ARI 0.00% 2.2¢ a.c.n. 004 410 833 limited

Removal of the obscene EBA/labour costs/Union Control to keep Whyalla/MBR open is whats needed

  1. 71 Posts.
    Here's the real reason ARI can't make any money...a bloody low level tradie on $120k a year???  No ability to cut wages?  12 months of full paid leave for a 'non work' injury?? etc etc - talk about snouts in the trough!

    Arrium management should grow a pair, stick to their guns, and not settle for anything less than what Bluescope achieved.  As it says below, because of the appallingly worded and structured EBA that Whyalla and MBR mine are run under, the Unions effectively run the show, NOT management, and certainly NOT for shareholders.  The status quo clause has to be removed, it's almost criminal that it could even exist.  How does that create a level playing field for negotiations??

    I always wondered why ARI said 65% of their costs to make steel were fixed but their biggest cost of making steel was labour (given labour should be flexible).  Now I know why.....FM!

    The unions either need to cede control back to management or 1500+ jobs disappear....your choice unions

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    This was what Bluescope demanded and received from workers at Port Kembla to keep the furnace open:

    (Alan Kohler - 30 October 2015 - Business Spectator)
    1. A three-year wage freeze,
    2. The suspension of the workers’ prized bonus scheme and agreement that when it’s reintroduced it will contain an ‘affordability’ clause, and
    3. The removal of the ‘status quo’ clause from the enterprise agreement.
    In many ways, the company believes the third of them is the most important.

    Ever since the Button Steel Plan in 1983, awards and enterprise bargaining agreements at Port Kembla have always contained a clause that said if the company and the unions could not agree, the status quo would prevail.
    That meant there was never any pressure on the unions to negotiate changes; in effect, it meant they ran the show.
    The new agreement provided that if the parties couldn’t agree, a senior member of the Fair Work Commission would be asked to mediate and/or arbitrate within 35 business days.
    Bluescope management believes this will allow them to regain control of the plant, and in particular allow ongoing change, which is why it’s called the “Management of Change Clause”.
    And one of the first things to go has been sick leave provisions, which allow a worker on sick leave to get full penalties if it’s a penalty shift that he’s called in sick for, and for the worker who is filling in to get full penalties as well. Removing that produced an important part of the $60m in labour savings.
    Corporate rescues: before you fork out, read the EBA

    Another bloated corporate needs rescuing as “the Australian disease” strikes again. If only everyone realised how self-inflicted this condition was, the executive class might be held to account. Before anyone invests or helps a business here they should read their enterprise bargaining agreements. Government types and high-flyers at US private equity firm GSO Capital Partners should take note.

    Arrium has a mining operation at the Middleback Ranges and a steelworks at Whyalla, both in South Australia. Both operations have been reported widely as being under threat of closure. Hundreds of jobs have gone and thousands more are at risk. The state government says Whyalla will need a taxpayer bailout and the company is having talks with the federal government, too.
    If the unwilling taxpayers are mugs, then so might be Arrium’s lenders. Arrium is ready to accept a $1.29 billion bailout from GSO, but Arrium’s existing lenders are already owed $2.3bn.
    The lenders, which include Australia’s big four banks, must decide by April 5 whether to accept the deal. If they do, and it goes through, reports say these lenders will write off 45 per cent of the total they are owed.
    Once the papers are signed and the champagne is popped, what will the parties to this grand misadventure have then? An expensive business in desperate need of a proper restructure in a terrible market, and with crippling EBAs that make it impossible to attain.
    The Arrium Middleback Ranges EBA reads like an old-school closed-shop union agreement. The management who approved this EBA would probably insist they have a great relationship with the unions. It is amazing how many businesses with these great union relationships seem to teeter on the verge of closure.

    The EBA was made in 2014 and applies until February 2018, although it continues past expiry, with the force of law, forever, until terminated or replaced.

    Although base wages appear modest — at March 1 this year, they range from $977.20 to $1627.60 a week — allowances add to these. Annualised wages schedules, which represent the “total grossed up” packages for rostered shifts, prove more illuminating.

    An entry-level tradesperson begins at $120,476 while a level five trade is on $160,631, with another increase to $165,450 due in March next year. Two additional allowances bump up the previous figures by $8502 a year.

    Production workers, entry level, begin on $95,783 and top out at $130,188.

    Staff on long-term, non-work-related illness, for the purpose of “added financial security”, are able to “reasonably expect continued financial support” at their normal rates of pay for up to 12 months, and longer if they are expected soon to return to the workplace.

    Union delegates are entitled to 10 days of paid union training leave a year and afforded paid time to “interview a representative of the company on matters affecting employees”.

    Union notice boards are provided and the company cannot remove union notices unless special conditions apply.

    If the company restructures, and people are put into lower-paying jobs, their old rate of pay is maintained forever, which cancels out the whole point of the exercise.

    Further, if an employee with at least two years’ service is declassified to a lower pay scale, not only do they stay on their old pay rate, it keeps rising in line with the rises due to the old rate for another two years.

    In the event the mine closes, redundancy pay is four weeks a year capped at 104 weeks. This simply incentivises workers to be nonchalant or even wish for business closure.

    When a redundancy is caused by innovation of mechanisation or new technology, the company must add three months’ notice or pay on top of the two years.

    The Whyalla EBA conditions are virtually the same. Any benefit of restructure or cost savings will be almost impossible to attain.
    While base rates appear reasonable — $934.70 to $1556.80 a week — EBAs are often written to disguise true earnings. The array of allowances and penalties mean a true indication of earnings can be gleaned only via group certificates.

    Whyalla’s management says it needs to make $60 million in savings. Perhaps it shouldn’t have signed the EBA.
    Arrium was asked if it had made any arrangement with staff or unions, as part of cost cutting, to cut or freeze wages, or vary EBAs, to enhance productivity. The company says it is engaging to determine how it can bring its businesses back to a cash break-even position.
    Naturally, the external factors bearing down on Arrium are no fault of its own. But a well-run business should have the ability to adjust to the times, and here is where the trouble is. The good times are over, but the high salaries and ridiculous conditions are set in stone.

    Arrium is locked into a high fixed-cost base, with no labour flexibility, captured by the unions, and run by managers with Stockholm syndrome who can’t stop signing foolish EBAs.

    Private equity people can waste their own money, but no government should help out. It would be madness; simply throwing good money after bad.
 
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