On March 22, InDaily published an article of mine that referred to the Premier Weatherill’s visit to the rust bucket states of America, like Illinois, Pennsylvania and Michigan. He was enthused by how an innovation ecosystem (as talked about in this column many times) “has been at the heart of the transformation of the rust bucket States.”

This has considerable relevance in considering how Whyalla can not only be saved, but put on a new growth path. The example of Pittsburgh (another collapsed steel town), which he visited, is illustrative. Indeed, the British steel industry is also under siege from Chinese imports and Europe faces major issues from Chinese imports, as well.

Arrium, Whyalla’s steel business, appears to have contributed to its own difficulties by undertaking a large mine expansion at the wrong time, but intensified competition from Chinese steel is a global phenomenon which is putting pressure on established steel producers, everywhere.

To reiterate the point I made in that earlier article, who would have thought that Pittsburgh, Illinois, the heart of the steel industry in America, would become one of the centres of the American robot industry? Healthcare played a big role in saving Pittsburgh, too, but let’s stay with robots.

Pittsburgh has changed what it does from steel to a vibrant technology centre. It has done so because of the freeing-up of its core human capital assets, its research capabilities and its start-up businesses.

Pittsburgh has transited from the industrial to the post-industrial era, again, as advocated for Adelaide in this column. It is pursuing an organic, bottom-up strategy rooted in university personnel and R&D, high technology and the arts. The city has also been willing to deregulate to create scope for new ideas to be tried out, as we should. And Pennsylvania has cut personal and business income taxes, as we should.

Democratic presidential candidate Hillary Clinton, with Professor Siddhartha Srinivasa during a tour of a Robotics Lab at Carnegie Mellon University in Pittsburgh. Photo: AP/Keith Srakocic

So, in saving Whyalla, as we should, we should not suppose that Whyalla can survive as a steel city.

The state and Commonwealth governments should invest in Arrium to buy time for an economic development strategy for Whyalla to evolve that has little to do with steel.

Clearly the transformation of Whyalla will take time, probably decades, looking at the example of Pittsburgh. So the first thing to do is to hold the steel mill together with injections of capital. The South Australian and Commonwealth governments should buy the steel mill from Arrium and invite commercial tenders to run it for 10-20 years before it is sold for whatever can be got for it.

Arrium’s mining operations are a different matter. The administrators can work that one out as best they can. But, provided the steel mill can get access to enough ore for itself, Whyalla does not need to be in the magnetite iron ore business.

The state and Commonwealth governments should immediately suspend, for 15 years, the operation of all business regulations (apart from regulations to do with health and safety) affecting the operation of businesses in Whyalla. And also cut in half, for the same period, all personal and company taxes for taxable entities resident in Whyalla. Let’s see what start-up businesses emerge in Whyalla and what small business expansion ensues in Whyalla as a result. In my opinion, onlookers had better stand aside or they will be killed in the rush.

But just to make certain, the South Australian Government should relocate 2000 public servants from Adelaide to Whyalla as soon as possible. Most people are probably unaware that there are more than 100,000 state public servants in South Australia, mostly concentrated in Adelaide. In these days of email, texting, and mobile phone connectivity, the economies from having public servants housed in close proximity to each other have fallen greatly.

According to the most recent State Budget, the Department of Premier and Cabinet has 1667 Public Servants, State Development has 1390, Primary Industries and Regions 981, Environment, Water and Natural Resources 1716, Health and Ageing 2,241, Planning, Transport and Infrastructure 3190, and Communities and Social Inclusion 5064. And this is before you get to the biggies like Education and Child Development, and the health units.

One of the main reasons why Adelaide is so dominant economically in South Australia is because the public service is concentrated there, along with the universities, research centres, and so on. It would greatly help avoid the economic collapse of large towns like Whyalla if some fair share of the South Australian public service was located in the regions.

This would tend to reduce the tendency of the public sector to find savings, where needed, in the regions first, even when these are not very substantial. This tendency first came to my attention in the 1980s, when John Bannon was Premier. Treasury and Finance made trivial economies in the health budget by closing three small but regionally very important – health-wise and economy-wise – country hospitals. This was devastating for the towns involved.

If 2000 extra public servants were employed in Whyalla it would add 20 per cent to employment there and give the town a head start into the post-industrial era. Air, road and maritime services would be bound to improve, and with it tourism. Port Augusta, Wudinna and Port Lincoln would be bound to get some rub off.

What are some of the ways that the Whyalla community might adjust as their dependence on steel-making diminishes? Some can move into farming in its various forms, including greenhouse cultivation of flowers and vegetables. Some can move into aquaculture, air-charter and drone work. Drones are revolutionising Australian agriculture and minerals exploration. Those with driving skills, cooking skills, cleaning skills, and of a friendly disposition can find employment in hospitality and tourism. Others will find jobs as security officers in the new enterprises being established.

Provided people are willing to be retrained as something else (hopefully allied in some way to what they were doing before), are hard-working, have contacts in Whyalla, have experience in and are good at working in teams, are computer and internet-savvy, and are willing to look to the young, expanding firms for jobs, most workers will be able to transit from a stagnant or slowly-declining steel industry into something else acceptable.

At 58 years of age, I lost my well-paid, public sector job. This was an alarming experience. I started my own economic consulting company, with a friend who had also lost his job at the same time. The company was based on the skills and contacts that we both had developed in our working lives. It turned out well, was a happy venture, kept the wolf from the door and led to a highly-interesting set of experiences. It closed voluntarily last year after 16 years.

Richard Blandy is an Adjunct Professor in the Business School at the University of South Australia and a weekly contributor to InDaily.