AG2004/6185, Transcript of Proceedings [2004] AIRCTrans 3165 (13 August 2004)

AUSCRIPT AUSTRALASIA PTY LTD
ABN 72 110 028 825

Level 7, ANZ House 13 Grenfell St ADELAIDE SA 5000
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TRANSCRIPT OF PROCEEDINGS

O/N 2076
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER FOGGO

AG2004/6185

CONCILIATION IN RESPECT OF
AGREEMENTS

Application under section 170NA(1) of the Act
by Mitsubishi Motors Australia Limited re
negotiation of a proposed agreement

ADELAIDE

9.40 AM, FRIDAY, 30 JULY 2004

PN1

MR G. SMITH: I appear on behalf of the Company. With me today is MR R. COLLETT and MR S. BARRETT.

PN2

MR I. JONES: I appear on behalf of the AMWU, along with MR J. CAMILLO.

PN3

MR B. JOHNSTON: I appear on behalf of the CEPU Electrical Division.

PN4

MR J. KANE: I appear for the Australian Workers' Union.

PN5

MR S. BROOKS: I appear on behalf of the ASU.

PN6

THE COMMISSIONER: Well, I see we have all the usual players. Is there any problem in relation to leave being granted to Mr Smith?

PN7

MR BROOKS: None at all, Commissioner.

PN8

THE COMMISSIONER: No, thank you. Leave is granted, Mr Smith. Can I say from the outset I have the information sent by the Company yesterday and I take that to be the latest document regarding the state of play between the parties?

PN9

MR SMITH: It is Commissioner, with a couple of amendments to it. Maybe I could do those straight after. Through discussions with Mr Jones this morning, in respect of the FEIUs claims in relation to notice and severance, the document reflects notice of 6 weeks and severance of 5 weeks. We understand that the position is in fact 7 and 7, not 6 and 5.

PN10

THE COMMISSIONER: Right, so severance is?

PN11

MR SMITH: Seven.

PN12

THE COMMISSIONER: Yes, thank you.

PN13

MR SMITH: Commissioner, there's some other comments I want to make about that document. Perhaps I could come to that after I give you a very brief outline of where we have come from.

PN14

THE COMMISSIONER: Yes?

PN15

MR SMITH: Commissioner, you might recall that it was 21 May this year when it was announced that Mitsubishi Motors Corporation would close the Lonsdale plant. It was subsequently decided that this would be a progressive winding back of the operations with complete closure by Mitsubishi Motors Australia Limited in October 2005. Of course, I guess you are also aware the company is endeavouring to find a buyer for the Lonsdale plant and hopes that there could be ongoing employment through a new employer, but that is still being attempted.

PN16

Negotiations with all the unions concerned commenced on 31 May 2004 and there have been approximately 17 meetings, many of which have been up to a day's duration, so there has been an awful lot of time, Commissioner, spent to date on trying to reach an agreement.

PN17

THE COMMISSIONER: Well, can I interrupt you there? I think it is to the credit of the parties that a considerable number of the issues have been resolved.

PN18

MR SMITH: Yes.

PN19

THE COMMISSIONER: Albeit that perhaps there are some big ticket issues still outstanding.

PN20

MR SMITH: Yes, there are, Commissioner, there are some big ticket issues, but yes, there have been a number of issues which have been sorted out and that is reflected in the documents we have provided to you. Commissioner, the company has made it clear throughout the negotiations that it really only has limited funds to apply to this agreement but I think you would be aware, as I think everyone in this room would be aware, that Mitsubishi, both at the international level - that is through its parent company, Mitsubishi Motors Corporation - and at the local level through Mitsubishi Motors Australia Limited, are facing extremely difficult financial circumstances.

PN21

Mitsubishi Motors Corporation has significant financial challenges which it must address and there's a press release which came out fairly recently, Commissioner, which I can hand to you.

PN22

THE COMMISSIONER: I'm going to mark the draft agreement as at 28 July 2004 as exhibit M1, and I will mark this statement as exhibit M2.

EXHIBIT #M1 DRAFT AGREEMENT DATED 28/07/2004

EXHIBIT #M2 PRESS RELEASE

PN23

MR SMITH: Commissioner, I won't take you to all of this, of course, but it is worthwhile just reflecting on it just a moment at the second - the first paragraph says:

PN24

Mitsubishi Motors take additional steps to achieve re-vitalisation plan targets - 72.6 billion yen in additional cost savings ear-marked to offset potential sales decline. Tokyo June 16, 2004.

