Unions will be the death of Australian car manufacturing

[BroadyFord]

For the first time, I am genuinely concerned that the entire Australian car industry may be about to collapse entirely. With Ford gone and Holden (and by extension Toyota) on a knife-edge, now is not the time for unions to be dictating and controlling every aspect of these companies. However, they either don't realise or do not care that their actions - as outlined below - will inevitably grind an entire industry to a halt and result in many thousands of their members losing their jobs. The next few months are critical in terms of whether the Australian automotive industry lives or dies. Sadly, the latter is looking more likely... :(

Decision made: GM will shut without a labour deal


http://www.businessspectator.com.au/...ut-labour-deal

Make no mistake, General Motors in the US is not bluffing. If there is no new labour agreement with its Australian workforce within six weeks then Australian manufacturing will cease.

The only two questions to be decided by Detroit are whether the cessation announcement is made before or after the election and the actual date that production will shut. In my view, because the decision to close without a satisfactory labour agreement has already been made, the closure announcement must be made before September 14.

GMH Australia managing director Mike Devereux made it clear to the American Chamber of Commerce luncheon in Melbourne on Friday that General Motors was not bluffing and said he believed that Toyota and General Motors both need to make cars in Australia for the parts industry to be viable.

So if there is no GMH labour agreement in six weeks and General Motors shuts down, then Toyota may announce it is shutting soon after.

The big union bosses think General Motors is bluffing. But in any event many would prefer General Motors and Toyota to shut, along with the entire Australian components industry, rather than make precedent setting concessions.

And it’s not easy for the unions because GMH says that the Australian talks will not be a “negotiation”, rather they will be a “discussion”.

That’s exactly what General Motors did this year at the Bochum assembly plant in Germany. The unions said General Motors was bluffing and in March, after a "discussion", rejected the General Motors labour deal. A month later, in April, Detroit announced that the plant would shut in 2014.

The bulk of the General Motors Australian workers on the front line are at Elizabeth in South Australia. There is no certainty that they will go along with the union bosses in Sydney and Melbourne. On Thursday I described the General Motors labour deals in Australia as “workplace agreements from hell” because they give the unions the power to manage much of the plant (Dollar’s decline sends a clear warning, June 20).

Ken Phillips described how the Ford unions actually decided to strike to get a similar agreement to GMH. The Ford workers ‘won’ but for both Ford managers and workers signing that agreement was their death warrant (The union hand on the wheel that doomed Ford, June 19).

Workers at Ford have only themselves and their unions to blame for losing their jobs. But at Holden the remarkable feature of the workforce is that they do not enforce many of the more onerous provisions of their labour agreement and five years ago took a temporary pay cut to keep the plant going. Nevertheless, if General Motors managers want the plant to operate when it involves worker overtime, management now wants the power to make that decision – not the unions, as is now the case (there is no issue with penalty rates). Detroit insists that the Australian labour agreement must be consistent with its world plants, subject to the Australian labour laws.

Without warning, Ford simply dropped the guillotine on the jobs of their managers and workers. General Motors is giving the workers and managers a chance to keep their employment. There is at least a possibility that GMH workers will want employment rather than the dole and defy the union bosses.

And given that the Elizabeth area of South Australia is one of the more depressed areas of the country, most General Motor’s workers know what living on the dole is like. And their looming retrenchment comes as the big mining construction plants will be completed and the workers go back home to seeks jobs.

If General Motors and its suppliers shut, as is likely, South Australian unemployment will rise well past 10 per cent. Victoria is more affected by Ford than GMH but with returning mining construction workers, unemployment in Victoria will rise sharply.

But what worries the unions more than unemployment is that if the General Motor’s workers agree to a ‘sensible’ work place agreement and take a pay reduction then it may spread around the country.

But even if General Motor’s workers agree to abolish their work practices and powers, it does not save the company in Australia. There will need to be cost reductions over a wide range of areas, including electricity pricing, and finally the federal government will need to come to the party.

Mike Devereux says that every motor industry in the world receives some form of government help – it’s a globally competitive business. It’s unlikely that an Abbott government would help any company that had a “workplace agreement from hell”. “Get your house in order first”, it might say to General Motors (and Toyota).

It is possible to operate General Motors profitably in Australia because the latest Commodore will be exported to the US. Australia is a world leader in rear wheel drive cars and that’s how we can overcome the tyranny of scale. Toyota has similar plans for the Camry.

