BlueScope Steel Ltd Annual General Meeting

AWU National Secretary Bill Shorten gave the following address to BlueScope Steel Ltd's Annual General Meeting in Sydney on October 19, 2004, as part of the union's campaign for resolutions improving corporate governance and executive remuneration at BlueScope.

It has been said of the AWU today, and our proposals

• That there is an absence of merit

• That the AWU proposals are not in the interests of BSL or the shareholders

• That in fact the proposals somehow make the AWU anti-BSL

• That our presence and participation here today is disloyal to BSL

• Some grotesque exaggeration - mislead.

Let me set the record straight
The AWU does not give BSL an unfair go
We just tell them things they don't want to hear and they think that's an unfair go.

WHY ARE WE HERE?
We are a big stakeholder

• We - now the AWU and formerly the proud FIA, have much invested in this company

• 4000+ members

• many years

• deaths

• plant closures and massive job reductions

• industrial achievements

• safety reforms

We do not come here to resolve our industrial agreements. Instead, we are here because as a major stakeholder. We want to be heard.

First, I want congratulate the company and its workers on their record performance this year. The results are an indication of the dedication of the workers to making BSL a success.

But does anyone believe the results are solely the product of the last 2 years?
The results are in part a vindication of the collaborative work undertaken by the AWU over the last 2 decades.

We have always known that BHP Steel has been good business. We are pleased that the market has now worked this out too.

We take nothing away from the strategic nous of Kirby Adams and his executive team about playing smart - but we just don't think they did it all themselves.
The AWU is very pleased to see some of those workers here today because as both shareholders and stakeholders, they have a double interest in the ongoing health of BSL.

The AWU has contributed too much for too long to allow the union legacy delivered by strong AWU representation of the famous BHP Steel commitment to fairness and equality in wages to be eroded.

We have a CEO who is not talking to us.
We have a Chairman failing to direct his CEO to talk to a major stakeholder.
Where you have a CEO who does not want to talk to a major stakeholder, where you have a Chairman who will not direct his CEO to talk to a major stakeholder, then we have to ask - WHO IS NEXT?

When did legitimate stakeholders become delegitimised by the Chairman and CEO?
We deserve better treatment than we receive.

We are forced to be here because we cannot get a proper hearing through traditional routes.

Despite some BSL PR flunkey dis-information, this is not a question of Union versus Company.

The Company document about the AWU proposals was patronising - the implication that because stakeholders are members of the AWU - and being active shareholders - that this therefore made our efforts second class.

This is not a question of Union versus Company. This is not a question of hard hat versus top hat, but about stakeholders/ shareholders talking to other shareholders.
We are forced to defend our rights as a major stakeholder.
We are not anti the CEO

We have a lot of respect for Kirby Adams (born into a rising market, not burdened by crazy debt but what has tested him?)

Yet the BSL CEO runs around the country talking about the dream of de-unionising whilst we are seeking an equitable go.
The Chairman won't instruct him.
The Chairman won't come on the record.
The AWU is an old and proud union, constantly seeking new ways to stand up for its members.
We want a fair hearing and we come here to be fairly heard.

Let us put some markers in the ground.

Some in the Board and Senior Executive Level persist in pretending the union is no longer relevant.

They are adherents to the view that all history started in July 2002 when BSL was spun out.

We have lived in this Steel Industry since the first blast furnace in 1912 at Newcastle.
The AWU was involved from the early days of Port Kembla's development, when the first rail loads of coal came down into the plant in the 1930s.

The AWU has been here through the building up of the company into the nation's proudest and one of the world's best corporations.

The AWU has been with the company through the good times and the hard times, and we will continue to be with the company into the future.

Today's successes are built on that hard work of the past.

Last decade, before the BHP merger and spin-off, we worked very hard to deliver productivity improvements through massive restructuring and job redesign.

It is the work of AWU members past and present, that has helped deliver these record results today.

We will continue to support a successful company, to provide job security and employment growth into the future.

All the resolutions put to this meeting by employee shareholders today are designed to promote BlueScope's ongoing success, through the best possible standards of corporate governance and accountability to shareholders.

In particular, let me turn to resolutions 7 and 8 on Executive Remuneration.
All BSL employees should be rewarded for strong performance.
However, the AWU seeks greater transparency about the very high level of remuneration

The salaries of senior executives at BlueScope increased enormously last year - According to BlueScope's Annual Reports these executives increased their remuneration by approximately 35% on average. If such increases continue, soon tens of millions of dollars will be paid each year to the top few executives at the Company.

Does the Board believe that such pay rises will continue into the future, or will executives receive more realistic pay rises - such as 4.5% and the 50 shares currently offered to other BlueScope employees?

