Grollo is leading the IR battle

Business leaders and the miners in particular should support Daniel Grollo in taking on the unions. If he loses, production costs will spiral just as Australia enters a slowdown.

Australia has a lot riding on the shoulders of Daniel Grollo. This is not just a battle over the Myer building site in Melbourne. It’s about the cost of building infrastructure around the country and more particularly determining when new mining construction can resume again.

We are seeing a dramatic capital strike by the Australian mining community. It’s true that strike is being fanned by lower commodity prices but union control of building sites is sending construction costs through the roof. When mineral prices were in the stratosphere it did not matter. Now it does matter and we are looking at the mothballing of more than $200 billion in mining projects. Bringing mining projects out of mothballs will not only require better mineral prices but management being able to re-take control of construction projects, which is what the Grollo dispute is all about.

We are looking at a 20 to 25 per cent reduction in building costs. Unfortunately too few big commercial builders have the management ability to take advantage of the precedents set by Grollo. They will need government, probably state government, help.

And I should emphasise that Grollo might be winning but he has not yet won. The unions will throw everything at him because they know the danger he poses to their control of building sites.

And so this morning the Melbourne Age is accusing Grollo of intimidating workers using bike gang members. There will be more to come and the personal attacks will be vicious.

The business community rarely produces a leader who is willing to take on extreme unionism. They are not prepared to pay the personal cost.

And a business leaders can only do it if they have strong government backing. In this case the Federal Government is no help but at least they are not undermining Grollo. The smarter people in the federal Cabinet know that there will be few major new mining projects (as distinct from bolt on operations) while extreme unionism is boosting construction and operating costs.

But in Victoria, the Baillieu government is leading Australia in tackling the issue. It has set up rules which look like being followed by most states who want to be able to build roads, hospitals and schools at a reasonable price. (Dodging mining sector mothballs, May 22 and Readying for an IR showdown, July 18)

I remember in the 1980s, Peter Costain, the British builder, agreed to the demands of the unions to employ six union officials on the site, with no other task than be union officials and virtually manage the job. They created havoc and Costain closed his Australian operation. That was the old BLF union. It was dismantled by a Victorian Labor politician Steve Crabb but is now back in force with a new name and leaders. Daniel Grollo not doing a ‘Costain’ and throwing the towel.

Daniel Grollo is the son of Bruno Grollo who made a fortune from building because he had a close team of workers around him who would not be intimidated by the union. But those workers retired and the Grocon organization became vulnerable.

In this dispute, Grollo was lucky that the union disobeyed a court order and that the Victorian police were willing to regain control of the Myer site at 3 am.

But now Australia needs Grollo to take advantage of that ‘luck’ to set the precedents that enable management to regain control of building sites.

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