Engineers angry

Press, 28 October 1982, Page 1

Engineers angry

Wellington reporter There is growing ' anger among the heavy engineering firms and unions about the situation H.E.R.A.’s studies have revealed. One leading industry figure asked how it was possible for this situation to have arisen, with more than 80,000 people registered as unemployed or on special work. ,New Zealand protected its

clothing industry from outside competition, as in Taiwan, to create jobs in New Zealand at the cost of more expensive clothes, he said. The Government ought to View the engineering industry in a similar manner; protection for New Zealand engineering from outside competition, as in Japan, to create jobs at the expense of more expansive engineering.

But it seems that if it is because New Zealand engineering is more expensive that the Government has allowed 87.5 per cent of the work on the four petro-chem-ical off-site engineering plants to be contracted overseas, then that is because the wrong sums have been done.

One case being talked of in the engineering industry is over a tender for 4000 tonnes of structural steel for the synthetic petrol plant at Motonui.

It was put out to tender in January, 1982, and stayed open for 120 days. Work was to start in August, 1982. and to be completed by February, 1983.

it was a tender for lump sum. fixed-price work. That meant that any increase in costs could not be recovered once the contract had been signed. New Zealand firms considering tendering for that contract before the wages and prices freeze had to allow for increases in wage rates, both from direct bargaining at the

workshops and as a flow-on from site agreements. If workshops did not match site increases, they were certain to lose staff.

They also had to allow for inflation increases of 17 per cent, plus a likely increase in the cost of steel in New Zealand.

So any estimated price for tender by a New Zealand company had to have a 40 per cent inflation-wages-prices factor added on. as these could not be recovered afterwards.

But a Japanese company, for example, tendering for the same contract, faced internal inflation of 2 per cent, an under-employed work force, and a mountain of steel awaiting a customer. What seems to have been poor accounting has worsened the problems New Zea-

land firms were faced with over the Government's decision as to how Motonui’s synthetic petrol plant — more than half the total petro-chemical complex —

should be handled. The Government told the Synthetic Fuels Corporation, and the contractors, Bechtels, that it could bring into New Zealand built-up modules of more than 60 tonnes.

Bechtels is bringing in huge modules, some of hundreds of tonnes, contracted out to overseas tender and shipped to New Zealand, to be bolted together. As modules, many of these components are beyond the scope of New Zealand heavy engineering firms. But the firms believed they could have made many of the parts which are part of the modules.