PN25

Mitsubishi Motors Corporation today outlined additional measures to its business re-vitalisation plan ...(reads)... Yikiro Okasaki.

PN26

And then the next paragraph is important, Commissioner:

PN27

All out cost cutting measures ...(reads)... by 5 per cent compared to 2003.

PN28

THE COMMISSIONER: Is this in relation to MMAL as well?

PN29

MR SMITH: No, Commissioner, no it is not, this is purely MMC:

PN30

In addition the company plans to ...(reads)... from 4 to 1.5 per cent.

PN31

I will leave it there. It goes on in some detail but the point we make there, Commissioner, is that this is a company operating at a global level and at the global level there are significant financial hurdles that it must jump and quite clearly the pain, if I can put it that way, is going to be felt right across the board. In respect of MMAL we have just concluded an Enterprise Agreement which provided for, ultimately, a 5 per cent pay increase, unlike Japan where it is going to be a 5 per cent pay decrease.

PN32

Now, at the local level, Mitsubishi Motors Australia Limited has made it clear that it has made in the last financial year, and is continuing to make, a significant loss. There are no figures made public on that but I think it is accepted by the parties that the company, at a local level, is in difficult financial circumstances. Those circumstances, that is the circumstances confronting MMC at the global level, the circumstances confronting Mitsubishi Motors Australia Limited at the local level, make it very important that we achieve this agreement at Lonsdale as soon as possible.

PN33

At the moment at Lonsdale we are carrying approximately 120 excess employees and I guess it is easy maths to say the quicker we can commence implementing that restructuring program, the quicker we can demonstrate to MMC that we are serious about cost reduction and we are serious about restoring the viability of this business in Australia. Commissioner, it is vitally important for the future of Mitsubishi Australia that MMC have confidence in our ability to return to profitability in the reasonable short term. At the moment we can't reach an agreement in respect of Lonsdale and that is the worst possible message to send to MMC.

PN34

To make matters worse, Commissioner, we have also received bargaining notices from the various unions. They came in in the first week or so of June and we have now received notices of protected industrial action. The unions have notified that a stop work meeting will commence at 2.30 pm next Tuesday, followed by an indefinite strike. Once again, Commissioner, this sends completely the wrong message to MMC. The message it sends is that Australian employees are not interested in protecting the Tonsley Park manufacturing facility.

PN35

The primary concern of Australian employees is to maximise their payout and to some extent we can understand that but of course, there is always a tension between maximising a redundancy payout and what the business can afford and redundancy cannot be paid regardless of the cost and the consequences to the business overall. The other issue that arises out of this industrial action, Commissioner, is that there's no doubt it will further lessen consumer confidence in Mitsubishi Australia in the Australian market place, and of course that confidence has taken a bit of a battering in recent times with the situation that is - the uncertainty that has been confronting the company over the last 6 months.

PN36

Commissioner, for those reasons today is an important conciliation. We are looking to progress the matter. We are hopeful of reaching an agreement and by reaching that agreement, avoiding any damaging confrontation. Commissioner, that is the background. Can I turn now to the position of the parties? I am not proposing to take you back to where we started and where the union started. There does not seem to be a lot of value in that. If we could focus strictly on where the current differences are between the parties. They are summarised in that document that you referred to earlier, Commissioner, and yes, as you said, we have achieved agreement in relation to a number of items but the big ticket items in respect of notice, severance, capping, the loyalty payment, the run-out bonus, shift premiums and pro rata-ing are still outstanding.

PN37

We have not achieved agreement in respect of those matters. If I could just take you to the document briefly, Commissioner. You have amended the notice payment to 7 weeks with the FEIU, so there is in fact a 2-week difference there. The difference or severance would now have to rise 2.8 weeks. In relation to the cap, just to make it clear, the FEIU has suggested a cap of 150. That is not to include the 7 weeks notice. Our cap of 100 does cover both notice and severance so the difference is 50 plus 7 weeks or 6 weeks, whichever claim is accepted - sorry, 5 weeks - whichever claim is accepted.

