Toyota’s vision, according to its corporate website, is to be a: “Most respected and admired company”.
It doesn’t say by whom, but let’s assume it’s not simply head office. As a maker of consumer products with a huge marketing budget, Toyota has always taken its reputation very seriously, so it would have been a big and difficult decision to volunteer to be this month’s least admired and least respected company.
What it did was score workers on a checklist of behaviours and skills, tell the 350 with lowest scores to pack their lockers and get on buses that would take them to a reception centre where they were given their redundancy papers. It’s hard to imagine a worse way to be sacked.
Most companies that want to be respected and admired call for voluntary redundancies or they “performance manage” people out of the business quietly with one-on-one meetings. What we saw from Toyota this week was a direct consequence of the mining boom and the high Australian currency.
Businesses under the intense pressure of cheap imports can no longer afford to simply take voluntary redundancies, where the best people go first because they are the most likely to get another job and the most likely to get the biggest payouts.
The way Toyota did it this week was pretty rough, let’s face it. Most companies that are letting people go for performance reasons try to let them preserve both dignity and job prospects, unless it’s a sacking for cause.
I suspect in this case Toyota got into a bind because the numbers were large and because it was negotiating with the union, the Australian Manufacturing Workers Union, and had been since January when Toyota’s local chief, Max Yasuda, announced there would have to be redundancies. The company’s EBA mandated negotiations with the union over redundancies.
On February 20 an employee bulletin said the company and the union had reached agreement on the selection criteria, however on April 11th they were before Fair Work Australia arguing about whether the redundancies would be forced or voluntary.
What happened then is a little mysterious. It is suggested that a deal was done before FWA commissioner Michael Gay, in which the union accepted the criteria while arguing that they be applied to voluntary redundancy applications.
In any event the company decided to stick with tapping the workers publicly and putting them in buses, so any deal was off and the AMWU was off to the lawyers to see whether there was a case for unfair dismissal or targeting of union shop stewards, which is illegal. That remains an open question, but we can assume Toyota got good advice and was careful.
Obviously the company’s bosses decided that doing 350 one-on-one meetings in secret was impossible, so they might as well take the PR pain of a big hit.
What we are seeing with this and a recent spate of lockouts is a new movement of militant employees, a repeat of the 1980s and 1990s when the lowering of tariffs forced firms to take a harder line with unions, followed by the Howard Government legislation that paved the way to roll back union control.
In 2006 John Howard tried to take his legislation a step further by allowing ‘hard won’ conditions to be negotiated away through WorkChoices.
In 2007 the electorate rejected that idea and installed a Labor government, but the trouble is that its new legislation reasserted the unions’ franchise at the same time as a mining boom lifted the terms of trade and the currency and tightened the pressure on companies from imports.
So now the ALP and the union movement is caught: you can’t have a mining boom plus compliant manufacturers.
And there’s little point, as the AWU’s Paul Howes did the other day, in shaking your fist at the sky and praying for the currency to fall. The new reality is here to stay.
If you want to know what it means, read Jackson Hewett’s interview with Simon Poole of Finisar Australia in Productivity Spectator. He has been cutting costs by 15% a year by getting the entire staff behind the project. It’s really a story about the future of manufacturing in this country.
*This article was first published at Business Spectator
I’m fascinated that Kohler considers the RBA to be some form of sky deity.
“What we are seeing with this and a recent spate of lockouts is a new movement of militant employees” Exsqueeze me? In what way were these employees militant? basically they had been working away for years then turned up at work next day to be treated like criminals and sacked… Nice to see the admission though, that the mining “boom”, which employs bugger all people per dollar generated (yes less than 2% nationally), whips the bulk of its profits overseas asap, and as we see today gets subsidies, unquestioned by the likes of this author for around $4 billion per annum because…well just because…is poleaxing the more useful parts of the economy. That’s a wonderful economic outcome, unless you are one of the 98% of people who don’t benefit from the mining boom. This country has gone nuts.
Really do not know what the article has to do with the RBA,but suspect the advice given to Toyota came from people like reith.
“we can assume Toyota got good advice and was careful”
Yeah, well no, you can’t assume that. They probably got advice but whether it was good, useful or right remains to be seen. These sort of redundancy exercises are always fraught with risk and it doesn’t take much to get it wrong advice or not. There just aren’t that many people around with experience in these kind of mass exercises.
What’s probably more likely is that the big T got advice from it’s lawyers who can only guess at how FWA will view the employer’s action and probably a contradicting or at the very least complicating set of advice from their HR advisers. Further complicating all of that was whatever PR advice they got and whether or not they took an ideological/IR position. So someone in an exec position then has to decide between three or four sets of advice. The circumstances tend to militate against a good outcome.
The 80s and 90s were not so much marked as an industrial battle field as an unprecedented era of co-operation between labour and capital through the Accord, the SEP, enterprise bargaining, and industrial democracy
as for
“a new movement of militant employees”
“the unions’ franchise”
as Bo asked ,exqueese me?
Dutch disease is like gangrene for manufacturing: once it’s set-in it’s usually too late to save the leg.