The crumbling pillars of union power

At SPC and elsewhere in the food processing, construction, motor and mining industries, the corporate bastions of union power are collapsing. Companies are choosing longevity over union dominance.

As Joe Hockey demands in cabinet that Coca-Cola Amatil effectively drastically changes the way it manages SPC Ardmona, it is clear that the union movement in Australia has never in its history been under so much pressure. The Rudd-Gillard governments – aided by Greg Combet – set up an elaborate industrial relations act to lock in union power. But it’s not working on a series of fronts.

Union officials in the private sector are suddenly discovering in food, motor, construction and mining that they are actually dependent on a series of corporate pillars to maintain their power in the workplace. Moreover, a number of those pillars are being kicked from underneath them.

It starts with a pillar that no one recognised as a pillar of union power: the willingness of supermarkets, led by Woolworths and Coles, to pass on the costs in the union-dominated food processing industry. When Ian McLeod took the reins at Coles, he refused to agree to the regular price rises that were required to maintain the bad work practices in food processing. Woolworths followed.

That meant that the crazy agreements that food managers had signed – which gave the unions power over what happened on site – were put under pressure. For a long time, unions blamed everyone but themselves for the regular Australian food plant closures. Now the cat is out of the bag, and workers gradually understand that they have to choose between enshrining union power or their jobs.

Coca-Cola Amatil, which owns the Shepparton Preserving Company, wants governments fund the installation of the new plant. The new plant requires government help because of SPC’s bad work practices. Coca Cola has some of the same practices in its soft drink plants and may not have the management skills to make the workplace changes.

The government will make a decision this week and clearly can’t see why it needs to help Coca-Cola Amatil because of its huge profits. More importantly, it would be very foolish to help SPC until it was sure that at least three basic changes were made: end of union-dominated consultative committees; freedom to sub-contract; and returning controls over shifts, rosters etc to managers (Hockey’s purse can perform industrial surgery, January 20)

A fascinating solution would be to get Coca Cola to close the SPC plant and sell the brand to a farmers’ cooperative for a token price. That cooperative could then be helped to erect a new plant in a nearby town with modern work practices. Woolworths and Coles, who want local food processing, would help with a long-term purchasing contract as they have with Simplot.

Simplot is using its Woolworths-Coles three-year supply contract to give it the time to fix its work practices and modernise the plant. That’s what Coca Cola should have done. Simplot workers will, over time, have to choose between the sack or union power (How Coles and Woolworths are revolutionising food processingOctober 31).

The second corporate pillar that is crumbling is the commercial construction industry, which traditionally entered into cartel-style agreements with the unions. I documented the looming breakdown yesterday (A nail in the construction cartel coffin, January 29).

The third pillar is the motor industry, where unions believed they could boosts costs and the government would subsidise the industry. And so the unions forced an agreement from hell on General Motors. Ford workers went on strike to get the same deal. All the Ford and GMH workers will now be retrenched. That GMH-Ford union deal from hell was clearly not the only reason for the planned closures, but it set the ball rolling. Toyota managers and workers now know they will be retrenched unless they severely restrict union power. The same message will soon spread to the motor parts industry.

A fourth pillar is the mining industry, where once again managers and workers will have to choose between shutting mines or union power. In mining, companies are now investing heavily in automation so union power is being lost via capital investment.

The ending of these four pillars is surely monumental, and the effects will spread .

One day, this new reality will come to the public service. The efficiencies available in the public service are very large but no government has had the courage to tackle them.