The Role of Labor Unions in the Australian Car Industry - Essay Example

Australian Car Industry Collapse Name Institution Instructor Course Date Australian Car Industry Collapse Introduction It is true that the manufacturing industry in Australia has fast reached its collapse level. This industry used to employ many workers during its hay days. Moreover, long ago there were companies like Holden, Toyota, Ford, Mitsubishi and Nissan operating in this industry. Currently, the hot debate is about what caused the collapse of the Australian car industry. This debate on what led to the failure of the Australian car industry has been largely revolving around the issue of unions. It is real, factual and verifiable that the labour unions in Australian car industry caused the collapse of the country’s automobile industry. Who Killed the Australian Automotive Industry? The Australian car industry has collapsed with the announcement of plans to exit the market by major automobile companies. At some point in time, Toyota Company decided to warn the trade unions that the future of the automobile business would be bad if it continued to reject the manufacturer’s cost-cutting deal1. Labor unions have for long been pushing the cost of operations at the manufacturing companies in Australian to very high levels. All major companies have now decided to close their shops in Australia because of running into big business losses. Ford Company closed in the year 2016. Toyota is among the other big companies that are expected to close their businesses in Australia this year. Statistics in this industry point to facts that do not add up well. For instance, while the Australian car industry manufacturers employ 50,000 workers, the production level for a year is 221,000 units. In terms of exports, this industry only generates $3.7 billion. The level of value-added output stands at $5 billion. The role of the enterprise bargaining agreements and labor union negotiations in the downfall of the car industry in Australia cannot be gainsaid. It is vital to note that the automotive industry is big employer in Australia as shown by the figures given in this paper. Currently, this industry continues to face a number of international as well as domestic competitive pressures, which underline the significance of workplace relations. Comparatively, the high levels of labor costs coupled with the inflexible work practices have made it very hard for the major companies operating in this industry to be competitive internationally deal. 2 The international focus within the automotive industry makes it quite hard for the car companies in Australia to survive with such hostile labor conditions that are brought about by the unions for the workers. The high cost of labor brought about by the labor unions through negotiations led to the start of the downward trend in the number of people employed by the car industry in Australia. This fact is evident in the Australian Bureau of Statistics data, which indicates a downward trend of declining employment levels within the car industry.3 This trend of decline in the level of people employed within the automotive industry is shown in the figure below: From the figure above, it is evident that employment has been falling quite significantly. It was at 77,776 in the year 2003, but had declined to 51,931 as of May 2012. This decrease represents 33%. The EBA’s in Australia’s car industry have been loading up companies with very high costs coupled with inflexible rules and processes. Unlike the other sectors within the Australian economy, the Automobile industry has been marked with a collective and union-dominated approach to the bargaining and making of work relations agreements.4 This kind of approach has given chance to highly protracted bargaining exercises as well as the periodic industrial disruption. What has conspicuously been lacking is the commitment by the workforce to the changes within the work practices and productivity. Consequently, there has been lagging productivity and industrial reforms in this sector. It is also important to note that this industry took arrangements of supply and production, which only worsened its vulnerability to the industrial disputation deal. 5 Notably, the disruptions in supply brought about by industrial disputation have the ability of creating widespread knock-on effects on to the overall production in a given company. The settlement of employer-employee disputes has also been a very huge issue that caused the death of the car industry in Australia. It is vital to note that lasting and effective dispute resolution outcomes are only achieved when there is direct engagement between the employer and employees at the workplace. The automotive industry in Australia has been sidelining this most effective method of dispute resolution. A lot of the EBAs that exist in this car industry give the Fair Work Australia (FWA) a very prominent responsibility of resolving disputes that arise between the employers and employees. Such a way of resolving disputes is institutional based deal.6 This method has proved to be quite ineffective in the case of the Australian car industry because generally institutional conciliation and arbitration normally limit the engagement between the employees and the employer.7 In this kind of resolving industrial disputation, the differences between the two parties are the ones given more precedence and emphasis than the shared interests. It is also vital to note the fact that reliance on the dispute