Mining's red IR alert

Corporate profits are increasingly under threat by union posturing and the resources sector appears next in line for a hit akin to those seen at Qantas and Leighton.

Australia’s corporate bosses need to be alert as union agendas threaten to create a profit black hole.

The industrial campaigns conducted by unions are no longer restricted to a process of hard negotiations, followed by strikes and hearings in industrial commissions. Union campaigns now have multi-layered techniques, first developed in the US but currently applied with great skill by Australian unions.

A taste of their corporate campaign techniques was provided by the Leighton boardroom coup in August this year. The company's chief executive at the time, David Stewart, had a history of successful strategies to contain militant unions in his reign at John Holland. Unions could see that moves were underway against them at the troubled Victorian desalination plant. In the weeks before Stewart resigned, the electrical union was active briefing journalists alleging the incumbent's strategies were contributing to further losses on the job. Stewart soon departed – after Grupo ACS, which had taken control of Leighton's major shareholder Hochtief, apparently saw the need for change – allowing the unions to win back control of the desal plant (Leighton's blood let isn't over, August 25).

Alan Joyce at Qantas is being subjected to a highly co-ordinated and personalised brand attack. He’s been called a "rogue employer" by ex-union boss, now Senator, Doug Cameron. He’s been blamed by unions for initiating a new era of ‘employer militancy'. Joyce’s crime in union eyes was to strategically use the tools legally available to him to counter the unions' rolling industrial disruption at Qantas. His tactic of grounding the airline enraged unions.

Have no doubt that if unions could force the sacking or dismissal of Joyce, they would notch that up as a great victory. The personalised attacks on Joyce indicate that such an objective is in their minds. Even though Joyce had overwhelming shareholder support at the October AGM he was booed by activists, offering a hint of moves to come. The construction union, the CFMEU, declared its intention to use its Qantas shareholding to leverage for a special shareholder meeting and expect more developments on the way.

Last week, Alan Kohler interviewed Rio Tinto head Tom Albanese on ABC's Inside Business program and pressed him about the industrial relations threat to the mining industry. Albanese was particularly cautious in his response, saying that Rio happily worked with unions around the world. Albanese displayed no interest in saying anything that could potentially have him classed as a ‘militant employer'.

But the peak mining association, AMMA, has no such coyness. They’ve long been declaring that the current industrial relations directions are extremely harmful to successful mining in Australia. They’ve labelled, for example, the intention to close the Australian Building and Construction Commission as an ‘economic disaster’.

The great fear is that the ‘disaster’ at the Victorian desal plant, for example, will spread to resource construction (A BHP union clash set for takeoff, November 21). The latest stories from the ground at the desal plant show why that fear is real.

A little over a week ago at the desal site, a concrete pour scheduled to cover some 26 square metres allegedly managed only two square meters because of ‘labour issues'. Labourers grossing around $2,000 a week say they spend days doing nothing. Large numbers of electricians are on site yet only a few can work at any one time due to the very small spaces where wiring has to be done. There’s allegations that three times as many cranes are on site as are needed. Almost everyone on site is paid the $700 plus a week living away from home allowance, including the majority of the workforce who live within easy driving distance.

I wouldn’t be surprised if the Leighton losses at the desal plant climbed toward the $1 billion mark. Time will tell.

In August this year I warned that the industrial arrangements at the Victorian desal plant were rolling over to construction in the resource sector (IR backpedals over the boom, August 12). One example is where the Fair Work Authority signed off on giving the same warring unions that control the desal plant coverage of the $43 billion Gorgon construction job in Western Australia.

Events since August have only confirmed that the risk factors facing resource sector construction have risen. What is different is a beefed-up activism by unions to kill off any authoritative comment that could substantiate the risk as turning into reality. Unions have corporate CEOs in their sights. The aim is to silence and neuter them.

Ken Phillips is Executive Director of Independent Contractors Australia and author of Independence and the Death of Employment.

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