PN38

The rest of them I think, speak fairly clearly for themselves. The run-out bonus; quite a significant difference in terms of dollars. The shift premiums; the unions would like it back-dated to Christmas. We want to agree to back-date only to the date of the announcement, 21 May. Then there's the agreed items. There's an item there called: medical testing. The difference there appears to come back to the fact that the unions would seek a union appointed doctor to do medical testing. We say that medical testing should be done as it has always been done through the MMA or Medical Centre. You would not think, Commissioner, that that would be a deal breaker.

PN39

So that fairly neatly summarises the difference between the parties and, Commissioner, you can see there is still quite a significant difference between us in respect of the key items. At the foot of the page, Commissioner, I just refer you, it says:

PN40

The company had proposed a position of 6 weeks notice and 5 weeks per year of service, capped at 104 weeks without loyalty or run-out bonuses and that was rejected.

PN41

So there was a preliminary position which we increased the notice to 6, the severance to 5, but we deleted the loyalty of run-out bonuses. The position was not accepted so the company has referred it to its previous offer which is the one reflected in this document.

PN42

Commissioner, you have also been provided with another document which sets out, more or less, the full text of a proposed agreement. Again, it highlights a number of other agreed items, which again I won't take you to, but that might be necessary during the course of the conciliation. Commissioner, outside of these documents I should explain too the company has really endeavoured to ensure that the Lonsdale employees, and any leaving from Tonsley Park for that matter, are looked after. As I've said, we are endeavouring to find a purchaser for the Lonsdale facility with hope to provide ongoing employment.

PN43

We have got an agreement to facilitate transfers to Tonsley Park where there are jobs available so that where it is practicable we will transfer people to Tonsley Park, and those who transfer will be receiving a $1300 travel cost one-off payment. We have negotiated assistance packages with both State and Federal Governments. We are fast through those packages, we are fast track training for example. The State Government has assigned a person to case manage the Lonsdale employees, so a particular focus on Lonsdale and the area and trying to minimise the impact on the local area.

PN44

The Federal Government has waived the 12-month waiting period for financial and other assistance which is an unusual step. So again, at the local level we are doing what we can. At the Government level we are doing what we can. We are providing financial and other counselling, personal counselling, and we are looking at what job opportunities might present themselves, both within our dealers, within our suppliers and the external market generally. So all in all, Commissioner, we are doing whatever we possibly can to ensure that people will have some form of on-going employment.

PN45

So it is quite likely that a large number of people in these circumstances will pick up a significant redundancy package from the company and may well find in a relatively short period of time that they are employed somewhere else. We also acknowledge that there may be people who don't do that, accept that, and that may be a fact of life.

PN46

Accordingly, Commissioner, as I have said, there are still very significant differences between the parties. The company has brought this matter to the Commission today to seek your assistance with a view to achieving agreement. If we can't get agreement through this process, it would appear that there are two options. Of course, the negotiated outcome is the ideal outcome. No employees lose money, the company continues to make its cars, satisfy its customers and its dealers and the reputation with MMC is not damaged and there is no further cloud over the ongoing operations. Clearly, that is the ideal outcome, and I don't think anyone can dispute that.

PN47

But if we don't achieve an outcome, there appear to be two options. One is that we go into a protracted, damaging industrial confrontation commencing next Tuesday. In that confrontation, Lonsdale employees will lose money. At some point, Tonsley Park employees will lose money, because there will be no work for them to do and they will be stood down. MMC will be looking at the Australian operations and asking questions, and we will have to answer those questions as to why we can't achieve agreement, which is a significant part of our restructuring program.

PN48

The company will have one benefit: it will reduce its stock levels, and we have a lot of cars out there at the moment, but there is still no doubt that we will lose customers as a consequence of that industrial action. So under that scenario there may be eventually be no winners at all. I mean not just Lonsdale employees and management, but also Tonsley Park employees. There will be no winners.

PN49

The other option is to submit the matter to the Commission for arbitration. Clearly, this is a paid rates arrangement. At some point I have no doubt there will be no reasonable prospect of agreement, and in those circumstances it may be appropriate to apply to terminate the bargaining period and have the matter determined by arbitration by this Commission. It is certainly the company's view that it can be no worse off through arbitration than the offer it has made. It believes it has made so far a very generous offer, and it does not believe that it can come out worse through arbitration. That is an option that is available to it and an option that we may have to realistically look at.

