Ansett's bankruptcy has a message that goes far beyond the airline industry. It is a message that union muscle can strangle the goose that lays the golden eggs. Moreover, the lessons need to be sheeted home to other industries less easily disciplined by the immediate competitive repercussions than the airline industry.
Imagine the furore three months ago if Ansett had said they would get rid of 3,000 people and expect the remaining 13,000 to make up the lost production with increased productivity. As is now well known, this is a scenario that would still have left Ansett's productivity far behind that of Virgin Blue. Nonetheless, the firm would have been targeted by unions who would lament "the loss of hard won gains" without any regard to the likelihood that such lavish conditions were bankrupting the source of jobs for their clients the workers. The Industrial Relations press would have given full and sympathetic coverage to the union calumnies.
Management has largely been blamed for Ansett's demise. It is a much softer target than unions and one that seldom hits back in the public arena. There can be no question that Ansett's working conditions were well above that level but is this a result of pusillanimous management? Maybe, but to use the terminology much loved by the left, workers are also "stakeholders" with all this entails in terms of reward AND responsibility. In truth, part of the problem for the Ansett workers was that their representatives also had other goals. Ansett conditions could be used as the stalking horse for those of Qantas. And because the union negotiators did not face the same downside risk -- unemployment -- as the clients they represented, they overplayed their hand. This speaks volumes against the notion of industry wide unions and the pattern bargaining strategies they adopt.
While management should resist productivity-sapping claims of union negotiators, this is often more easily said than done, especially when unions' demands are backed with strike threats and the business has been weakened by other events. In such circumstances it takes a rare mixture of desperation and especially thick-skin for a management to confront the unions head on.
The two notable cases of taking unions head-on have been Chris Corrigan of Patrick's with the waterside workers, and Charles Copeman of Robe River. Both Corrigan and Copeman succeeded in breaking the iron jaw of union excesses that were forcing their firms into a downward spiral. Both business leaders were men of great determination who faced considerable personal threat, and ridicule from politicians and the press.
Moreover, neither Patrick's nor Robe River had to also protect valuable brand names from demonisation. The vulnerability of these brand names is illustrated by Nike and Macdonald's, each of which pay considerable danegeld to NGOs and their support bases but still face protests. The vulnerability of Australian manufacturing firms to brand-name damage is particularly evident in the Australian food industry where the brand name is more valuable than any of their capital assets.
A Kellogg, a Mars, a Unilever, dare not contemplate the damage that could be done to their prime assets by a concerted attack on them with the claim they are "un-Australian". Yet they face the same labour inflexibilities that have undone Ansett. And unlike the former airline duopoly, the food industry is under no illusion that it has a cushion against the marketplace discipline of competition. As a result of the investments they have in their brands, they would prefer to cut their losses from the existing labour relations environment and quietly pack up to establish their facilities in more accommodating workplace environments.
Victoria's Treasurer, John Brumby, was unfortunately quick off the mark to condemn Arnotts and to threaten to ban its products in Victoria when the company sought to rationalise its production facilities outside of Victoria. In doing so, he imitated the siren call used by all who would exert pressure on firms by attacking their brand names. What Mr Brumby did not want to confront was the reason for Arnotts and other firms packing up from Victoria and relocating elsewhere, normally outside of Australia. What many politicians don't want to ask, is why firms are turning their backs on the conditions -- cheap high quality ingredients, sizable local market, proximity to rapidly growing Asian markets -- that have promised so much for the Australian food industry for over three decades, but have left it as the perpetual bridesmaid. Of course the answer is that this great promise is continually shipwrecked on the shoals of union work practices.
The lessons of Ansett need to be applied throughout Australian industry. If we are not to see a hollowing out of manufacturing, work practices must adapt, and management, not unions, must manage.
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