Patrick wharf strikes could sink profitability

January 10, 2011 Edward

ON Monday, about 60 Patrick stevedores in Geelong are expected to walk off the job for two days.

The wharfies’ union is ramping up its push for wage increases and job reclassifications, which the company reckons will render its bulk freight business essentially unprofitable.

This will be the third strike at Patrick ports on either side of the continent in the past two weeks as the Maritime Union of Australia moves to ratchet up pressure on Patrick’s listed owner, Asciano, to indulge a 40-point log of claims that began life exactly twice as long in August last year.

So far, Patrick has endured 72-hour and 48-hour stoppages at its Fremantle and Albany ports respectively, and its workers at Geelong and Melbourne voted last week to join their West Australian colleagues in reinforcing their log of claims with strike action.

The Geelong workers will work short shifts over the weekend and then stop work for 24 hours from first shift on Monday in a move that will delay the movement of two grains ships.

That action will be supported by Patrick’s 200-strong workforce at Melbourne’s Webb Dock. They have put a ban on transfers to cover the Geelong shifts and voted to strike if directed to by the union. Talks between Asciano and the MUA are due to resume on the same day Geelong stops; depending on the outcome, we should expect strike action at the Webb Dock.

Given unionism’s long history of militancy on Australian ports, the MUA decision to reinforce its negotiating position through strike action will have many thinking back to the bad old days, to the era before Chris Corrigan and the Howard government finally loosened the wharfies’ grip on our gateways to trade.
For its part though, the MUA insists the strikes are motivated by a desire to deal with issues of “safety, training and permanency” on Patrick’s bulk ports.
A statement released by the union yesterday focused on the fact that, of three wharf workers who died in Australia last year, two worked at bulk and general ports. Mind you, none of them were working at Patrick ports.

Nonetheless, safety must always be paramount and the union’s desire to see less casual employment on the wharves would seem sensible, along with moves to improve the consistency and quality of training.

But the claim before Patrick contains a whole lot more than proposed initiatives on training and employment permanency. Which is why Asciano has taken more than six months to consider and discuss its response to the union.

The MUA presented their initial log of 80 claims in August last year and the first meeting between company and union occurred in September. Apparently, union leaders could not make earlier meetings because of official commitments in Mexico and a subsequent two-week long national council meeting.
Much has been made so far of the idea that Patrick has been somehow tardy in dealing with the MUA claim. But the fact is the current enterprise agreement did not expire until the end of October and a revised (and much shorter) log of claims was presented to the company as recently as the first week of November.
Which might explain why Asciano has not made a formal offer in response to the union’s claim (hence the protected status of the industrial action).
But when it does finally get back to the MUA, it is unlikely to come bearing gifts that get anywhere near matching the union’s claim.

The union is understood to have asked for wage increases of 30 per cent over three years (10, 10 and 10), an increase in the company’s superannuation contribution from the compulsory 9 to 15 per cent and changes to the grading system that would compress seven levels of seniority into into three, with the lowest level being the equivalent of the present third tier.

Not only is the union claim patently unrealistic but it has been delivered with no commitments to productivity offsets that now routinely underpin enterprise agreements. On the surface, at least on the wages and conditions components of the claim, the union has indeed attempted to revisit excesses of the past.
By Patrick’s analysis, if it conceded on all 40 of the claims, it would increase the costs of employment in its bulk and general freight business by 58 per cent in the first year alone and by a fearsome 194 per cent over the three years that will be covered by the EA under construction.

The combination of the wages claim and the jobs re-classification would result in a 24 per cent increase in the cost of salaries in the first year and lock in 10 per cent increases for each of the subsequent two years.

And that, by Asciano’s internal numbers, would see its costs more that double the forecast earnings of bulk and general for 2011. In other words, this EA represents material motivation to exit the bulks industry.

A spokesman for the MUA told me yesterday that “the wage claim is literally the last priority for both members and Patricks”.
But, from Asciano’s perspective, that is certainly not the case.

Asciano is, first and foremost, concerned that the union’s obviously very ambit claim on wages and conditions will brutally undermine the standing of its bulks business, which last year generated a pretty spare $12 million, or so, in earnings before interest and tax.

But both employer and union know this is obviously about more than just the pretty marginal bulks business. The outcomes of negotiations on the wages and conditions elements of the enterprise agreement will cover the whole 1600 who work for Patrick’s bulk and general freight business around Australia and the 1300 who work on the better-known container ports.

The thing to appreciate here is that Asciano’s management is an utterly different beast culturally to the necessarily pugnacious team that ran Patrick before it was taken over by Toll Holdings and then released to freedom under its current moniker.

When it comes to industrial relations, Asciano, like Toll, is far more amenable to creative consensus. So, sometime in the not too distant future, we can expect that Asciano will respond to the MUA with an offer and when it does it is likely to draw on existing EA landmarks. It might match the 5, 5 and 5 deal that Asciano recently did with its Pacific National train drivers or it might look to the Toll Shipping EA that locked in consecutive annual rises of 5 per cent, 4.5 per cent and 4.5 per cent in return for a range of productivity offsets.

At that point, the MUA will be delivered with a wonderful opportunity to demonstrate what its real priorities are here.

Source: The Australian (January 7, 2011)