PN50

So as I have said, Commissioner, there are three options: the ideal option, negotiate an outcome. At the other end of the spectrum, it is the protracted stoppage, the industrial confrontation, us having to stand down employees, Lonsdale employees taking strike action, everybody losing, or possibly some middle ground through an arbitration process. The focus of today, Commissioner, is on the first option - the ideal outcome, that is, resolving this dispute without the need for any of the others - and, Commissioner, we would ask that the matter be adjourned into conference to allow that to occur.

PN51

MR JONES: Commissioner, just in brief responding to Graham's comments. Can I, for the record, simply say that we all in this room believe Mitsubishi to be a good employer. We believe Tom Phillips to be an exemplary President of the company, and Tom and Mitsubishi have made it clear to us and to our members and to their workforce that in fact the members, the workforce themselves, had nothing to do, and indeed Mitsubishi Australia had nothing to do, with the closure announcement at its Lonsdale plant.

PN52

So when their employees and our members develop a claim to respond to that announcement that they had no control over, nobody ought to be too surprised. Graham, in his submissions, Commissioner, put that Mitsubishi was facing a significantly difficult time. Gee whiz, you know, 700 people that have no employment will be facing a significantly difficult time. They also said that, in terms of what is to occur in Japan, that there is going to be some pain experience right across the board. Well, that is going to make the 700 employees in Lonsdale feel really warm to know that an executive is not going to get his bonus in Tokyo, and that in terms of the significant pain that is experienced in Japan is a 5 per cent reduction as opposed to 100 per cent of a person's income in Australia. So people will go away feeling warm and fuzzy when they go home tonight and tell that to their families.

PN53

Can I also say, Commissioner, that we concur with the company in the need to conclude an agreement as soon as possible. We would conclude an agreement today on the spot if the employer was to place before us the right formula, and it is the formula at the end of the day that we are arguing around. There are a number of matters, Commissioner, that really just have to be challenged. Graham said that the fact that the unions have got protected action notifications in sends the wrong message.

PN54

There has been a number of mass meetings of Lonsdale workers, and the protected action message is one of frustration. I think that, Commissioner, you have certainly been around this industry long enough to know that industrial action is the last resort for us, and there is a significant frustration that has crept into the workforce at Lonsdale about where the negotiations are going. And we refute the suggestion that Lonsdale employees, our members, aren't concerned about fellow unionists at Tonsley Park. Of course they are concerned about them. It is just that their circumstances at this point are far more dire than the circumstances of their fellow unionists at Tonsley Park.

PN55

The issues between us, Commissioner, are significant but not to the point of beyond resolution. I should say, too, that Graham, love him as we do, said that action by Lonsdale employees would act to diminish confidence of the community in the product and act to the further detriment of the company. I go to the document that he handed out with the various news releases about MMC and an inquiry that took place in Japan where they found that they were less than honest in the way that they handled many of the recall issues to deal with Mitsubishi products and are now recalling 160,000 vehicles on 26 separate recalls. There could be nothing that would act to diminish the confidence of the general automobile buying public than something along those lines.

PN56

Commissioner, can I say that in terms of the propositions that Graham placed for resolution, we have come to this conference today effectively to utilise the services of the Commission to try and come a little closer together, to try and move towards the middle, so that we can take something back to our members. That is why we are here. We wouldn't go so far as to automatically leap into the fact that there is no reasonable chance of agreement. I think there is every chance of an agreement, as I say, with people coming to the table with an open mind.

PN57

One issue, Commissioner - and I'm not going to harp upon those areas where we are apart, because they are simple matters of money and they will at some stage be resolved. But the medical testing issue has been one that has been raised by the union almost from day one, and we have sought, in terms of that issue, to get an independent expert in to do an analysis of the workplace, so that we understand what the hazards of the workplace are and what exposure people have been exposed to, if you like, over the last five to 10 years, so that we know what type of testing to conduct so that people can leave Mitsubishi with a clean bill of health.

PN58

You wouldn't think that would be a tough issue, but that has been a tough issue. The notion of saying to 700 people, who believe that they have been exposed over their working life to various toxic substances that may have a deleterious effect on them as they get older, that the company will do the testing is a little bit like talking to the asbestos victims at James Hardie and saying that the company is going to do the testing. I am not suggesting that this company is a James Hardie, but I think it is a bit of the same thing in the context and the way that those 700 workers think out at Lonsdale.

