The Demise of Ansett

Ansett's collapse should send a chill around Australia.  Not just because of its demise, but because of what it says about our work culture and its effects on other industries.

The collapse starkly illustrates the fact that the workplace environment has not changed from the bad old days.  Management still see government as their ultimate protector.  They see competition as something to be eliminated with the help of government, and the workplace as something that is up to the government fix.

The unions are just as culpable as management.  The IR System gives the unions joint control over the management of human resources -- as such, they are effectively part of management.  The unions, however, have accepted the power but reject the responsibility.  As a former Ansett executive stated:  "I can recall on many occasion speaking to staff and union leaders saying, 'If we don't change some work practices, this company is going to go down the drain'.  They never, ever accepted that.  They believed Ansett was a cash cow that could just be bled to death".

The unions were fully aware of the arrangements at Virgin Blue which allowed it to operate at costs 40 per cent below Ansett's.  But when Mr Toomey, CEO of Air NZ/Ansett, came to the unions six months ago with an agenda to make the company more competitive with Virgin Blue, he was spurned.  Even when the firm went bankrupt, the unions continued their bloody-mindedness.  They initially blocked Qantas from taking Ansett's planes by demanding that it match Ansett's more generous wages and conditions.

Their solution is that the government should pay for their folly.  The unions have demanded that government take equity in Ansett despite its being bankrupt with accumulated losses of over $2 billion and in need of a capital injection of over $1.5 billion.  And they are now organising a marginal-seat campaign against the Howard Government for refusing to meet their absurd request.

The demise of Ansett is not, however, a complete disaster.  Although it has caused great harm to many, the long-term, impact could well be positive.  The demand for its services remains unchanged.  Some firm -- with luck, not Qantas -- will buy its assets, hire some of its employees, and service its routes.  The new operator may even reform the workplace culture in the airline industry.

The real concern lies with other industries more open to foreign markets.  Our cancerous workplace culture is killing off what little remains of the textile and clothing industry.  Most clothing manufacturers, even those servicing the high-value, fashion end of the market, have left for overseas.  The few that remain are under attack by unions trying to stave off change.

The food-processing industry, which should be to Australia what the IT industry is to California, is also suffering from the same malady.  Over the last six months, six factories have shut down and moved offshore, and many more are threatening to do the same.  Although competition is driving the industry, the movement offshore is caused overwhelmingly by the "them versus us" workplace culture.

Airline, textile and food-processing are not alone.  Virtually all formerly protected industries are suffering the same fate.  We are witnessing the hollowing out of the Australian economy not by force of global competition but from our own stupidity.

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