The Competitiveness Crisis in Australian Steel Fabrication

The usual suspects, and why they aren’t the answer

The well-rehearsed arguments are valid as far as they go. A fully loaded boilermaker in Australia costs $80 to $120 an hour against $8 to $15 in Vietnam, Thailand or India. Our electricity prices are among the highest in the developed world, and fabrication is energy hungry. Despite being one of the world’s great iron ore exporters, Australian fabricators routinely pay more for processed steel than competitors in countries that subsidise their domestic mills.

Major projects and resource companies have leaned harder and harder into lowest-cost procurement. When structural steel can be fabricated offshore and landed on site for 40 to 60 percent of local cost, you’re not going to win that fight on price alone.

All of that is true. None of it explains why two workshops with the same wages, the same power bill and the same steel price can differ by 30 percent in output. That difference is the part nobody’s examining, and it’s the part we can actually do something about.

The tariff trap

Protection subsidises the inefficiency

When an industry struggles, tariffs are the reflex. Shield local producers from cheaper imports, save jobs, give the industry breathing room to recover. The problem is that tariffs don’t create breathing room for recovery. They create breathing room for complacency.

If a fabricator is running 25 percent below optimal because of poor production planning, thin supervision and reactive management, a tariff fixes none of it. It just means they can keep operating that way and still win work, because the competition has been made artificially expensive. The pressure that was driving the need to improve evaporates the moment the wall goes up.

We’ve run this experiment. The automotive industry had decades of protection and direct subsidy. When it came off, the industry wasn’t leaner and ready to fight. It was dependent, uncompetitive, and gone within a few years. Fabrication is smaller and far more fragmented, but the dynamic is identical.

The cost flows straight downstream

Steel fabrication doesn’t sit in isolation. It feeds construction, infrastructure, mining, energy and manufacturing. Every dollar added to fabricated steel through a tariff flows into the cost of buildings, bridges, rail, ports, renewable energy structures, water treatment plants and resource sector infrastructure.

Housing affordability is already a national crisis. Commercial construction costs have escalated hard. Major infrastructure projects routinely blow their budgets. Adding tariff-inflated steel to that mix doesn’t protect fabrication, it makes the whole construction sector less productive and pushes the bill onto taxpayers, developers and the public.

There’s a compounding effect people miss. When construction costs rise, fewer projects proceed. Fewer projects means less work for fabricators anyway. A tariff that pushes up construction costs can reduce the total volume of fabrication work available, which partly defeats the point of the protection in the first place.

Retaliation, and the arithmetic of it

Australia’s economy runs on exports. Iron ore, coal, LNG, agriculture, critical minerals, education. Putting tariffs on imported steel and fabricated product invites retaliation, particularly from the country that’s both our largest source of steel imports and our largest export market.

Steel fabrication employs roughly 110,000 people. The export industries exposed to retaliation employ millions. We’ve already had a live demonstration of how fast that lever gets pulled, and how much it hurts, with barley, wine and coal. Doing this in the current trade environment is inviting a disproportionate response.

A tariff doesn’t build competence

This is the part that matters most to me. A tariff wall doesn’t train a welder to produce first-time-right work. It doesn’t teach a workshop manager how to plan production. It doesn’t fix the disconnect between design and manufacture. It doesn’t lift arc-on time or cut rework. It doesn’t give a fabricator a voice in the design process.

What it does is let every one of those problems sit there, unchallenged, behind a price shield. And when the protection eventually comes off, because it always does, the industry is in worse shape than before it went on.

A dollar spent on genuine productivity improvement delivers lasting benefit. A dollar spent on tariff protection delivers temporary relief and long-term dependency.

A compliance market that serves itself

AS/NZS 5131, the standard governing structural steelwork fabrication and erection, was introduced to improve safety and quality. The intent was sound. What’s grown up around it is something else: a compliance ecosystem that extracts real cost from fabricators while delivering questionable benefit to public safety.

Certification under the standard is effectively controlled by a very small number of bodies. Between them they write the guidance, deliver the training, sell the certification, and conduct the audits. They also hold significant influence over the development and interpretation of the standards themselves. They sit on the committees, they shape the technical requirements, and they then build commercial services around the compliance obligations those requirements create.

