The dead-end of the metal unions' Manufacturing Alliance with the bosses


The Australian Manufacturing Workers Union (AMWU) has criticised the Labor government for failing to invest in manufacturing. It claims that Labor is ignoring its “base” in the blue-collar unions and is likely to lose thousands of votes unless it invests heavily in manufacturing.

What has disturbed the usually cosy relationship the AMWU officials have with the ALP is the government’s decision to slash the green car innovation fund – a handout to big business. The government claimed it axed the $500 million program to fund the flood relief package.

The AMWU officials launched a campaign to “save manufacturing jobs”. Central to their campaign is an expensive run of TV advertising. Dave Oliver, national secretary of the AMWU, has said he’s not sure which way votes will flow at the next federal election as a result of the union’s campaign. On March 15, 8000 workers rallied in Perth as part of this campaign, demanding more local jobs from the resources export boom. The rally was directed at the Western Australian Liberal state government to secure more local contracts for mining construction projects.

The Construction, Forestry, Mining and Energy Union (CFMEU), AMWU and Maritime Union of Australia (MUA) all mobilised big contingents for the rally. Workers chanted “our rocks, our gas, our jobs”. There were placards at the rally reading “train our kids first” and “support local businesses”. The nationalist sentiments expressed turned into overt racism when CFMEU state secretary Kevin Reynolds took the stage. He claimed Chinese migrants on 457 visas were undermining Australian wages and working conditions.

Less than two years ago, Oliver was making claims that the federal ALP government had committed to strengthening manufacturing in Australia and boosting local jobs following the formation of the Manufacturing Alliance, an initiative the AMWU took with the Australian Workers Union (AWU) in July 2009. Together, both unions represent 250,000 workers.

In its newsletter, AMWU News, Oliver was quoted as stating: “We want the industry’s interests to be heard at all government levels, to support and promote Australian manufacturing businesses, to lead debates and further the industry, and to ensure that the two unions work jointly to protect and promote the sector.” Paul Howes, national secretary of the AWU, made a similar statement in the same article: “We must prepare for the future, and ensure that our industry and our country, is well positioned to navigate the global financial crisis, and come out the other end with a strong recovery”.

‘Buy Australian’

The AMWU claims that the government responded with a “Buy Australian” initiative and the establishment of the Steel Industry Innovation Council. The newsletter reported that both unions welcomed the initiative and “have a seat at the table of the new body”. The Manufacturing Alliance convened a national round-table of union officials and industry bosses out of which came nothing but the usual Laborite class-collaborationist rhetoric about the employers and workers having mutual interests. Not a single job was saved.

Oliver in the AMWU News stated that “there are many employers who are willing to engage in cooperation to the benefit of both the company and the worker.” He also claimed that the “‘Buy Australia’ policy is the first major reversal of free trade and free-market-based policies for more than 15 years and will deliver thousands of jobs in manufacturing”. According to the Australian Bureau of Statistics Labour Force May 2009, between February 2008 and May 2009 the manufacturing sector shed 81,000 jobs. Apart from big closures such as the Bridgestone plant at Adelaide which shed 600 workers, thousands of smaller firms have also closed or moved off-shore.

Speaking at an October 2009 Business Leaders’ Forum, Treasury secretary Ken Henry stated that not only was the decline of manufacturing in Australia necessary, it was also desirable. A similar view was expressed by Alan Wood, an economics writer for News Ltd’s Australian. His response to the Swedish-owned Electrolux company’s decision in 2006 to close its manufacturing plants in Australia, at the expense of 500 jobs, was to comment that “[i]n the age of globalisation, offshore sourcing of production by industries like Electrolux is sensible and inevitable”.

As far as Ken Henry and Alan Wood are concerned, this is the “free-market” at work, with a shake-out of inefficient enterprises that can’t compete on the world market. Capital has no interest in the welfare of wage-earners. Neither is it restricted by national borders. What these job losses indicate is not just inefficient enterprises falling victim to the Global Financial Crisis, but a flight of capital away from Australian manufacturing.

