Jump to content
House Price Crash Forum

Australia Faces Its Demons


Recommended Posts

Looks like Australia and WA could lose out on Gorgon jobs. this is what I feared. The only benefactors will be Krud and friends via the tax system, which will give them even more power over how to spend the money. More wasted money on million dollar school science labs in outback towns with one student! These mega projects just seem to concentrate money and power in the hands of big government and big business.

http://www.news.com.au/perthnow/story/0,21...35-2761,00.html

WA losing out on Gorgon jobs

September 19, 2009 06:00pm

WA is missing out on thousands of jobs and billions of dollars as steel contracts for the Gorgon gas project go overseas and interstate.

Gorgon project manager Chevron has already offered almost 260,000 tonnes of steel work to Asia to build the major undersea gas modules.

Steel for the modules will likely be bought from China after Chevron changed from Australian steel standards to Japanese standards.

The "Gorgonville'' worker accommodation site on Barrow Island also will be built overseas.

Another 600 transportable units are being built in South Australia.

Chevron said it tendered the modules in Australia, but had received no bids.

"When we went out to tender, there were no Australian bidders who said they had the capacity to build it,'' Chevron Australia managing director Colin Beckett said.

"So the bidders for the modules are (now) in Asia.''

The Asian bidders have demanded Japanese standard steel instead of Australian.

Chevron said it was not sure which nation would build the modules, as the tender was ongoing.

"Korea is good for this; Indonesia, Thailand, Malaysia have done a lot of work on module fabrication,'' Mr Beckett said.

Woodside's $5 billion Pluto gas platform was built in Thailand.

Australian Manufacturing Workers' Union WA secretary Steve McCartney said the modules would have been worth almost 10,000 full-time steel jobs and 2200 apprenticeships.

"Fifty-five thousand tonnes of steel work is equal to 2000 full-time fabricating jobs and 450 apprenticeships,'' Mr McCartney said.

"If you do the maths, that's what WA is missing out on. We've had no word or any insight on whether any WA fabrication shops are going to get anything.

"The problem with Chevron and other companies is that they make the packages so big that it's impossible for Australian companies to tender for.''

Mr McCartney claimed the Gorgon partners deliberately drew up large contracts to drive them to cheaper Asian bidders.

"Woodside did it on (Gas) Train Five, and they've just done it again on Pluto,'' he said. "It is a bit cheaper from their perspective.''

Chevron denied the claims.

"Part of the reason we are building modules is to reduce the amount of work carried out on Barrow Island,'' Mr Beckett said.

"We're trying to put it into the largest pieces we can to reduce the amount of work it takes to connect them.''

Mr Beckett said WA steel firms had bid for work, but none had been awarded yet as it was still early days.

"We've said, based on our estimates, that $33 billion worth of goods and services are going to be carried out here in WA,'' he said.

"We're going to have millions of man hours of work on Barrow Island, and millions of man hours in workshops around Australia.

"A lot of steel is required on site, and that will (also) be Australian.''

Fremantle Steel Fabrication general manager Laurie D'Amato said WA firms were disappointed at the amount of work going overseas and interstate.

"We're still pushing hard, but the way things are at the moment it's not looking too promising,'' he said.

"Too many projects are going offshore and it's not giving any of us confidence.

* WA firms can view and bid for Gorgon projects through www.projectconnect.com.au.

Edited by UncleKev
Link to post
Share on other sites
  • Replies 4.4k
  • Created
  • Last Reply

Top Posters In This Topic

Skid Mounted modules fabricated in Asia was always the way this project was going to go. To think not would be foolish. Asian shops have coded welders for $12 an hour. Right now in WA I can get coated fabricated structural steel delivered for about $2000 per tonne and retail in WA is $5000. To artificially intervene in this free market is akin to trying to save shipbuilding and car making in the UK in the 70's. Best to support it and add value where you can and everybody including the client, suppliers and end users get the best deal on the market.

The unions are trying to screw these projecst up they are horrible thieving, destructful bludging oxygen thiefs, do not listen to them.

And don’t worry about Lauro from Freemantle fab he is doing fine and is just stirring the pot. There is nothing to stop him sub contracting fab out. The maintenance will mostly be done in Perth how big is that ?

Don’t worry the benefit is here already, trust me.

shame the Aussie government doesn't take the same attitude to the housing market.

this strong AUD is not good news at all - back to Dutch disease for this country.

Link to post
Share on other sites

actually krudd did give the local carmakers a large cash handout last year

i believe though he is still planning on reducing tarriffs for imported cars next year?

makes no sense whatsoever , money down the drain

they've already started importing the first chinese utes here , brand = 'Great Wall' :lol:

Link to post
Share on other sites
Skid Mounted modules fabricated in Asia was always the way this project was going to go. To think not would be foolish. Asian shops have coded welders for $12 an hour. Right now in WA I can get coated fabricated structural steel delivered for about $2000 per tonne and retail in WA is $5000. To artificially intervene in this free market is akin to trying to save shipbuilding and car making in the UK in the 70's. Best to support it and add value where you can and everybody including the client, suppliers and end users get the best deal on the market.