There’s no genuine separation between the organisations setting the rules and the organisations profiting from compliance with them. A fabricator wanting to work on anything above the most basic structural steel has one path. Pay the fees, sit the courses, submit to an audit run by the same organisations that sold the training. There’s no competitive market for any of it.

Worth adding: the peak body sitting at the centre of this is substantially funded by Australia’s dominant steel producers. So the companies selling the raw material fund the organisation that controls market access for the companies buying and fabricating it. Ninety-four percent of those fabricators are small businesses with fewer than twenty employees. That power imbalance is significant, and as far as I can tell it has never been examined at that level.

Paperwork, not shop floor

The audits are overwhelmingly paperwork exercises. An auditor comes in and checks that procedures are documented, that welder qualification records are filed, that inspection and test plans exist on paper. What they largely don’t do is spend meaningful time on the floor verifying that any of it is actually happening. They don’t watch welders work. They don’t verify that supervisors are supervising. They don’t check whether inspection is catching defects before the work leaves the building.

The standard itself treats welding as a special process. You often can’t verify the quality of a finished weld without destroying it. That makes the quality system and the competence of the people more critical, not less. Yet the audit asks whether the system exists on paper rather than whether it’s producing good outcomes in practice.

Here’s the part that should interest the Commission most. This certification isn’t referenced by, or required in, Australian Standards. It’s a voluntary assurance scheme that has become a de facto market barrier, because specifiers and principal contractors now write it into tender conditions as a convenient compliance box. The fabricator pays. The certifier profits. The structure is barely more assured than it was before the audit.

Meanwhile the failures that genuinely threaten public safety keep turning up. Fillet welds substituted where full penetration butt welds were specified. Imported steelwork with inadequate quality control. Welding procedures that exist on paper and are ignored in production. Those are the things that matter. The paperwork isn’t catching them.

The productivity gap nobody’s addressing

Running 20 to 30 percent below potential, right now

Any conversation about productivity in Australian fabrication jumps straight to automation and robotics, as though the only route to being more productive is to spend millions on equipment. That misses the point completely. Most workshops in this country are running 20 to 30 percent below their optimal efficiency today, with the plant and the people already on site. The problem isn’t a shortage of robots. It’s a shortage of know-how, from the floor to the front office.

Arc-on time tells the real story. The percentage of paid hours a welder actually spends depositing weld metal. In a well-run shop it sits around 25 to 35 percent depending on the work. In a lot of Australian shops it’s closer to 10 to 15 percent. The rest goes on waiting for materials, hunting for drawings, fixing fit-up, chasing consumables, sorting out equipment, reworking, and standing around because nobody planned the workflow.

That gap between 15 and 30 percent costs nothing in capital equipment to close. It costs planning, supervision, and better trained people.

Competence decline is the productivity killer

Over the past two decades the general skill level across the welding and fabrication workforce has dropped, and it’s dropped a long way. This isn’t about whether a welder can pass a qualification test. It’s about whether they understand what they’re doing and why.

A competent welder doesn’t just lay a bead that looks acceptable. They understand fit-up. They know how joint preparation affects the outcome. They can read a procedure and understand the relationship between the parameters. And they recognise when something isn’t right before it becomes a defect.

That depth has been progressively lost as the training system was hollowed out and experienced tradespeople left without passing anything on. When you lose it, you lose productive welding time in ways that never show up on a timesheet. Excessive grinding and reworking because technique is poor. Fit-up out of tolerance because nobody understood preparation. Distortion because nobody planned the sequence. Welds gouged out and done again.

Every one of those eats hours and adds cost, and most workshops don’t measure it, don’t track it, and don’t recognise it as a problem.

The management knowledge gap

Most workshop owners and managers came up through the trade. Good welders and boilermakers who started a business or worked their way into management. What they often never got was any formal grounding in production planning, workflow management, lean manufacturing, or even basic scheduling.

So the shop runs reactively. Jobs come in and get allocated to whoever’s free. Materials get ordered when someone notices they’re needed. Problems get solved as they arise rather than prevented. That’s not a criticism of their capability or their work ethic. Nobody taught them, and the bodies that should be providing that support are busy selling certification.

