betrayal.
What if you can’t afford an education in this new Australia? she wondered. What if you make a mistake? And what if you just don’t work that way?
Some people aren’t good at school. They are good with their hands. They can make. My older two sons didn’t do well in school, couldn’t grasp it and the teacher didn’t have the time to help them. They were lucky to have help at home that pushed them through. Otherwise they would have been lost in the world. People like them, they get told they are dumb, but with manufacturing, they can prove they are not. They go to work happy that they can do something and prove to people that they are not dumb, and that they can do it.
Now these people have no choice about where to work because there isn’t a choice anymore.
In that way, Whyalla is no different to anywhere else across southern Australia wherever the compact between labour, industry and government has been abandoned or undermined. Whyalla could be Wollongong from the 1980s, or Elizabeth in South Australia, or Geelong, Broadmeadows or Dandenong in Victoria when the car industry closes for good next year.
The factory, the steelworks and the smelters may have helped create a more evenly shared prosperity than Lenin’s Socialist Republic, but now they are dead or dying in communities where a new housing development might go up overnight but there won’t be a well-paying job within a 45-minute drive. If parents aren’t thinking about leaving, their kids are because they can’t see a future. In 1920s America, the Okies went west to California. In 2016, South Australia’s sons and daughters go east to Melbourne or Sydney.
Town, work and family defines identity in these places. But in an Australia increasingly divided between winners and losers, this identity is fraying, along with the old certainties.
Politics is just the latest victim. At the recent federal election, almost a third of all South Australians voted independent, the bulk of whom cast their ballot for the insurgent Nick Xenophon Team. Rowan Ramsey, the incumbent Liberal candidate for the electorate of Grey in which Whyalla sits, only narrowly survived.
So, too, did the federal Coalition, forming government with the slimmest of majorities on promises that include corporate-tax cuts and a $2 billion welfare crackdown. It is an approach that will only deepen the antagonism between ordinary people and Canberra.
In the weeks following the election, Xenophon promised to use his influence to pursue a bailout for the Whyalla steelworks as part of his mission to stop South Australia becoming a ‘rust belt state’.
It is a noble aim, and one desperately needed, but at the time of writing, Arrium was still for sale and Holden is pending closure. Elizabeth, where the Holden factory sits, is averaging a 34.5 per cent unemployment rate. Whyalla is currently at 8.6 per cent.
Among the people who live in these places are the Australians who might be working two jobs, or no job, or going out of business. They may now be able to choose between 350 different new car models sold under 67 separate brands, or 747 types of beer online, but many feel like they no longer have a choice.
As the prime minister told the steelworker’s wife, Australia’s future is ‘bound up with open markets’.
