Anyone who has happy childhood memories of that great biscuit snack, Weston Wagon Wheel, will also remember how the Wheel seemed to become smaller over the years. Now the Australian icon food manufacturer of forty years is going for good.
George Weston, the maker of the Wagon Wheel and other well known biscuit and cake products is closing its Abbottsford plant and shifting production interstate and overseas. The closure is no isolated case but part of a continuing long list of disappearing food manufacturers that is costing jobs and increasing our food imports.
More closures will occur. The reasons are straight forward, could be fixed but are being ignored. The manufacturing plants are under performing with the big reason being poor labour practices.
Take one example. Recently at one large food manufacturing plant, a delivery of chilled raw materials arrived unexpectedly on a Sunday afternoon. Normal warehouse employees were not present so a middle manager who had a forklift license unloaded the container and put the goods in a cool room. She did this so the product would not rot.
One Monday morning the warehouse employees were furious that someone else had done their job. They went to the union, who complained to senior management and the middle manager was disciplined. This sort of nonsense never makes the headlines.
However repeat this type of behaviour in thousands of small, different ways over many years and the capacity of managers to run their plants is so heavily reduced that the plants become unprofitable and have to be closed.
I have discovered the extent of the problem by researching the capacity of managers to run their firms based on clauses in firms' industrial agreements. The Capacity to Manage Index looks at each clause in agreements to see if the clauses reduce or increase capacity to manage.
Westons at Abbotsford rated minus 16. Arnotts closed Burwood plant rated minus 9. Ballantyne Chocolates who are closing their Melbourne plant scored minus 9. Simplot who have closed their Kensington Four and Twenty pie plant had minus 10.
This trend of closures reaffirms a two year old report of mine that gave evidence that international food manufacturers will not invest here because of labour problems. The experience of the Japanese food giant Saizeriya in having their new Melton factory built eighteen months late due to labour problems, is well known overseas and has scared off new investment.
For existing plants the scenario is clear. As plants reach the end of their technological life companies worry that upgrades cannot be completed on time or on budget and existing operational labour issues will cause new investments to under perform. It's easier to go overseas.
The outcome is that workers lose jobs, unions lose members, farmers lose value adding and export opportunities and consumers eat more imported foods. The reaction of all governments so far has been to publicly ignore the problem and spend millions on slick marketing campaigns to hide the problem. Some industry associations respond by criticising anyone who talks about the problem.
The outcome is a culture of dangerous silence amongst those best positioned to do something.
But concerns are not just with food manufacturing. The clothing manufacturing industry is struggling with near death, significantly because of bad labour problems made worse by industry specific destructive laws.
And according to my report car manufacturing has a worse reduction in capacity to manage than food manufacturing. The big four car manufacturers don't appear at risk because of the hundreds of millions of dollars of tax payer grants they receive. But many car parts and components manufacturers could shift overseas.
Evidence of possible local manufacturing closures in the housing and construction materials supply sector is emerging.
What's being done to fix the problems? Nothing so far that will alter the closure trend!
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