PN59

So, you know, it may very well be a deal breaker at the end of the day, because it is a significant issue and we are talking about the health of themselves and their families. If the Commission pleases.

PN60

THE COMMISSIONER: Thank you. Do any of the other unions want to add anything?

PN61

MR KANE: If the Commission pleases. I think we need, probably for the record, to go to one item that Mr Smith raised, and that was the buyer for Lonsdale or ongoing employment that he alluded to where employees would leave the company with a package and have ongoing employment. Commissioner, if you look at the history of the southern part of Adelaide as it stands today with 750 employees at Mitsubishi, plus the employees who have left Tonsley Park with voluntary packages, if you look at the job losses at Port Stanvac, 350 employees, and if you look at Tenneco Automotive, Walker and Monroe, who are losing contracts in the car industry to overseas and will probably not grow too much into the future - I'm not saying they are going to close or they are in danger, but they are not growing; they are actually losing contracts - and just most recently Shefenacker Vision Systems, another large employer, lost a major contract that, hopefully, will be replaced, but will cause job losses at Shefenacker in 2 years' time.

PN62

So, if large businesses are not attracted to the southern area, we don't see much hope for future employment in that area, and hence the employees, as put by Mr Jones, seeking a package that would maybe see them through financially a bit longer, hoping that jobs are available. Working for Mitsubishi and working for Woolworths on two different wages is something absolutely far apart. With those few words, I will leave it at that. Thank you, Commissioner.

PN63

THE COMMISSIONER: What has Woolworths got to do with it?

PN64

MR KANE: It is the wages one would earn at Woolworths versus the wages that one would earn at Mitsubishi. They are quite different.

PN65

MR CAMILLO: I agree with Mr Jones and Mr Kane. The crucial issue here is that when Tom Phillips addressed the massed meeting of Lonsdale workers, he indicated to the workers that they would be made redundant, but also made it quite clear that this will be a benchmark. Now, our understanding of that being a benchmark in regards to redundancy was that they would pick up probably the best redundancy packages in the industry. That was my understanding, that is a lot of workers' understanding at Lonsdale, and when workers see what is before them now - and they have had the Kyoto agreement and the ..... close-down agreement - when they compare the two they see they are way, way short of those other previous agreements. And that is why they say in that they believe the company said benchmark and they should get the best redundancy in the industry.

PN66

THE COMMISSIONER: So you are saying, Mr Camillo, that on the state of the agreed methods at the moment and what the company is offering, it falls short of the Toyota agreement at Port Melbourne.

PN67

MR CAMILLO: That is my understanding, yes, it fell short of the Kyoto agreement.

PN68

MR JOHNSTON: Commissioner, I would just like to respond to Mr Smith's comments about the company doing everything they possible can for employees. I have to say that the FEIU and the unions are also doing everything they possibly can. He made reference to meeting with Governments and getting Government assistance. I have to put on the record that the unions have also been involved in that hand in hand with the company. So it is not just the company going out and doing everything they possibly can; the unions have been involved with Mitsubishi in meeting with Government and other parties to try and expedite some of the employee services, etcetera, etcetera. So I just wanted to have that put on record, because the way that Mr Smith came across was that it was just the company doing everything in its power and not the unions.

PN69

THE COMMISSIONER: Mr Brooks, I am sure you don't want to be left out.

PN70

MR BROOKS: No. Thank you, Commissioner. I would just like to basically agree with what Mr Jones said: that we do have every chance of reaching agreement. We have come a long way. As you have identified, we have agreed to a lot of things within this agreement. It was only at the last meeting we were still moving positions, so there is still a way to go, particularly with the big ticket items, but there has still been movement and we think we can still achieve an agreement between the parties. That is all I would like to add.

PN71

THE COMMISSIONER: I am pleased we are finishing on a positive note. I think it would be useful if we moved into conference.

OFF THE RECORD

NO FURTHER PROCEEDINGS RECORDED

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #M1 DRAFT AGREEMENT DATED 28/07/2004 PN23
EXHIBIT #M2 PRESS RELEASE PN23