Toyota will walk without a new IR agreement

The government is likely to provide the money to save Toyota. The big issue is whether the workers will abandon their SPC-style agreement.

At a time when most people believe that Australian motor making will cease, let me bring good news: there is still a chance Toyota and a big chunk of the parts industry can be saved.

As you will see below, my encouragement comes from one of the key members in the Coalition cabinet, Small Business Minister Bruce Billson.

As expected, now that Ford and Holden are ceasing production, demand for locally produced Falcons and Commodores is slumping. They will lose a lot of money trying to keep production going to 2016, so the latest Ford cutbacks are no surprise. The whole nasty situation may fold quickly, closing essential parts makers.

That makes the Toyota situation more urgent. There are two key actions required to save Toyota: there must be a new industrial relations agreement and the government must honour its election promise to allocate money to the car industry, particularly the parts industry.

The first hurdle, industrial relations, is the toughest. Foolishly, Toyota signed an SPC-style agreement, which means its managers can’t manage properly and productivity is affected. My commentary on the SPC agreement applies to Toyota (SPC’s infinite management matrix, February 6).  

Toyota will not continue in Australia unless its workers agree to a modern enterprise agreement that fully protects their remuneration entitlements but enables managers to manage the plant, including setting rosters and timetables.

That brings Toyota into line with the government. There is no point in continuing to make cars in Australia under these sorts of bad agreements. We can learn from SPC. It’s not about money, it’s about management.

The original changes Toyota proposed to its SPC-style agreement did not go nearly far enough because they still left extensive union power over non-remuneration matters that should not be in industrial relations agreements, given the high dollar and low tariffs.

However, the unions managed to get the courts to block a worker vote. Overcoming the court obstacles and determining whether Toyota workers want to continue employment with no change in remuneration (pay is not the issue) is now the biggest hurdle to overcome.

Just as Julia Gillard promised no carbon tax, Tony Abbott made an ironclad promise to assist the automotive industry, albeit at a lower rate than the ALP. Now that GMH is closing, there is plenty of money. If Abbott does a 'carbon tax' and reneges on his undertaking to the Australian people he knows what to expect at the polls (Abbott's 'Costello moment' can transform Australia, February 3).

What Toyota wants is not so much large amounts for itself, but substantial help to make a strong, diversified parts industry that is not totally dependent on Toyota.

Here comes the good news.

The minister for Small Business, Bruce Billson, tells me that he has reviewed a large number of Australian motor parts makers and has found they have achieved world-class efficiencies. Some makers are in his electorate.

Billson believes the parts makers are in a position to be major exporters of both motor and non-motor parts. But they will need investment help because in forcing parts makers to be efficient, the vehicle assembly groups (GMH, Toyota and Ford) drove down margins and cash flow to a level where parts makers can’t finance new plants.

Some may have bad SPC-style enterprise agreements, but they are completely ignored to keep the business alive. The message from Billson is that we do not require a series of employee votes from parts makers. That makes it much easier.

Billson did not go further but what is required from Toyota is a parts industry roadmap so the government knows where help is important. Not all parts makers will survive.

If Toyota workers vote against change, they are voting to close Toyota and the motor industry in Australia. If they vote to keep their jobs and remuneration, my understanding is that the government money will come and Abbott will not walk away from an election undertaking as firm as his motor promise. If the workers reject the deal or are not allowed to vote, Toyota will almost certainly walk. No cabinet decision is then required.

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