Inefficiency is basically code for “not enough profit”. It doesn’t necessarily mean that the industry in question isn’t sustainable, or even that the commodities being made aren’t profitable to their owners, simply that they can make bigger profits if they relocate their factory elsewhere. The goal of capitalist businesses is to maximise profits, and that means minimising costs. Where this can be done without having to invest in new machinery, it will be. In an automotive spring factory I worked in, Monroe Springs, the furnace that heated the leaf springs for Ford Falcon utes dated back well before World War II. Of course there was no need for a new furnace since the making of leaf springs hadn’t changed since they were used on carriages towed by horses.

Much of Australia’s heavy industry is archaic while the expectations on the workforce to produce “good quality” with greater intensity is greater than ever. When faced with decaying equipment, Australian capitalists weigh up the cost of refurbishment and repairs of their physical assets against their expected revenues. When these costs start to reduce their expected profits, they will purchase new equipment or look to reduce their labour costs, including by simply moving production to where labour is cheaper.

Example of ACL Bearing

After ACL Bearing received millions of dollars in government subsidies, it went into voluntary administration in August 2009. ACL was the sole manufacturer of precision bearings for automotive use in Australia and exported to over 55 countries. The news of the closure came within weeks of workers being told that their jobs were safe due to a rescue package worked out in June between the federal and Tasmanian state Labor governments, ACL, car producers Ford and Toyota, and the AMWU. According to the AMWU’s newsletter, the workers voluntarily took a 20% pay cut. The longest serving ACL workers were owed up to 96 weeks redundancy pay.

But the capitalist media and politicians – despite their rhetoric about the social and economic costs damaging the “nation’s fabric” – weren’t interested in the ACL workers. They were left to their own devices and forced into Centrelink queues. The company executives will live on quite comfortably. Two ACL directors were paid a combined $665,000 in redundancy payments between July 2008 and the end of June 2009. ACL boss Ivan James was paid a weekly income of $7814 from July 1, 2009.

What the AMWU and AWU have tried to put together is a “national action plan” that concentrates on investing in “high end technology” in “niche markets”, but it hasn’t gone anywhere. In a speech in June, Howes said: “If Australian manufacturing is to survive and prosper it must meet the competition from firms headquartered in Europe, the US and Japan that are exploiting advanced management systems, propriety intellectual property and technology leadership, and those in India and China that combine low wages with emerging management and technology capabilities.”

The idea was for government to pour money into research and development (R&D), providing funding for industries that are supposedly concentrating on “innovation”. Essentially what the Laborite union leaders propose is that taxpayers’ dollars be used to bankroll companies that already have a monopoly on advanced technology. The Advanced Manufacturing Cooperative Research Centre (AMCRC), based at Swinburne University, received $49 million in government funding. The centre invests in intellectual property protection giving exclusive control of new technologies to Australian big business.

The outlook of the AWU, AMWU and CFMEU is essentially nationalist-protectionist. Their general approach has been to advocate for tariffs (taxes on imported goods) in order to protect “jobs” – in reality business profits – from goods made in low-wage countries. But this doesn’t work. For one thing, the big end of town won’t allow it. Tariffs in other countries threaten the profitability of basic commodity exports, which is why mining companies in this country, such BHP-Billiton and Rio Tinto, are major backers for “free trade”.

Tariffs by another name

In their rhetoric, Oliver and Howes rarely mention the word tariff. They often use the terms “protection” or “import duties”. Perhaps they don’t want to invoke memories of when “fully imported” used to be a sales pitch for better quality. They call for “procurement” clauses, such as for steel in government contracts, and thus providing Bluescope with taxpayer-funded subsidies. This approach has limitations in that government construction and infrastructure projects account for a small amount of GDP.

The call for government procurement and a “Buy Australia” campaign is not new. The AMWU ran a similar campaign in the 1990s called “Build it here or jobs disappear”. It didn’t achieve much except for promoting nationalism in the labour movement. Australian governments have since entered free trade agreements with many countries such as New Zealand, Chile, Singapore, Thailand and the US and negotiations for FTAs are under way with Japan, Indonesia and India. Successive Labor and Coalition governments have made it clear that tariffs are a policy of the past. They do not want to incur a backlash from the US and other developed capitalist countries that support “free trade”.

