THE DISTILLERY: IR battlefront

One jotter takes a look at the industrial disputes at BHP and Qube and spots a key difference between them.

Each day, Distillery selects the three or four best ideas that have been put forward by the nation’s leading business and economic commentators (and lists other items they have covered). Readers are invited to comment on the Distillery selections in The Conversation.

With the Liberal Party unwilling to pay the electoral price of confronting its industrial relations demons, a real discussion about the future of Fair Work Australia has to take place outside Canberra. The Australian’s Matthew Stevens looks at the latest lockout from Qube Logistics chairman Chris Corrigan and explains that, like Qantas boss Alan Joyce, the financial pain of strike action has left him with little choice, unlike the BHP Billiton-Mitsubishi joint venture in the Bowen Basin, which has the profit margin to take its time. The Age’s Adele Ferguson delivers a depressing verdict on the government’s recommendations to strengthen the battle against shady liquidators, while the official departure of Perpetual’s star stock picker John Sevior isn’t the biggest problem at the fund manager.

Firstly, The Australian’s Matthew Stevens surveys the differences between the industrial disputes of Qube Logistics chairman Chris Corrigan with the Maritime Union, and BHP Billiton-Mitsubishi with its own unions.

"A student of all things IR, Corrigan has likely kept a close watch on the Bowen Basin coalfields where the BHP-Mitsubishi Alliance continues to play a patient, if very calculating, hand in its game of workplace poker with the three mining unions. BMA has refused the lockout option because the industrial action hurts workers disproportionately to the impact on production or the financial bottom line. The fact is that coalmines are a very different proposition to our ports in that the rolling strikes and work bans have impeded production but not critically. You have to give it to the guys at the MUA, they really know how to make their stoppages hurt. That is because time is mission critical to the financial viability of shipping. A day's delay can wipe $30,000 from the bottom line and Shipping Australia (the peak body for the shippers and their agents) observed yesterday that across one seven-week period this year industrial action cost 12 of its members upwards of $12 million just in increased fuel costs.”

Second in this morning’s Distillery, The Age’s Adele Ferguson – who has an impeccable understanding of business regulation – has been left feeling flat by the government’s recommendations to make the Australian Securities and Investments Commission more effective at rooting out dodgy liquidators.

"For instance, the report makes the important recommendation that creditors should have the power to remove a liquidator. If it stopped there it would have a profound systemic impact because the current system makes it virtually impossible to remove a liquidator even if there is evidence of fraud or fee gouging… But the recommendation is weakened by the inclusion of a clause that gives insolvency practitioners the ability to apply to the court to prevent their removal. If the practitioner wins, he/she is entitled to claim back the costs to the detriment of creditors. This is outrageous because if creditors want to get rid of someone, they should be allowed to do so without the fear of having to pay out tens of thousands of dollars in legal fees if they lose.”

Meanwhile, The Australian Financial Review’s Chanticleer columnist Tony Boyd looks behind the confirmed departure of star stock picker John Sevior and the likelihood of him starting a rival fund, to the greater problem facing company boss Chris Ryan: revenue growth remaining flat or even shrinking, while expenses are surging.

"An examination of the company’s five-year performance profile, published in the latest annual report, starkly illustrates the problem now facing Ryan. In 2007, financial year revenue was $466 million and expenses were $260 million. In the 2011 financial year, revenue was $444 million and expenses were $339 million. Part of that rise in expenses is the payments made to fund managers who receive short- and long-term bonuses based on their performance against benchmarks. In some respects their interests are aligned with the interests of investors in Perpetual’s funds and not the interests of Perpetual shareholders… Ryan is under tremendous pressure for reasons that are not of his making. He inherited a company that had lost sight of its core strength – investment management.”

And fourthly, The Australian’s Robin Bromby uncovers some supply shortfalls threatening to get out of hand in 2012 for metals that we’re not too familiar with, but will prove to have an impact on products that we all use.

"The latest fright comes from PricewaterhouseCoopers under the attention-grabbing title of: ‘Minerals and Metals Scarcity in Manufacturing: the Ticking Time Bomb’. It says the chemical, energy and auto industries are in a state of "red alert" over disruption of supply. The most critical are beryllium (lightweight metal for missiles and X-ray tubes), cobalt (super-alloys and batteries), tantalum (mobile phones), fluorspar (glass, ceramics) and lithium (batteries for electric cars). There won't be enough to go around. Maybe. There is no doubt that pretty well all metals are going to be in shorter supply barring a string of large discoveries. But this is not the first – nor will it be the last – metals prophecy that proves to be a tad pessimistic.”

Turning to Telstra’s latest recruit for the rest of this morning’s musings, The Age’s Malcolm Maiden examines how Telstra’s new chief financial officer, former AXA Asia Pacific chief executive Andrew Penn, fits into the field of contenders to succeed the telco’s boss, David Thodey. The conclusion is about second or third in a field led clearly by retail consumer boss Gordon Ballantyne. Meanwhile, The Australian’s John Durie sits down with the outgoing chief financial officer John Stanhope for his thoughts on the company long-term – most of which are now well-known.

Staying in company news, The Australian’s Bryan Frith reveals just how much of a cash cow Hastings Diversified Utilities Fund has been for Westpac Bank as APA Group puts an off-market $1.06 billion takeover offer on the table.

Fairfax’s Insider columnist Ian McIlwraith has heard that Hastings Diversified Utilities Fund chairman Alan Cameron didn’t even get a phone call before APA Holdings chairman Len Bleasel lobbed a $1 billion cash and scrip offer for his company. The Australian’s Criterion columnist Tim Boreham picked up something similar.

The Sydney Morning Herald’s Ian Verrender notices that Nathan Tinkler appears to be moving to avoid the potholes that ultimately tripped up so many corporate trailblazers in the 1980s with a penchant for debt and risk, by taking the foot off the former for the moment.

And finally, The Australian’s Rowan Callick says the exclusion of Senator Kim Carr from cabinet shows that manufacturing is on the outer because the ousted senator has taken that portfolio with him.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles