17/02/2014 - 15:57

Auto sector reeling, not a great feeling

17/02/2014 - 15:57

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The Toyota saga is a good example of the employment flexibility required to survive and prosper in the modern economy – and what can happen when it’s missing.

Auto sector reeling, not a great feeling
DONE DEAL: Deals negotiated by management and unions in have come back to haunt carmakers including Toyota. (Photo: Attila Cszasar)

I have aired my views on the Australian car industry before but will remind readers about the earlier demise of another motor vehicle manufacturer – and the lack of teeth gnashing that went with it. 

That was the Western Australian motor vehicle industry, which disappeared in the late 1990s when a Malaysian firm bought it and took all its intellectual property offshore.

That manufacturer, of course, was OKA, those hardy four-wheel-drive trucks that have proved resilient operators in our outback for close to two decades.

There was barely a whimper when OKA was sold off overseas, despite it being Australia’s only real locally owned manufacturer.

It had no major subsidies and was a successful niche producer that could have, with the right backing, become a global producer of the type of vehicles that were in high demand during the recent mining boom.

It was troubled due to the challenges of being a start-up in a high-cost, technically demanding field, but it never died. It still lives, one way or another, and may yet get a new lease of life one day.

But of course it was Western Australian, far away from the big urban centres where votes really count and politicians make grandiose promises during election cycles.

Anyway, I have little more to say. This is just a reminder that I didn’t hear any union leaders or any opposition spokespeople when WA lost its car industry.

Redundancies

WHOEVER or whatever (or whichever combination of those) is to blame for the loss of the nation’s car industry, I am troubled by one thing I have noticed around these industries that struggle to deal with changing economic times.

In many cases the workers have huge redundancy provisions built into industry or company-wide agreements that, it seems to me, ensures they may never have to work again if their job disappears.

I understand that such provisions may be intended to soften the blow of losing work and may also be meant to act as a disincentive for employers to shut down operations due to the cost of doing so, but I feel this poison pill backfires (if it is in any way intended to help preserve the operation, business or industry).

The reason is that a business needs all hands on deck when it is fighting for survival it, there is no room for those whose thoughts lie elsewhere or feel others can do the hard yards.

In the car industry, many of its longest-serving employees have, at the very least, split loyalties between their industry and the huge payout they will receive if the business ceases.

This is a ridiculous scenario and you don’t have to deeply understand human psychology to know where most such workers, many past their prime and nearing the twilight years of their employment, would be hoping things end up. Payouts for people with decades of uninterrupted employment can resemble a Lotto win.

So, despite the rhetoric about jobs for life and passing on employment through generations, I imagine many of these people are barely even torn over the choice – if it was ever presented – between reducing very comfortable conditions or walking away with a windfall.

What is worse, those who stand to benefit from such failure as we are now witnessing are allowed to vote at employee meetings where key decisions are made about what the workers might give up to save a business.

I know that some car workers have taken temporary pay cuts in recent times to help alleviate short-term issues brought on by the high Australian dollar, but the past few years was not about short-term change. For the car industry to survive in Australia it had to be far more flexible and cheaper; and by ‘cheaper’ I mean competitive with other first-world nations.

They make cars cheaper in Europe, one of the world’s most costly places to do business.

If we were to see a long term, intergenerational business, we needed to rewrite the way the carmakers and their employees deal with each other.

Who can blame people nearing the end of their work life from thinking they would rather take the money? The blame lies with those in management and the unions who allowed this to happen for their own short-term benefit, back in the day when the car industry was protected and the cost of dumb work practices could be buried by a good lobbying effort in Canberra.

I am equally dumbfounded when I see people in my own sector paid out massive sums by media businesses that want to shed staff and cut costs. Millions of dollars that could be used to train new young people or invest in capital equipment is paid out to people who have earned well throughout their lives and still have plenty to offer.

I don’t begrudge those I know who have received such a windfall; I just shake my head at the managers who sign the cheques and shareholders who let it happen.

It is crackers. 


STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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