Altona site to shut: Union sounds jobs alarm on gas crisis

The closure of manufacturing giant Dow Chemical's plant in Melbourne's west has sparked a sharp rebuke of politicians for failing to solve the national gas crisis, with a key union warning that a job loss "avalanche" could be unleashed unless the problem was solved.

Dow Chemical on Tuesday cited rising gas prices and increasing international competition as contributing factors in its decision to shut its manufacturing plant in the Melbourne suburb of Altona, costing 26 jobs.

Rising gas prices have been blamed for the closure of Dow's Melbourne plant.Credit: John Woudstra

The company said the plant, which opened in the 1970s, was struggling under pressure of rising costs and the company's ability to supply the Asia region through its new factories in Thailand and the Middle East.

"There [were] a range of factors that have impacted the plant's economic viability," said Dow's Australia and New Zealand president and managing director, Karen Dobson.

"Energy is one of a number of factors considered in the assessment, including increasing operations and manufacturing costs ... No single factor drove the assessment conclusion."

Gas prices in Australia have increased sharply in recent years amid supply pressures that have sparked warnings of a potential east-coast shortage.

AWU Victorian secretary Ben Davis.Credit: Wayne Taylor

The situation has fuelled calls from industry and unions for state and federal government action to ensure gas exports do not come at the expense of adequate local supply and also for state government moratoriums on exploitation of onshore reserves to be lifted.

"While politicians bicker, companies close," said Ben Davis, Victorian secretary of the Australian Workers Union, which represents Dow employees

Mr Davis said union officials and manufacturing executives had been warning of the consequences of inaction.

He said the closure of Dow's plant was a "devastating, heartbreaking" decision for his members and their families and he hoped Dow would not be the first of a wave of manufacturers "who find our energy situation untenable".

Let's hope this isn’t the start of an avalanche to come.

AWU's Ben Davis

"Thus far we have been spared too many job losses," he said. "Let's hope this isn’t the start of an avalanche to come."

Industry representatives for some of the country's biggest manufacturers – such as steelmaker BlueScope, fertiliser maker Incitec Pivot and building materials suppliers CSR, Brickworks and Adelaide Brighton – said the closure of Dow's Altona plant highlighted the severity of the challenges facing the manufacturing sector.

"If you want globally competitive manufacturing, you need competitively priced energy," said Ben Eade, the chief executive of industry group Manufacturing Australia.

"It's very hard for a big manufacturer to allocate capital to new plants or indeed in some cases the maintenance of existing plants with gas prices where they are."

Federal Energy Minister Angus Taylor said the government was "extremely concerned" that high gas prices were impacting the viability of Australian companies. On Tuesday he called on the Andrews state government In Victoria to end its "reckless moratorium" on domestic gas exploration.

"In times of high energy prices, arbitrary policies that drive up the price of energy should be abolished," Mr Taylor said.

The federal government was taking action to prevent critical industries from being forced overseas, Mr Taylor said, and had launched policies aimed at driving down prices for commercial and residential customers by introducing new supply and competition into the market.

Victorian Energy Minister Lily D'Ambrosio did not respond to a request for comment.

Dow said workers at the plant would leave the company over the next six months, when the firm would cease operations at the site.

Dow Altona site leader Justin Jones said the plant was no longer competitive.

"Increasing manufacturing and operational costs along with new supply options that benefit from fully integrated raw material supplies and competitive energy prices resulted in this decision," he said.

"We appreciate the potential impact on employees and their families and are committed to doing everything we can to support employees during the transition."