A further reason for greater transparency is to prevent senior leaders of this company receiving high remuneration, despite much of the company performance and high stock prices being driven by external factors of massive Chinese demand and the ongoing restructure of the United States Steel Industry.

I mean when the historic world high prices for hot rolled coil steel fall away, what next?

Part of the answer will probably lie in some of the long-term strategic decisions being made now - Operations in Asia, North American acquisitions and gaining greater control of a route to the domestic market. Of course some of these steps were made pre-BSL and some have not yet started to deliver value. But the rewards are still high.

However, the AWU believes that the other part of long term success is a company that has the best productivity and constructive engagement with its unionised workforce.

BSL may try to continue to de-unionise over the next half a decade - but at what price?

To protect against importers, co-operation is necessary to securing high levels of productivity.

And if BSL tells the analysts they are doing well in the co-operation department, we can advise that co-operation is elusive.

The AWU knows a stakeholder cannot be unhappy with the share price rise, but we are simply concerned that when external factors have driven this rise, evaporate as they surely will, what petrol of good and productive relationships does BSL have in the tank for tougher economic times to ensure growth?

We have said earlier that at the highest level of BSL, there is a disregard for the major stakeholder that is the union. Why is BSL doing this? Is it to achieve long-term value?
1. Better business and outcomes?
2. The myth that BUT FOR a few union troublemakers
3. Because some of the old ways are not sustainable yet we acknowledge this
4. Kirby Adams is a very smart guy and growing in the job. However, he clearly has a view that a relationship does not have value.

We acknowledge that BSL has been playing smart - pricing in market

• Successful in leveraging price

• Hot rolled coil prices - squeezing tubemakers

• Passing on price increases

• Understand distribution market

We are telling the shareholders that we represent a workforce that is not happy and therefore:

• Engage in industrial action even though

• The AWU nationally is not regarded as militant

• Sites that have never taken action have done so this year.

• Not just union officials that is crucial but employees.

After all, what are the business deliverables from all this union confrontation? What are the gains for BSL?
1. Can't be engagement
2. Distrustful workforce - surely not?
3. What is bankable addition to bottom line - pretty anecdotal.
4. We believe that success is relative. BSL's success is to be measured the mess it has made of things in Port Kembla.

Yet the union has assisted BHP Steel make changes in the past;

• Steel plan

• Newcastle closure

• Even during the Westernport dispute the AWU kept working - despite the ridiculous posters of the helicopter flying over the maintenance unions picket line carrying steel boasting that fighting some of the workers was "innovation" there is no recognition that the AWU kept working.

The problem is that senior BSL management has created the myth that their BHP steel past is a foreign country where they did things differently there.

The Union stakeholders and shareholders are witnessing the payment of massive increases to people with no memory.

CONCLUSION

Today we remind the CEO, the Chairman and the Board that BSL has various constituencies - customers, shareholders, communities and employees (many of whom choose to be represented by the AWU as is their right in a democratic Australia).

We do not come here today to say what does the AWU want to do?

We ask instead 2 questions
One - what does the business need at this stage?
And then two, can the AWU contribute to the business needs?

We believe that BSL constantly needs to innovate - We know that BSL needs to learn to innovate or it won't survive.
This means re-inventing itself - growing through alliances with its constituents, all its constituents.
We are concerned that BSL is so proud that it can't manage an alliance with the union.
We remain concerned that BSL will not work with long-term stakeholders and partners such as us.
We cannot imagine BSL asking what do our union partners want?
What are our shared goals and values?

For us BSL consists in people and not in boards or shares empty of people.
The AWU in today's debate and many other ways wishes to make a contribution; we relish the challenge. We are by our nature cautious and prepared to be stereotyped as cautious in order to achieve a good outcome.

We understand to go forward;

• that our steelworkers will continue the transition to knowledge workers

• that customers are more powerful than ever

• that fewer direct workers will produce greater amounts of steel in the future,

• BSL will need policies to capture the diversity of workforce -put people into the trapezoid

• That older workers will become more valued not less

• BSL will need non confrontationist people policies which recognise all employees not just direct employees

As a major stakeholder, the AWU will be around for a longtime to come. We have sought a voice today because ;

• We want our members to have opportunities to make key decisions

• We have been and are a safe and trusted ally

• We are not rivals nor want to be seen as competition to management

• We are honest enough to tell you the bad news not just the good news

We do not see the Executive team as supermen and women - we can't afford to rely on this as the supply of super heroes is both unpredictable and far too limited.

BSL carries the hopes and aspirations of many members - as employees and many more as shareholders - BSL business will always be our business.

Though now I sit down, the time will come when you will hear me.
ENDS