The unions are trying to screw these projecst up they are horrible thieving, destructful bludging oxygen thiefs, do not listen to them.

And don’t worry about Lauro from Freemantle fab he is doing fine and is just stirring the pot. There is nothing to stop him sub contracting fab out. The maintenance will mostly be done in Perth how big is that ?

Don’t worry the benefit is here already, trust me.

Bardon,

An Irish fabricator here who would like to talk to you regarding the above rates, can you email or reply to me on this item.

Thanks,

Irish Steel

Link to post
Share on other sites
Todays Headlines in the Courier Mail. Dont you just love it.

Re, this optimistic explosion in the Oz market... It won't last. When does the $25K subsidy turn back into $7.5K? - end of this month I think. Its just first home buyers rushing to get that extra 12K before the coach turns into a pumpkin and paying an extra $50K to do it. We've had a little mini property boom in our area, and its all young families desperate to cash in on the subsidy. My oh my, I always thought that one of the things that made Australians just a little more canny than the British was counting before we acted with overinflated mindless consumer exhuberance... I was wrong. No difference. Anglo-Saxon lemmings all of us.

Link to post
Share on other sites
Speak for yourself, some of us are very proud of the fact that we dont have any Anglo-Saxon origins.

`what have the anglo saxons ever done for us`.............................. said in best Graham Chapman accent

apart from turning a bunch of nothing into a first world nation from scratch...... :P

Link to post
Share on other sites

Comment in the Courier Mail today:

Two real estate agents watching the dust over Sydney. One looks at the other and says."All that real estate changing hands and we dont get a cent commission".

(thanks to LoneCrow at *********************.com for that one)

Link to post
Share on other sites
It was a big one alright. Trust me to wash my car whcih I seldom do, the day before.

Have a look at a photo taken at one of our sites in central Australia yesterday.

You wonder how much topsoil was lost in that event.

IMG_9307.jpg

I see the pickup truck was fitted with an orange light and an orange flag to make it easier to spot. Those Aussies are sharp!

Link to post
Share on other sites

Buddy of mine just sold his wee flat in Mosman for far too much money having just caught the end of the max FHB grant window. I have to say, it makes me wonder what's going on in that part of the market. Then again, a mate of mine is looking to buy LNS / Eastern Bubs ~2m and houses are selling at the first showing so perhaps it's all pervasive.

Frankly, I'd prefer a bit of slow and steady.

Link to post
Share on other sites

Here's one for Bardon. I bet you didn't know Australia was in an ever deepening and accelerating recession that started 3 quarters ago. A heavily subsidised housing market may look rosy for now Bardon, but how long until the economy can't afford it?

Text in bold is relevant to Australia even though the whole piece is worth a read.

http://www.zerohedge...-economic-abyss

As always, Albert Edwards provides a solid dose of economic observations based on facts, not hope. And, as always, he is one of the few in his attempts at deductive logic: why bother with causal relationships when there is a scent of "change you can (almost) believe in" permeating the airwaves. Never mind that the next administration will have to deal with the massive fallout of this "change" once it realizes America is bankrupt: we hope they have their catchy slogan writers already on damage control. After all "debt repudiation you can really believe in" just lacks that certain pizzazz that may prevent the next president from being on TV 24/7.

Back to Albert, who shares his thoughts on the liquidity driven asset bubble:

Many clients believe it is inevitable that "excess" liquidity will continue to drive risk assets higher. The broken nature of the banking intermediation means that surplus reserves are not being funnelled into the real economy and therefore must, it is believed, inevitably cascade foaming and invigorating over risk assets. And all the while interest rates remain close to zero this process is expected by many to continue apace, driving risk assets higher.
This is wrong. It is the cyclical upturn that is sucking money into risk assets. This is exactly what happened in Japan in the 1990's. Japan enjoyed many decent economic and profit recoveries which regularly pushed equities and other risk assets substantially higher. But the underlying fragility of any cyclical recovery amid a secular balance sheet recession meant there were frequent lapses back into recession. This eventually drained hope away from zombie investors who then became sellers-on-rallies, rather than buyers-on-dips.

Additionally, Edwards presents the case for balance sheet-based deflation. In essence, even as the government tries to inflate its way out of all its problems, it is, even by printing trillion in new treasuries, unable to catch up with the non-governmental balance sheet collapse.

The US Federal Reserve recently published their comprehensive flow of funds data for the US. This showed that the household sector continued to pay down debt for the fourth consecutive quarter. Corporates also started to pay down debt sharply in Q2 at a similar $200bn pace. The non-financial private sector paid down debt at a $435bn pace in Q2. This compares to a $2,116bn pace of expansion in 2007 (see chart below). Add to that the financial sector unwind and the total private sector is unwinding debt faster than the government is able to pile it up (hence the red line is still negative)! The lesson from the balance sheet recession in Japan is that the massive private sector headwind to growth has a long, long way to run.