The fixes aren’t exotic. Plan cutting lists before the job hits the floor so material is ready. Set up welding bays so consumables, gas and equipment are within arm’s reach. Sequence work so the bottleneck machine isn’t idle. Check fit-up properly before any weld metal goes down, not after. Brief the crew at the start of the shift on priorities and quality requirements. Track rework and actually chase the root cause.

Zero cost or low cost, every one of them. Together they’d recover a serious share of that 20 to 30 percent.

Where are the courses on being competitive?

The industry bodies run courses on welding supervision, quality management and compliance. All of it aimed at meeting standards and passing audits. Where’s the training on production planning for a fabrication shop? On lean manufacturing adapted for structural steel? On throughput, bottleneck theory, workflow optimisation?

It doesn’t exist in any meaningful form. The support infrastructure is oriented to compliance, not competitiveness. And the certification bodies have no commercial incentive to change that, because a more productive fabricator doesn’t buy more certificates.

Design for manufacture, the upstream cost driver

Over-engineering as the default setting

Industry estimates put 60 to 70 percent of a fabricated structure’s cost as determined at the design stage. Section choice, connection type, weld type, plate thickness, tolerances. All of it drives cutting time, fit-up time, welding time, inspection requirement and rework risk. Fabricators typically have zero input. By the time drawings hit the floor, the expensive decisions are already locked.

Engineering competence has declined in parallel with trade skills. Graduate engineers go from university to a desk with almost no exposure to a workshop or a construction site. They don’t know what’s easy to weld and what’s a nightmare. They specify full penetration butt welds where a fillet would be perfectly adequate. They design connections that put a welder in an impossible position. They call tolerances tighter than the structure needs and tighter than the process can reliably hold without heroics.

When an engineer lacks confidence in their own grasp of loads, material behaviour and connection design, they default to over-engineering. Thicker plate, bigger sections, more stiffeners, more weld. That isn’t a deliberate conservative call. It’s a competence gap being papered over, and the fabricator pays for it. A genuinely skilled structural engineer knows a lighter, well-detailed design is often stronger and always cheaper to build. That understanding is getting rare.

The fabricator’s voice gets ignored

Fabricators build these structures every day. They can look at a connection detail and tell you that moving a stiffener 50mm would let them use a different process and save two hours a joint. They can spot where a change in section size eliminates a transition detail that costs more in labour than the extra steel. They can offer a connection type that’s faster to make without touching structural performance.

Those suggestions are routinely dismissed, or never sought. Engineers are reluctant to take input from tradespeople because it feels like a challenge to professional authority. Design firms don’t want to revisit a completed design because it costs fee revenue. Principal contractors don’t broker the conversation because their procurement model treats design and fabrication as separate sequential activities with no feedback loop. And plenty of fabricators have simply stopped offering, because they’ve been knocked back too many times.

Liability fear drives a lot of it. Engineers are worried that accepting a fabricator’s suggestion exposes them if something goes wrong in fifteen years. So they over-design and refuse alternatives, even demonstrably adequate ones. The irony is that over-engineering carries its own risk. Heavier structures mean bigger foundations, larger cranes, more complex erection, and more weld metal that could contain a defect.

Design for manufacture and assembly is well established in automotive, aerospace and electronics. The structural steel version, bringing the fabricator in during engineering rather than after it, consistently produces lighter structures, lower fabrication cost, faster erection and fewer site problems. It just requires engineers confident enough to collaborate rather than dictate, and a procurement model that values whole-of-life cost over lowest design fee.

What I’ve asked the Commission to examine

The standard analysis of this industry’s decline focuses on input costs and trade competition. Necessary, but nowhere near sufficient. I’ve asked the Commission to look at five things.

The Australian steel fabrication industry isn’t dying because our tradespeople can’t weld or because our workshops can’t fabricate. It’s dying because the ecosystem around it, the certification bodies, the training system, the engineering profession and the procurement models, has failed to focus on the thing that actually matters. Helping this industry produce better work, faster, at lower cost.

That’s a productivity question, not just a cost question. It deserves a fundamentally different kind of examination.