[DanielXR8]

Originally Posted by BroadyFord

For the first time, I am genuinely concerned that the entire Australian car industry may be about to collapse entirely. With Ford gone and Holden (and by extension Toyota) on a knife-edge, now is not the time for unions to be dictating and controlling every aspect of these companies. However, they either don't realise or do not care that their actions - as outlined below - will inevitably grind an entire industry to a halt and result in many thousands of their members losing their jobs. The next few months are critical in terms of whether the Australian automotive industry lives or dies. Sadly, the latter is looking more likely... :(

Decision made: GM will shut without a labour deal


http://www.businessspectator.com.au/...ut-labour-deal

I can see the point made, but there is the other side. If you don't agree with the corporate structure and you are given no say or influence on it at all - even if you are less than impressed with how it is run and how much it costs to run. Is is fair for that same executive team to take money out of your pocket and your families?

Personally I think GM should offer to give the staff shares in GM, on an annual basis, equivalent to the pay cut they are asking for. At least that way they stand to benefit in a real way if the company does prosper and if GMH calls it quits, they have a few shares they can divest in GM to help tide them over.

Saying never mind my pay or how I do business, but you better give up yours, is never going to go over well.

[Rodge]

Labour costs and the GFC came very bloody close to sinking Riviera Australia, mind you a grossly bloated management structure didn't help either. Its time for pragmatic thinking otherwise the dole queue gets a lot longer when all the third party suppliers close up shop as well and people's choice in this vehicle segment gets a lot smaller.

[DanielXR8]

I think Mike Devereux gives a more considered response here http://www.goauto.com.au/mellor/mell...257B94000924B7, or at least he is reported more fairly. Mike Devereux strikes me as a pretty level headed exec, so you have to wonder what has pushed all this crap onto the priority list right when VF is being launched. Hardly great timing when you are pushing the Australian theme with VF.

My best guess is they have heard the Libs will sink them when it comes to funding and GM Detroit has gone into a panic. Possible also the Chev SS is not picking up orders like they had hoped. Certainly many online in the US are really negative about the styling of VF.

[BroadyFord]

Originally Posted by DanielXR8

Possible also the Chev SS is not picking up orders like they had hoped. Certainly many online in the US are really negative about the styling of VF.

If this is the case, then what is stopping Holden ramping up exports of the Chevy Caprice PPV? This is a vehicle that has been well received by law enforcement agencies and Holden have said if the dollar drops to a more realistic level (as is now the case) then they would be selling "thousands, not hundreds" in the US.

[XP6]

From what I can gather it doesnt matter what either ford or holden do... its more to do with rug pulling from Detroit than any union or workers pay rate.
Do you enjoy your weekends... bash the unions to submission and they'll be a thing of the past forever.

[jpd80]

This is typical of how GM negotiates with Unions, they don't like or understand them.
GM lead everyone to believe that they were planning to be here for another ten years with grandiose plans
but now I recon that GM now wants to pull out of Australia and is looking for an excuse to do it sooner than later..

[flappist]

Originally Posted by XP6

From what I can gather it doesnt matter what either ford or holden do... its more to do with rug pulling from Detroit than any union or workers pay rate.
Do you enjoy your weekends... bash the unions to submission and they'll be a thing of the past forever.

OR stand staunch and do not wear any of the pain that others have to endure in the current economy and your weekends might get 3.5 times longer......

[XP6]

Originally Posted by flappist

OR stand staunch and do not wear any of the pain that others have to endure in the current economy and your weekends might get 3.5 times longer......

I dont get many now...

Originally Posted by BroadyFord

For the first time, I am genuinely concerned that the entire Australian car industry may be about to collapse entirely. With Ford gone and Holden (and by extension Toyota) on a knife-edge, now is not the time for unions to be dictating and controlling every aspect of these companies. However, they either don't realise or do not care that their actions - as outlined below - will inevitably grind an entire industry to a halt and result in many thousands of their members losing their jobs. The next few months are critical in terms of whether the Australian automotive industry lives or dies. Sadly, the latter is looking more likely... :(

Decision made: GM will shut without a labour deal


http://www.businessspectator.com.au/...ut-labour-deal

Make no mistake, General Motors in the US is not bluffing. If there is no new labour agreement with its Australian workforce within six weeks then Australian manufacturing will cease.

The only two questions to be decided by Detroit are whether the cessation announcement is made before or after the election and the actual date that production will shut. In my view, because the decision to close without a satisfactory labour agreement has already been made, the closure announcement must be made before September 14.

