Just days away from being unable to pay employees, Whyalla’s small businesses say optimism is back
Around Whyalla, some businesses with links to the steelworks had been down to their last few thousand dollars in the bank but government intervention has put a pep back in their step.
After making payroll in recent weeks Whyalla Hose & Fittings Services was down to its last few thousand dollars in the bank.
Then, on Monday morning, the 30-year-old business’s director, David Bruce, received written confirmation that the lifeline many Whyalla businesses have been waiting for had already arrived – a promise from the state government that it would be paid half of the $600,000 it is owed by GFG Alliance immediately.
Less than two weeks since the South Australian government pushed the Whyalla steelworks – then operated by Sanjeev Gupta’s GFG Alliance – into administration, the wheels of the Whyalla economy are starting to turn.
And the mood among many business owners mirrors Mr Bruce’s of Mr Gupta and the conduct of GFG Alliance.
“That’s in the rear view mirror, and getting further and further away,’’ he said.
“The dark clouds have been lifted.’’
Mr Bruce’s business, which does work across both the steelworks and the iron ore mines near Whyalla, employs about 15 staff and had not had a significant body of work ordered by GFG since about April last year.
But now that KordaMentha has been reinstalled as the administrator of the steelworks – for a second time after taking control of the operations when Arrium failed in 2016 – things are moving at “warp speed”, Mr Bruce said.
His company’s general manager, Jarrod Starkey, said the steelworks already appeared to be trying to catch up on overdue maintenance work, which would be a boon for local businesses.
“The steelworks and the mines are starting to put their feelers out again to start getting us out there to do some work,’’ Mr Starkey said.
“Shutdowns (for maintenance) are already planned in the system and so forth, so it’s positive.
“There was minimal spend going on at the steelworks. At the mines they were probably spending a bit more because they were still producing but at the steelworks, I think our last big job we would have done would have been about April last year.’’
Mr Starkey said the fact that businesses were being paid immediately the money they were owed by GFG as part of the $100m emergency bailout package announced by the state and federal governments two weeks ago, meant that businesses were able to move forward with certainty.
“It’s a lot better than last time. Last time we weren’t in a position to get any of the money straight away,” Mr Starkey said. “It’s moving pretty well.’’
Mr Bruce’s business borrowed about $750,000 from the SA government during the previous administration, and had only recently finished paying that money back.
Chris Birch, owner of CBCH/Max Cranes Whyalla which employs about 70 staff, said there had been a “complete turnaround” in the mood in Whyalla since the government stepped in and appointed the administrator.
“The idle chitchat has turned from negative to looking forward to the future,’’ he said.
“We’ve had our kicks in the guts over the years with BHP pulling out, then Arrium.’’
Mr Birch said that from about September it became clear that GFG was in serious trouble, and CBCH ultimately refused to do any work for the company until it was paid for past work.
But the work coming in had also been dwindling in recent months, meaning staff had to be put on shorter shifts, and “jobs were being canned because of availability of parts’’.
“It was all coming to a head,’’ he said. “All the businesses in Whyalla started to communicate with each other as to how everyone was travelling and it started becoming evident that things weren’t good in the town.
“Now I consider it behind us and we’re moving forward with supply chains now getting reinstated.
“Just on the weekend the plants are now starting to gear up into full capacity with the parts that they need to get there and we’re noticing the workload starting to increase in the mines and the steelworks.
“They’re moving very quickly which is a credit to how it all happened behind the scenes and now we’re starting to see the action between the government and KordaMentha.
“Our opportunity is starting to get back on track.’’
Mr Birch said people in the town would prefer to have an Australian company come in and buy the steelworks once it is eventually sold by the administrator, because “we’ve had a taste of when it’s not’’.
Maaric Dry Cleaners owner Chrys Press said the amount of work he was doing for the steelworks and the mines had dropped off dramatically in the months leading up to the administrator being appointed, but the impact had spread to his other industrial customers as well.
Mr Press said his business, which employs eight staff, was owed about $50,000.
“The downturn from the plant was one thing but what we really needed to see pick up was the contractors in the town,’’ he said.
“That work there, we’d lost 80-plus per cent of that. Walk-ins off the street, that’s just flat.’’
Mr Press said a lot of skilled people had also left Whyalla, and the hope was that they would now come back to the town.
“A few people that I know who train at the same gym as me they were heading off, but now they’re sticking around to see what happens. Sadly though there’s a lot who have already gone.’’
Mr Press said there was an “uplift straight away”, when the administrator was appointed.
“People had something else to talk about, rather than just negative stuff,” he said.
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