Jobs at risk as brickmaker pays double the freight

Brickworks has warned jobs at its Perth manufacturing base are at risk as it finds it cheaper to freight materials from Spain.

 

Building materials giant Brickworks has warned jobs at its Perth manufacturing base are under threat as the company considers boosting imports from Spain in the face of the spiralling cost of shipping bricks around the country.

Brickworks chief executive Lindsay Partridge branded coastal shipping a “protected industry” ahead of the group’s annual results next week, revealing it cost his company twice as much to move bricks from Perth compared with importing them from Europe owing to expensive domestic freight.

In a strong plea for costal shipping reform, the Austral bricks owner — one Australia’s biggest building materials manufacturers and distributors — said the company was struggling to change tack amid the demise of the West Australian building boom.

Mr Partridge said he wanted to use Brickworks’ Perth base to supply “booming” house building in Sydney and Melbourne, but shipping costs were prohibitive owing to a lack of competition arising from rules that demand Australian vessels have priority on domestic routes.

“We’d prefer to sell Australian made bricks in Australia … (but) we would increase our imports from Spain because it’s cheaper to get the products from Spain than it is to get it from our own factories here in Australia.”

“What we have is a downturn in WA, we have new competitors in the market, in the last five years or so, so we have spare capacity in WA which would be able to supply the east coast of Australia which is currently at peak of market.”

Sea freight from Spain to Sydney costs $850 per 20 foot container compared with $1,690 from Perth to Sydney, an internal analysis by the company showed. With 8,160 bricks per container, that works out at 10 cents to import a brick to Sydney from Spain compared with 20 cents to ship it from Perth. The freight costs come in addition to the average 55c price of bricks in Spain and Australia, Brickworks said.

The figures are based on tender estimates for freight from shipping lines and don’t include port charges or costs from the factory to the port.

“Most of the money is in the moving of the container on the ship,” Mr Partridge said.

Coalition moves to open coastal shipping were blocked by a Labor, Greens and crossbench effort in the Senate, spurred by a ferocious lobbying effort by the Maritime Union of Australia.

But Minister for Infrastructure Darren Chester told The Australian yesterday coastal shipping reform remained a ”priority” and for the Coalition to bring back to Parliament “this year”.

“The viability and competitiveness of the coastal shipping sector is at risk without genuine reform,” Mr Chester said.

“As part of that process, I am ensuring there is constructive stakeholder engagement with all industries, including those reliant on coastal shipping.

The previous Labor government “shifted the goalposts” when it was in power by tightening rules on when foreign vessels could use domestic shipping routes.

This so-called effort to protect local shipping jobs, Mr Partridge said, mean “everyone else who needs coastal shipping to move product was at a disadvantage”.

“I have to face international competition, why do we have a protected industry? Why can’t I use ships that come into Australia anyway to move my product?”

“No other Australian is protected in this manner. My brickmakers aren’t protected. Why is a seafarer’s job more important than a brickmakers?”

Australian manufacturers relied on using foreign ships that had entered Australian to deliver cargo — for example, televisions — and had spare capacity en route back to Asia or Europe to move commodities and other materials around Australia.

“About ten years ago the WA market was booming and the NSW was on its knees, we had this incredible shift in product one way, and now we can’t shift them back again,”

“We knew this day would come the goalposts shifted, now we can’t kick the goals like we used to and this time it will cost jobs”.

While stopping short of saying he would lay off jobs in Perth, Mr Partridge said the company as in a quandary.

“They think they’re saving Australian maritime jobs but what they’re doing is costing Australian manufacturing jobs,” he said.