GMH Australia managing director Mike Devereux made it clear to the American Chamber of Commerce luncheon in Melbourne on Friday that General Motors was not bluffing and said he believed that Toyota and General Motors both need to make cars in Australia for the parts industry to be viable.

So if there is no GMH labour agreement in six weeks and General Motors shuts down, then Toyota may announce it is shutting soon after.

The big union bosses think General Motors is bluffing. But in any event many would prefer General Motors and Toyota to shut, along with the entire Australian components industry, rather than make precedent setting concessions.

And it’s not easy for the unions because GMH says that the Australian talks will not be a “negotiation”, rather they will be a “discussion”.

That’s exactly what General Motors did this year at the Bochum assembly plant in Germany. The unions said General Motors was bluffing and in March, after a "discussion", rejected the General Motors labour deal. A month later, in April, Detroit announced that the plant would shut in 2014.

The bulk of the General Motors Australian workers on the front line are at Elizabeth in South Australia. There is no certainty that they will go along with the union bosses in Sydney and Melbourne. On Thursday I described the General Motors labour deals in Australia as “workplace agreements from hell” because they give the unions the power to manage much of the plant (Dollar’s decline sends a clear warning, June 20).

Ken Phillips described how the Ford unions actually decided to strike to get a similar agreement to GMH. The Ford workers ‘won’ but for both Ford managers and workers signing that agreement was their death warrant (The union hand on the wheel that doomed Ford, June 19).

Workers at Ford have only themselves and their unions to blame for losing their jobs. But at Holden the remarkable feature of the workforce is that they do not enforce many of the more onerous provisions of their labour agreement and five years ago took a temporary pay cut to keep the plant going. Nevertheless, if General Motors managers want the plant to operate when it involves worker overtime, management now wants the power to make that decision – not the unions, as is now the case (there is no issue with penalty rates). Detroit insists that the Australian labour agreement must be consistent with its world plants, subject to the Australian labour laws.

Without warning, Ford simply dropped the guillotine on the jobs of their managers and workers. General Motors is giving the workers and managers a chance to keep their employment. There is at least a possibility that GMH workers will want employment rather than the dole and defy the union bosses.

And given that the Elizabeth area of South Australia is one of the more depressed areas of the country, most General Motor’s workers know what living on the dole is like. And their looming retrenchment comes as the big mining construction plants will be completed and the workers go back home to seeks jobs.

If General Motors and its suppliers shut, as is likely, South Australian unemployment will rise well past 10 per cent. Victoria is more affected by Ford than GMH but with returning mining construction workers, unemployment in Victoria will rise sharply.

But what worries the unions more than unemployment is that if the General Motor’s workers agree to a ‘sensible’ work place agreement and take a pay reduction then it may spread around the country.

But even if General Motor’s workers agree to abolish their work practices and powers, it does not save the company in Australia. There will need to be cost reductions over a wide range of areas, including electricity pricing, and finally the federal government will need to come to the party.

Mike Devereux says that every motor industry in the world receives some form of government help – it’s a globally competitive business. It’s unlikely that an Abbott government would help any company that had a “workplace agreement from hell”. “Get your house in order first”, it might say to General Motors (and Toyota).

It is possible to operate General Motors profitably in Australia because the latest Commodore will be exported to the US. Australia is a world leader in rear wheel drive cars and that’s how we can overcome the tyranny of scale. Toyota has similar plans for the Camry.

[KIWI-1]

Same old, same old?

"UAW workers receiving generous benefit packages when compared with those working at non-union Japanese auto assembly plants in the U.S., had been cited as a primary reason for the cost differential before the 2009 restructuring. In a November 23, 2008, New York Times editorial, Andrew Ross Sorkin claimed that the average UAW worker was paid $70 per hour, including health and pension costs, while Toyota workers in the US receive $10 to $20 less.[15] The UAW asserts that most of this labor cost disparity comes from legacy pension and healthcare benefits to retired members, of which the Japanese automakers have none."
http://en.wikipedia.org/wiki/United_Automobile_Workers

[jpd80]

Originally Posted by KIWI-1

Same old, same old?

