IR is Killing the Food Industry

The industrial relations system is killing the food manufacturing industry.

Over the last sixteen months, fourteen food processing plants have closed in Victoria alone.  These closures will result in the loss of over 2000 good paying, full-time jobs.  And it's not just a matter of moving interstate, as most of these jobs have been lost to Australia.

Of course, there are a number of reasons for the closure of these plants, but a malfunctioning IR system is the key.

The food industry around the world is changing.  Small nationally focused processing plants are being replaced with larger, more technically-advanced plants serving regional markets.

This process should be to Australia's advantage.  Australia has high quality, competitively priced basic food products.  We have a relatively large, affluent home-market for processed foods.  We sit next to Asia which is the fastest growing market for processed food in the world.  In short, the food industry should be booming.  Instead it is going out the back door.

Three current examples illustrate the problem which were discussed in The Australian this week by Robert Gottliebsen.

Six years ago, the world's largest manufacture of chocolates, Barry Callebaut from Switzerland, sent a team to Australia to investigate building a new state-of-the-art processing plant to service the Australian and Asian markets.  While Australia had most things going for it, the poor workplace culture endemic to the food industry ruled us out.  Instead the firm left and built the plant in high-cost Singapore.

At about the same time, Nestle, the world's second largest food manufacturer and also from Switzerland, decided things were changing for the better.  They built a new confectionary plant in Broadmeadows to manufacture its Kit Kat bar for the Australasian market.  The plant has been plagued with industrial disputes and poor productivity levels.  During one of the lock-outs the firm was forced to import stock from overseas.  In the process, it found that it could do so much cheaper than it could manufacture locally.  So when Nestle introduced its new Chunky Kit Kat bar, it had it made in Malaysia and not in Australia.

More recently, the City of Melton and the State government have been pursuing the giant Japanese food company Saizeriya to locate a $400 million processing plant in the city.  This was to be the start of a $1 billion food processing centre.  The city and state put together a generous package including free land.  Things were advancing nicely -- until the unions got involved.  At that stage a turf war broke out between competing unions.  The project now faces union-imposed bans on plant construction and is having difficulties negotiating a sensible enterprise agreement.  As a result, the company is set to walk.

Lost opportunities in the food industry as a result of a destructive workplace culture are not restricted to the food industry but are spread throughout the manufacturing sector.

Unless things change quickly and we allow enterprises and their workers to agree conditions free of unions seeking to impose their own costly management control, the up-coming world slowdown will see a hollowing out of our manufacturing base.  And once this is gone, it is gone forever.

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