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Australian workplace culture partly to blame for Toyota's exit

Date

Ben Potter

COMMENT

Toyota will cease manufacturing cars in Australia in 2017.

Toyota will cease manufacturing cars in Australia in 2017. Photo: Reuters

The Australian car-making industry might be on its knees, but Toyota's manufacturing enterprise agreement was still scheduled to deliver two pay rises totalling 5.5 per cent this year.

To cover the $17 million cost of the pay increases, Toyota put a proposal to its manufacturing workers late last year to cut back the three-week compulsory Christmas shutdown, cut down on long weekend sickies and blood-bank rorts, excessive overtime, and shift loadings.

To say that Toyota was dismayed would be an understatement 

Ford had signalled it would pull out of local production in 2016, and General Motors-Holden was girding its loins for a similar announcement. Local production of Toyota's next generation Camry – and its larger Aurion spinoff – was up for grabs after the current model ran out in 2017. Toyota Motor Corp was due to make the crucial decision this year.

In the circumstances, you'd think the Toyota workers and the Australian Manufacturing Workers' Union would play ball. But instead, the union orchestrated a Federal Court challenge by a handful of shop stewards to prevent Toyota putting the changes to its workers for a vote, citing a "no extra claims" clause in the enterprise agreement.

Justice Mordy Bromberg agreed. He said the company would first have to call a vote to waive the "no extra claims" clause. If they voted in favour of that, it could then put the other changes to a vote. The two-step process would take until well into the new year.

To say that Toyota was dismayed would be an understatement.

By this time – December – two-thirds of the industry had announced it was pulling out, citing the excessive costs of producing cars in Australia. Both Toyota and Holden had argued that it cost about $3800 more to build a car here than it did in alternative plants. About half of that cost was labour, Holden indicated to the Productivity Commission.

Barriers to success

Here was Toyota trying to close a small slice of that gap, with the clock ticking on the fate of local production, and a Federal Court judge was telling the company that it couldn’t put the deal to a vote without first asking the workers to vote out the “no extra claims” clause.

Australia’s arcane and combative industrial relations culture was not the only reason for Toyota’s decision. As the Productivity Commission made clear in its position paper, the country’s tiny market couldn’t sustain competitive production of commodity autos, and was being monstered by the explosion of Asian auto production in the past decade.

But the culture of the workplace was clearly a material reason for the company’s decision to pull out in 2017.

Max Yasuda, Toyota Australia president, had signalled that the giant auto maker was losing patience with Aussie workplace culture in an exclusive interview with this newspaper two years ago. “If you don’t work on Friday, it is a long weekend right? In this country, and in our plant, they just don’t come in and later on they ask for sick leave,” he said.

Months later, Toyota tapped 350 workers for redundancy based on individual ratings of their attendance and workperformance records – an unusually aggressive approach in unionised workplaces in Australia.

The previous year it had been embroiled in a bruising industrial battle with the AMWU over the enterprise agreement. Australian car making was already in trouble, with a soaring dollar and massive global overcapacity in the wake of the global financial crisis. Yet Toyota’s workers went on strike for five days and banned overtime to secure the deal which tripped Toyota up in court and which will give them two pay rises this year – even as the company prepares to pull out.

AMWU vehicle division chief Dave Smith made it clear the union was punishing Toyota for being less willing to sit down and negotiate with its reps as “equals”, as it said Holden had done. The union may now be regretting that decision, although Holden’s experience suggests it may not have made any difference in the long run.

Ben Potter is a senior writer with The Australian Financial Review.

 

331 comments

  • Abbott's plan to weaken the unions? Put them all on unemployment benefits.

    Commenter
    David
    Location
    Melbourne
    Date and time
    February 11, 2014, 8:32AM
    • Leaning so far left can be damaging. Try a little balance in your thinking and put the blame where it belongs.
      It is the Unions and their militancy mate, that have priced us out of competitive Markets, Worldwide. Get it?

      Commenter
      True Blue
      Location
      Palm Beach
      Date and time
      February 11, 2014, 9:01AM
    • Not far wrong David.

      No talk of cutting fuel subsidies to the mining sector (and Ms Reinhert). Instead, at the tail end of a commodities boom and, at a time when low global interest rates are keeping the Australia dollar higher than it should be, the government chose not to do anything to engage Holden, which lead to Toyota's demise.

      Is this government going to sit back and watch all of South East Australia de-industralise? What happens when the mining boom tapers off? Factories do not spring back into existence just because the currency has weakened!

      Ironically, by 2017, the dollar might be 60-70 cents again because of falling interest rates in response to higher unemployment and due to lower lower capital inflows, the result of the tapering of the investment boom in the mining sector. The only savior seems to be another mining boom in shale gas, not that it will do Melbourne and Adelaide much good.

      Commenter
      Andrew
      Location
      Fitzroy
      Date and time
      February 11, 2014, 9:14AM
    • I wonder which costs more... pay the dole or bail out failing companies?

      Commenter
      Liberator
      Location
      SEQLD
      Date and time
      February 11, 2014, 9:16AM
    • David

      Read the article by any chance?

      Commenter
      $keptic
      Location
      Melbourne
      Date and time
      February 11, 2014, 9:24AM
    • I don't understand what the problem is, Labor pushes for jobs at any cost to keep Unions happy, but they don't get thta jobs are for successful businesses and if you make the business work, and make money, jobs will follow. You have to have a viable business to be able to employ people. Labor simply does not get that, they pay wages on the Government Credit Card and now we are billions in debt. It's like me paying someones wages out of my savings account, sooner or later I would run out of money

      Commenter
      Anonymous
      Location
      Brisbane,
      Date and time
      February 11, 2014, 9:30AM
    • The course was set in motion long before Abbott took the reins. The unions have priced themselves out of the market. Their wages are far higher than those in other countries and their conditions far too generous. If someone is going to do your job cheaper and more efficiently then you need to change.

      Commenter
      Bender
      Date and time
      February 11, 2014, 9:47AM
    • Unemployment benefits? You wish. We're headed for US style wages and "safety nets" . What's everyone whinging about? this is what everyone voteed for over the past thirty years. LON or Labor even pro population Greens. Well done Australia. You've destroyed paradise. I've tried to tell anyone that will listen for ten years now it's happening.

      Commenter
      JohnBB
      Date and time
      February 11, 2014, 9:50AM
    • "...the union orchestrated a Federal Court challenge by a handful of shop stewards to prevent Toyota putting the changes to its workers for a vote".

      The unions are doing a fine job of putting their members out of work all by themselves. They don't need Abbott's help at all.

      Commenter
      The Other Guy
      Location
      Geelong
      Date and time
      February 11, 2014, 9:52AM
    • David ,
      i think the Union and the workers who supported their union position already done this. Did you bother to read this story or follow the facts over the last year with Ford, Holden and now Toyota.
      I get it , BLAME Tony for everything.

      Commenter
      aaa53
      Location
      sydney
      Date and time
      February 11, 2014, 10:09AM

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