"UAW workers receiving generous benefit packages when compared with those working at non-union Japanese auto assembly plants in the U.S., had been cited as a primary reason for the cost differential before the 2009 restructuring. In a November 23, 2008, New York Times editorial, Andrew Ross Sorkin claimed that the average UAW worker was paid $70 per hour, including health and pension costs, while Toyota workers in the US receive $10 to $20 less.[15] The UAW asserts that most of this labor cost disparity comes from legacy pension and healthcare benefits to retired members, of which the Japanese automakers have none."
http://en.wikipedia.org/wiki/United_Automobile_Workers

Local Aussie workers in the vehicle builders Union get nothing like those conditions and amounts,
trades are paid much higher but ordinary line workers don't get much at all.

Remember, there were the same people who went on half work - half pay during the global melt down...

[jpblue1000]

I believe in unions, they have a place in the workplace, I believe they should have 'less power' but more rights.
All I will add is look at the demise of the UK manufacturing during the 70's and who history has held responsible.

JP

[KIWI-1]

Not saying they get the same, my point is that at the time the UAW leaders were hailed as heroes for the great deal they got for workers... until it nearly killed the industry. Same problem here.
I reckon there will be a few in the Australian industry who take early retirement over the next few years to lock in their generous retirement benefits.

[jpd80]

Originally Posted by KIWI-1

Not saying they get the same, my point is that at the time the UAW leaders were hailed as heroes for the great deal they got for workers... until it nearly killed the industry. Same problem here.
.

No it's not, the UAW priced themselves out of the market with those high
wages, workers here get nothing like those pay and conditions.

And to continue saying so is only going to raise the ire of people we care
about and respect.

[KIWI-1]

Originally Posted by jpd80

No it's not, the UAW priced themselves out of the market with those high
wages, workers here get nothing like those pay and conditions.

And to continue saying so is only going to raise the ire of people we care
about and respect.

...and the AMWU hasn't?

[prydey]

the union has long fought for conditions that aren't sustainable, as is now evident. it will also cost holden a small fortune to lay workers off, given the ridiculous redundancy packages on offer.

[jpd80]

Originally Posted by prydey

the union has long fought for conditions that aren't sustainable, as is now evident. it will also cost holden a small fortune to lay workers off, given the ridiculous redundancy packages on offer.

How much are they offering?

[onfire]

Unions really are a double edged sword. If it weren't for the unions, a lot of us wouldn't get paid anywhere near what we are, nor see benefits.

But on the other hand, Unions should be a primarily a tool for mediation between the corporate world and workers. And that's about it.

[39ClevoUte]

We have a major problem. Aussies want to pay for goods made by people who earn, not a lot, at cheap prices. (look at all imported goods). They do this with wages from an economy that was based on everyone getting a lot.
This is a slow downward spiral, as each cheap product is purchased an Aussie looses a job.
The other problem is, global manufacturers can see the disparity between their operations. They make at lot more profit at other sites, they need to be competitive and pay the returns to their shareholders.

Unfortuately I fear we are on a long downward curve with wages until there is worldwide parity. This will eventually cause some sort of crash, because our local house prices, cars, holidays and everything else we own locally doesn't match these lower wages.

I don't know what the answer is, but I think we eventually need to adjust.

[prydey]

Originally Posted by 37Pickup

, because our local house prices, cars, holidays and everything else we own locally doesn't match these lower wages.

real estate is probably the single biggest area affecting everything else. our houses are simply not worth what they are rated at these days. it is a supply v demand type situation but quite simply, they are not worth a fraction of what we pay for them.

[mr smith]

Originally Posted by prydey

real estate is probably the single biggest area affecting everything else. our houses are simply not worth what they are rated at these days. it is a supply v demand type situation but quite simply, they are not worth a fraction of what we pay for them.

Yup, once we cool off (Some dude on the radio tonight was saying how there has been a big increase in NZers staying home and not coming to OZ), we will see some big price drops and lots of toys for sale across the board. Houses, muscle cars, Harley Davidsons.
Steve Keen is right but didn't bank on our stupid govt spending all our money keeping an unsustainable situation afloat.

[KIWI-1]

Originally Posted by 37Pickup

Unfortuately I fear we are on a long downward curve with wages until there is worldwide parity. This will eventually cause some sort of crash, because our local house prices, cars, holidays and everything else we own locally doesn't match these lower wages.

I don't know what the answer is, but I think we eventually need to adjust.

Spot on.
One way to adjust is to add intellectual value.
As I mused in another thread...
I wonder how competitive the Australian component industry would be if the Billions paid to Ford, Holden and Toyota had instead been invested in the that industry?