Being the dominant player in the world market, the US however does employ tariffs; particularly to protect its automotive industry. The fall-out from the Great Recession of 2008-09 shows how artificially subsidised the auto industry was and the hypocrisy of “free trade”. When the US tyre industry recently faced collapse, US President Barack Obama proposed a 35% tariff on imported tyres. The last 40 years of Detroit’s history has been an unholy alliance between the auto-manufacturers, the government and the United Auto-Workers union. For more than 40 years a 25% tariff kept out of the US foreign imports of light trucks and SUVs while the big three auto manufacturers pocketed billions from producing sub-standard, petrol-guzzling vehicles that didn’t have to comply with all the environmental and safety standards of other passenger vehicles.

The crisis the auto-manufacturers face is just one part of an overall long-term decline in the world capitalist economy, with a resulting increase in inter-imperialist competition. Australian governments won’t pursue tariffs at this stage, because they seek to force a restructuring drive onto industry in order to move capital away from areas that are deemed inefficient.

Tariffs lead to a weakening of world trade as they provoke retaliatory measures. They have never averted a capitalist economic slump. Between 1929 and 1934 when governments across the developed capitalist countries erected tariffs, world trade decreased by 66%.

Furthermore, nationalist protectionism – by encouraging workers to identify their interests with those of “their” capitalists – pits workers of different nations against each other, solely to the advantage of “their” national capitalists. At a recent monster-truck show in the US, an editor for the economics website, Seeking Alpha, observed that lots of booing was directed toward the lone Toyota among all the Fords and Chevy’s (naturally the Toyota was cast as the “evil truck”). Stung by the collapse of manufacturing in the US, many workers there have directed their anger towards foreign-owned products (or even products made in the US by US workers employed by foreign-owned subsidiaries). At a base level this extends to national chauvinism towards the workers of other countries, as if they were responsible for “stealing” jobs from us.

Under capitalism, the systematic gutting of manufacturing and transfer of capital into more profitable areas, whether rational or not, is inevitable. In this environment, Australian manufacturing has become heterogeneous in nature. Traditional heavy industry is giving way to new high-tech industries that have less requirements for large amounts of manual labour. What has emerged is that manufacturing activities with strong links to Australia’s natural resources of food, forests and minerals account for a significant and growing share of manufacturing value added. A second category of goods – more differentiated products with higher skill and R&D intensities – also have tended to increase in relative significance. These include medicinal and pharmaceutical goods, photographic, scientific and medical equipment and, to a lesser extent, electronic equipment. This trend is not only taking place in Australia, but is a common feature of all capitalistically developed countries. Among 17 “rich” countries, only one (Singapore) experienced an increase in the share of traditional manufacturing in nominal GDP over the two decades from 1978.

The Labor government seeks to wholeheartedly embrace the big corporations’ agenda of “free-trade”, while on the other hand preserving social peace through fostering collaboration between the trade unions and big business. By seeking to openly collaborate with big business to secure Australian manufacturing industry jobs, the leaders of the AMWU and AWU are pursuing a futile course. None of their proposals address or challenge the inherit logic of capitalism – its pursuit of corporate profit maximisation through the production of commodities without any rational social basis or social plan. Neither do they address the dominant role big business plays in formulating government economic policy.

As divided as the capitalist ruling class is by its competing business interests, there is one point it is united on – the central element of its plan for economic recovery is the reduction of living standards, working conditions and democratic rights of workers everywhere in order to bolster business profits. A necessary step in the halting of factory closures is the fight for democratic rights. Workers need the ability to be able to collectively withdraw their labour and that requires a challenge to the existing industrial laws which are a continuation of John Howard’s draconian Work Choices. A serious fight against these laws would strengthen the level of organisation of the union movement and lay the basis for stronger resistance against factory closures.

And a serious fight against Labor’s Work Choices Lite is impossible as long as the unions are dominated by pro-Labor officials who peddle the illusion that workers and their “national” exploiters – which consists of all of the employing class, the class that lives off our labour – have a mutual interest in the defence of workers’ jobs. It will require the replacement of these officials with militant union leaders who are guided by the principle that an injury to one worker, anywhere in the world, is an injury to us all.

Australian News & Analysis