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The second reason is the credibility of the cited cost savings of the Chinese-supplied centre section. Again HERA research shows that if the tender comparison is based on fair and equal trade practices – after all we have a free trade agreement with China which incidentally this year starts to exclude import tariffs on fabricated steel – in general the price difference for complex fabricated steel work is less than the additional tax and social benefit to the NZ economy if buying local. This is, of course, based on the assumption that Chinese fabricated imports are fabricated on equal quality assurance requirements, i.e. every welder and all steel is certified, quality assurance including inspection is as in New Zealand and the steel is purchased in the range of the international As an industry, we would be saddened to find out that the real driver here is a purported $700,000 savings, and request real public accountability so that we see less of the costly steel procurement disasters as detailed in the previously mentioned ‘Imported Fabricated Steelwork’ study. It’s time for real accountability to building New Zealand infrastructure and I am sure that project owners want to be part of that picture. Heavy Steel Volumes and Price Development In May, the Heavy Steel Volumes dipped slightly as shown in the 12-monthly rolling total chart below. In this graph, the steel volume has been linked to the Import Value (CIF) Index. steel commodity price and the risks of delays, repair and other issues are factored into the cost equation. The third reason is our industry’s concern with the quality of imported products from low cost countries. While the Whangarei decision makers appear to have every confidence in the quality of the bridge they will be receiving, without a very high and costly quality assurance effort, our industry experience as laid out in HERA Report R5-40:2010 “Imported Fabricated Steelwork- Economic, Social and Risk-related Impacts” tells us that Whangarei will not get what is specified. In consideration of the seriousness of our industry’s concern about potential quality issues but also the need to understand our industry’s competitive position, the HERA Executive agreed for HERA to support the local procurers in their effort to get the required quality in return for providing, for research purposes, open information relating to the tender and the actual procurement process. We understand that the Council and Joint Venture partner are considering the HERA offer. The CIF index is given in percentages and correlated back to January 2000 where the value of the index is set at 100%. The price index in May 2012 was 139% points or in other words, landed steel costs have risen in the last 10 years by about 39% points. HERA NEWS Jul 2012 Page 3 The other graph shows the CIF values for the last 13 months in more detail. It showed that the value of the landed steel dropped by over 10% over the last 4 months. HERA produces statistics on levied metals imports which are available to members at a small fee. To find out more, contact Brian Low at 09 262 4845 or email marketing@hera.org.nzPDF Image | Electricity Generation Supercritical CO2 Geothermal Siphon
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