[westy73]

I believe Unions were invented to basically keep the employer bastards honest and make sure workers had rights and were paid fairly for a fair days work. This has gone pear shaped as unions have become more aggressive, more greedy, more militant.

Unions have a place but not to hold the businesses to ransom just so they can line their pockets. Higher wages means it's harder for businesses to compete especially as has been stated above many times when cheap imports are being dumped when comparatively their wages are so small. I bet manufacturing worker counterparts in these other countries would love to have the holiday pay, sick pay, overtime pay etc etc etc.

It aint a level playing field and the more the unions demand the less likely any manufacturing industries will survive in Australia. It's blatantly obvious to me and common-sense must prevail.

[olds]

Ford announce all manufacturing to cease 1000 jobs gone . 1500 jobs to remain ,a lot of dead wood in that forest

[Bossxr8]

Who the hell wrote that article and where do they get their supposed "facts" from.

The unions never threatened strikes with our EBA's, why the hell would we, the company only had us working 3 and 4 day weeks, why would they give 2 stuffs if we went on strike, it would have saved them more money cause they wouldn't have to pay us anything for down days. We had absolutely no bargaining power and basically just excepted the small pay increase the company offered, and we took a superannuation cut for it. These articles are always such beat ups.

It really doesn't matter how much the auto manufacturers pay their workers if they are only building in tiny numbers, its the brutality of small rates of scale that are killing them all, wages have very little to do with it. If Holden doubled their production numbers wages wouldn't mean jack, they would be raking in the dough.

Wages only make up a small fraction of costs, its things like the massive increases in electricity and gas that have made a massive spike in manufacturing costs.

[Brazen]

Scale is the key, the plants need to be making over 100,000 cars a year to be viable. A 5% pay cut isn't going to change a thing. Labour isn't the problem for the auto industry - actually it is one of the strength, they are flexible, don't strike, and highly trained.

[olds]

Its not the guy on the production lines fault the product isn't - up to date ,well advertised or unpopular with the market . They only do the nuts and bolts stuff

[Brazen]

Meanwhile one of the GM plants in Thailand has had the workforce on strike, it is estimated to cost GM $6.5 million a day, the strike went for 3 months. Suddenly Australia doesn't seem so expensive.

There are many risks that you have in low cost countries.

[fte50]

Originally Posted by Brazen

Meanwhile one of the GM plants in Thailand has had the workforce on strike, it is estimated to cost GM $6.5 million a day, the strike went for 3 months. Suddenly Australia doesn't seem so expensive.

There are many risks that you have in low cost countries.

And this will continue to happen in unstable countries as employees rise to the conditions we take for granted.

The same thing was happening in South Korea the last 2 decades, only their trade union activists were put in military prison to prevent any uprising.

Yes you pay more in Australia, but as the saying goes - you get what you pay for.

[vztrt]

Originally Posted by Brazen

Meanwhile one of the GM plants in Thailand has had the workforce on strike, it is estimated to cost GM $6.5 million a day, the strike went for 3 months. Suddenly Australia doesn't seem so expensive.

There are many risks that you have in low cost countries.

Thailand factories have their own problems as wages are getting higher and higher due to the competition between manufacturing companies. This will hurt in the long run. Also you'll find Thai built vehicles will suffer more and more from quality issues if this isn't addressed.

Originally Posted by jpblue1000

and that's why houses are so expensive cause every tom dick and harry could afford a McMansion cause their wages grew to fast. hell don't just stop at one buy an investment house too to realy drive up demand.

JP

Its funny how the price of houses sky rocketed at the same time capital gains tax was halved in 99. Then we had the mining boom and cheap credit plus more foreign people buying houses. All of a sudden house prices have gone from 3.5-5 times the average wage to 8-9times the average wage and seeing as the average wage increased a fair bit house prices a stupidly expensive.

On top of this you get gouged by power bills because they need to make a profit (its funny that they are paying out dived ends to shareholders) and increasing prices even if there is competition (well in Vic electricity price rises are smaller then NSW/QLD). Now we have water asking to raise prices by another $200 a year (cause $300 was considered to high).

Then you have business that is getting inundated with new legislation for environment, OH&S, more tax for workers, super to rise or paid maternity leave, etc etc.

Its a big merry-go-round and its been out of control for a long time. Unless cost of living is contained reducing pay for some workers isn't going to solve Holden's issue. Its just easier to threaten your workers with their jobs.

No one cared when things were going great guns and everyone is to blame for this.