Holden killed by union greed and government blunders

Holden killed by union greed and government blunders, by Robert Gottliebsen.

For almost its entire life as a manufacturer of cars in Australia, General Motors operated its Australian plant under union control. Executives could not make decisions — even small ones – without union agreement.

Many areas of Australian manufacturing, mining and commercial building were the same. But in the last decade of the 1990s and extending into the current century, many tough executives emerged to change the Australian efficiency game. …

Economic conditions changed in the 1980s:

Meanwhile, … during the 1950s and 1960s when Holden cars were in short supply, General Motors executives gave in to unions regularly. Because GM Australian executives were moving on to other parts of the global GM group it was peace at any cost. And tariffs, a low currency and government subsidies insulated GM from the inefficiencies and crazy work rules. In addition the union was moderate and did not usually overuse its power.

But then that all started to unravel. Tariffs were slashed, the dollar floated, and governments became unhappy with subsidies. And the Coalition Canberra signed trade agreements that made it impossible to send Australian car parts to places like Thailand, thus so curbing Australian exports and hitting the local supply chain. But if subsidies were on the way out then the “work agreements from hell” had to end.

Ford:

Ford actually had a reasonable agreement but despite the writings on the wall, crazy Ford workers actually went on strike to get a similar “agreement from hell” to GMH. The Ford workers “won” but for both the foolish Ford managers and the workers, signing that agreement was their death warrant. Ford in Dearborn US responded by closing manufacturing in Australia.

Holden:

The CEO of General Motors in Australia in 2012 and 2013, Mike Devereux, and the executives around him knew that they had to regain control of plants and end that agreement from hell or General Motors would shut the plants. Unfortunately the workers and the unions preferred to lose their jobs rather than adopt modern work practices and return control of the shop floor to managers. Some older workers, particularly at the Elizabeth plant in South Australia, wanted their retrenchment pay. GM gave Devereux a deadline.

In the end, Devereux and his people got worker and union agreement but it was too late, because the deadline had passed. Back in Detroit, General Motors had decided to close the plants and would not budge. …

Toyota:

Toyota was more complex. The Japanese made a serious mistake in taking old-style, inflexible people from its Port Melbourne plant to the new plant in Altona. They foolishly signed an agreement, which gave vast areas of plant control to the unions …

The GM and Ford closures had made it was clear in Japan that Australian workers did not understand what was happening in the world. To Toyota’s way of thinking, there were lots of other countries where workers actually wanted well-paid employment.

However the case of Toyota the so-called “free trade” agreements that Australia signed had an even greater effect on Japanese executives.

The Japanese could not understand why we kept signing “free trade” agreements that were not free trade agreements at all.

John Howard signed the Thailand free trade agreement, which allowed free entry of Thai motor parts into Australia but whacked huge tariffs and other restrictions on exports of Australian motor parts and cars into Thailand.

The Thai trade agreement, plus the GM closure made it hard to get scale in the parts industry to justify continuing, even if Toyota could end their own agreement from hell.

Yet Toyota knew that with a modern labour agreement robots would have made Australian car making economic and made this nation a high technology leader in the region, with lots of well-paid, satisfying technology jobs for employees.

We only have ourselves to blame.

Every heavily unionized industry in Australia that has to compete with overseas industry has died. The construction industry and the public service are heavily unionized, but overseas competition is obviously minimal in those areas.

Clearly, the influence of Australian unions makes any industry non-competitive and eventually kills it. Our unions are a little too successful for their long term good.