AE%2010.1%20-1_0.jpg

If that is the case, we can expect, just like Japan, frequent relapses back into recession. The market now understands how an end of inventory de-stocking can boost GDP, i.e. it is the change in the change that matters. Similarly as Dylan Grice points out -
http://www.sgresearch.socgen.com/publication/53ED260E0C373E5AC1257641004E9492.pdf.html' rel="external nofollow">
, it is the change in the fiscal deficit that is a net stimulus or drag to GDP. A massive 6pp stimulus last year is likely to turn into a 2pp drag on growth next year (see chart below). With continued private sector de-leveraging likely next year and beyond, how can one seriously not expect the global economy to relapse back into recession next year taking nominal GDP deep into an abyss?

AE%2010.1%20-2_0.jpg

Most notably, Edwards discusses the red herrings of systematically focusing on the wrong economic indicators, whose recurring spin by the media exaggerates the scope of any nascent recovery:

Amid the excitement of this cyclical recovery, equity investors continue to focus on entirely the wrong thing. It is cash revenue growth that is relevant for profits, not volumes. Hence when we see that Japanese core CPI inflation suffered a record 2.4% decline in August, it emphasizes that we should forget volumes and look at values. Volumes are a red herring that are misleading investors into a frenzy of excess optimism.
One of the reddest of red herrings was the recent Australian GDP data. Real GDP rose a surprisingly robust 0.6% QoQ in Q2 after a rise of 0.4% in Q1 and a single quarter decline of 0.7% in Q4 2008. Unsurprisingly equity investors liked this data. Yet less attention was paid to the fact that nominal GDP declined 1.5% in Q2 after a decline of 0.6% in Q1 and a decline of 0.1% in Q4 2008 (see chart below)!
AE%2010.1%20-3_0.jpg
In cash terms, Australian GDP is getting worse sequentially, not getting better. One last comparison worth considering: in Q3 2008 Australian nominal GDP peaked out at a 11% yoy rate and on the most recent data that had slowed to 0.9% yoy - a heady slide indeed (by way of comparison real GDP slowed from 2.4% yoy in Q3 2008 to 0.6% in Q2 this year). Investors should not be reassured by the minor 1.8 percentage point (pp) slowdown in yoy volume growth over this period. Instead, they should panic at the 10pp loss in cash GDP growth.

At this point it is passe to discuss green shoots. An early term coined to fantasize about a quick V-shaped recovery, has since been eradicated due to the ongoing concurrent data presentations that highlight on one hand an employment picture that keeps getting worse (over and above expectations, see today's number) and on the other hand stimulus funding trickling down into the economy. In a sense, Obama has bet the house, farm, and generations of unmanageable interest payments, that the second will overtake the first eventually, and that consumers will look beyond the fact that tomorrow they may be out of a job and get back to using their credit cards as the only real driver of the U.S. economy.

Yet all factual signs point to a continued divergence between cash in (government) and cash out (everyone else) in the US, and by implication, global economy. Layer on top the fact that global trade has been decimated and that currency imbalances will make it prohibitive for natural flows to resume (US core importer, everyone else exporters), courtesy of a worthless dollar, and if you were to remove your rose-colored glasses for a second, you will see why even in the face of a 55% rally in the stock market, strategists and economists (not David Bianco mind you, we mean objective, unconflicted ones) continue their bearish stance on the economy. Because unless you truly believe that the stock market is its own isolated bubble, which many do, at some point cash from assets will have to support equity and debt valuations. And once the government cash funding vacuum pops, the market-economy divergence will also collapse. At that point, every dollar used by the government via stimulus and Federal Reserve pumps will have an equal and opposite effect on stocks, thereby throwing America not just into a debt funding crisis, but a complete economic and capital market tailspin. Alas, it appears impossible to prevent this, as the administration and the Federal Reserve Chairman are dead set on executing their inherently flawed experiment...and the American middle class.

Edited by williamdb
Link to post
Share on other sites

Bardon,

I'm being lazy, can you tell me if Australian mortgages are typically fixed or variable rates? I'm trying to get a feel for the impact of the rate change.

Thanks

W

Edited by williamdb
Link to post
Share on other sites

Bardon,

I'm being lazy, can you tell me if Australian mortgages are typically fixed or variable rates? I'm trying to get a feel for the impact of the rate change.

Thanks

W

Both.

Rate rises have been factored in to fixed rate mortgages for the last 6 months.

Edited to add a bit more.

Edited by aussieboy
Link to post
Share on other sites

Moderately on-topic – from the BBC’s “where would you like to live” poll link

Added: Wednesday, 7 October, 2009, 04:25 GMT 05:25 UK

I moved from the UK to South Australia in May 2008 and can honestly say that I have never lived anywhere so racist and parochial in all my life. Despite claims to the contrary, it is as violent and dangerous as Nottingham (where I used to live), with a new attack or violent home invasion every night on the news. Not bad for a city of only 1.5 million people!!!

Take me back to the UK as soon as possible!!!!

Tracy, Adelaide

Link to post
Share on other sites
  • Guest featured this topic

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 440 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.