resolution tribunal normally eliminates the protagonists from the domain of the relations practitioners at the workplace, who are quite aware of the institutional procedures and rules. It is factual that the externally resolved disputes and achieved solutions are normally hard to be sustained when compared to the ones made by the parties to the industrial disputation. Therefore, it must be noted that there is a very great damage that has been inflicted on the car industry manufacturers in Australia because of using the enterprise bargaining as well as workplace relations culture. Let it be known that the people who have been pointing at the labor unions as the main reason behind the downfall of the car industry in Australia have never meant to propose a reduction of labor costs to the levels applied in competitor countries such as Thailand and China since it is clearly unattainable in Australia deal. 8 However, an industry with high labor cost has to avoid labor arrangements that embody inflexible practices and high non-wage costs. The thing that is required is EBAs, which deliver outcomes commensurate with the capacity of the employing companies to survive and hopefully grow in a tough and highly competitive industry deal. 9 The content of EBA normally gives the state of onsite workplace relations. The case of Australia’s car industry has shown that allowing a very influential labor union and its representatives is a mistake that all business managers have to note. In this case, the management of the company minimizes their powers and remains subject to the decisions and desires of the labor unions deal. 10 The direct engagement between the employer and employees is then subjugated to maintenance of the central role of labor unions. Labor unions then increase the standard wage rates and introduce many allowances as well as fringe benefits entitlements. These are the things that killed the car industry in Australia. For a very long time, the labor unions within the car industry have always demanded increased wage rates. They have used industrial actions to call for the salary increments and initiation of fringe benefits. These demands have been loaded on the automotive companies in Australia, which have been forced to comply on many occasions. However, car companies like Toyota have been issuing their advisory warning regarding the future of the Australian automotive industry since with the conduct of the labor unions, which was headed for complete death if no corrective measures would be taken deal. 11 No corrective measures by the labor unions and the government of Australia were taken and implemented. This development led to a very big cost of labor. Many companies could not earn the cost savings they used to get so that they expand and grow. The overall cost of doing business in Australia became extremely too high for firms like Toyota and Ford. They have been leaving in the recent past causing the downfall of the car industry in Australia. These companies not have just been focused on the market in Australia, but they are business organizations that operated in a global car industry with stiff competition from the different players deal. 12 The high cost of labor demanded by the labor unions and granted by the car manufacturers has made it hard for the companies to compete favorably at international level hence closed their shops. Conclusion It is true that the downfall of the automobile industry in Australia was caused by the labor unions in the sector. Labor unions have had a very significant role in the death of the car industry because of their financial demands from the companies. Companies like Toyota have experienced rough times trying to persuade the automobile workers to be cautious with their demands during negotiations to no avail. The result of the pressure on the management of these companies by the labor unions has been increased wage bill and money for fringe benefits as well as the allowances. Companies have lost their competitive edge over rivals at the global level. This scenario made Australia not a favorable business location for the automobile companies and most of them have closed their operations. The closure of operations by many major companies in this car industry meant its death. Works Cited S. Drill ‘Coburg car parts supplier APV Automotive Components goes into receivership and admits it can’t pay staff.’ Herald Sun. (2012a). Available at: http://www.heraldsun.com.au/news/victoria/coburg-car-parts-supplier-apv-automotive-components-goes-into-receivership-and-admits-it-cant-pay-staff/story-fn7x8me2-1226322694042. S. Drill. ‘More car industry jobs lost as parts supplier APV closes down,’ Herald Sun. (2012). Available at: http://www.heraldsun.com.au/business/more-car-industry-jobs-lost-as-as-parts-supplier-apv-closes-down/story-fn7j19iv-1226440424223. S. Drill. ‘Ford ‘will be forced into mass job cuts,’ Herald Sun. (2012). Available at: http://www.heraldsun.com.au/ipad/ford-will-be-forced-to-close-factories-and-cut-thousands-of-jobs-industry-figure-says/story-fnbzs1v0-1226438623821. S. Clibborn, R.D. Lansbury and C.F. Wright. ‘Who Killed the Australian Automotive Industry: The Employers, Government or Trade Unions?’ Economic Papers: A journal of applied economics and policy. (2016). G. Collier. ‘Workplace deals drive car firms into the ditch,’ The Australian. (2012). Available at: http://www.theaustralian.com.au/national-affairs/opinion/workplace-deals-drive-car-firms-into-the-ditch/story-e6frgd0x-1226265114623. Read More