Australian automotive assembly industry

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Since the 1990s the Australian automotive assembly industry has faced dual pressures from increased globalization and decentralized bargaining with the impact of enterprise bargaining on the employment relationship practices. Due to the increase in lower cost international competition Australian manufacturers have experienced a decline in profits which has given a way for the governments, manufacturers and the trade unions in reinventaring the industry. The dismantling of tariffs by the government has paved a path to expose the local manufacturers to expand onto import competition .as one consequence the Australian manufacturers have broadened their vision from expanding in local markets to expansion in overseas market particularly in Middle East. This can seen from the data which shows that the imports is 5.45 in 1990 and by the year 2002 it has increased to 18.54. Thought the value of exports have been increasing over the years which can be observed from the data it stands as a pale significance when compared to the growth value of the imports. The shift from the centralized system of industrial relations to a more decentralized form of bargaining has also been one of the important changes that have affected the Australian automobile industry. This decentralization involves the direct relationship between the employers and their employees.

The managerial strategies towards employment relations adopted by the major vehicle manufactures was discussed in the methodology section of the case study given. The awards were given to the employee matters only with minimum standards that are defined in the Workplace Relations Act 1996. The 'enterprise awards' are the awards that apply to the automotive assembly sector of which each company has own award. This study has taken all the EBAs that are certified by the AIRC between 1992 and 2004 for the Ford, Toyota, GM-Holden and Mitsubishi assembly plants. This study also helped in understanding the complicated nature of employment regulations in the Australian automobile assembly sector in the dual regulations through awards and agreements. This study was involved in examining the clauses of agreements and awards which are derived from the framework that are previously studied or followed. According to the enterprise bargaining structure in Australia the framework was designed with some minor adjustments. The studies also showed that adoption of lean production system by Toyota has changed by which the employees have managed and it also said that the employment practices are designed on a multiple factor basis. The disputes in workforce have resulted in the focusing of the unions on the higher redundancy payment. Late 1990s the disputes in the industry have increased in the course of time. But the skill formation has become increasingly more important in the industry. A vehicle industry certificate (VIC) was introduced in the late 1980s as a part of Australian award restricting program. This certification aimed to link career paths and link pay levels to skills. Different levels for production work and the maintenance trades are encompassed with VIC and as the benchmark for this skills is industry wide it helped the employees to move between the industries and gain recognisation for the skills acquired. The VIC has been raised in several years is currently knows as certificate II. The VIC program is less enthusiastic to the older workers in encouraging them to acquire new skills. The enterprise bargaining has helped in paying according to the skills and all the four companies require different types of skills that are introduced for their company development.

The Australian economy development involves an important role of the automotive manufacturing industry. A total value of 6% in manufacturing has made Australia one of the largest sectors in manufacturing and also as a most significant export industry. The increasing competition of the industries and decline in profits and exports has prompted the government, manufacturers and the trade unions to make the industry more effective. The dismantling of the tariffs by the government has helped the local automotive producers to expose to international competition and also allowed the manufacturers to capitalize on the growing potential in the Middle East.

The proportion of locally made vehicles sold in Australia declined from 63 percent in 1993 to 42 percent in 2002 due to the ease of entry barriers by the government. In the early 1973 quasi-enterprise bargaining was introduced and existed till 1991 and till then government has not formally supported the bargaining enterprise. From 1991 both labor and liberal- national governments have encouraged bargaining, making a major shift away from a more centralized approach to employment relations. However there is still an element of external regulation in the automotive sector and more generally across the industrial relationship system. The AIRC, a tribunal establishment by the Commonwealth Government, continues to have the power to settle disputes through conciliation and arbitration, to certify enterprise agreements and to establish minimum standards across the work force. The encouragement of Australian government for the decentralized approach and easing of entry barriers for international players made the Australian automotive assemblers to go for more technology in their assembly line and also opened the door for companies to save profits by employing more of temporary and skilled labor. Therefore the government policies have helped and indeed have been a positive impact in the employment relations in the industry.

Some minor adjustments were made to the frame work in accordance with structures associated with the enterprise bargaining in Australia. This resulted in the content analysis being structured around five broad themes, each of which encompasses various sub categories : " work organization" entitles job structures and demarcation , the structure of teams and working hours; "staffing arrangements" include methods of staffing adjustments, such as redundancy and precautions form of employment; "skill formation" covers theme including industry standards on skills and training; "wages and remuneration" encompasses themes such as wage outcomes, wage determination and performance based pay arrangements and "enterprise governance". . When talking about the impact on employee relations, both institutional and work organization factors need to be taken into consideration. The Australian Industrial Relation Commission has the power to settle disputes through conciliation and arbitration. Several manufacturing trade unions have come under one cover to cover all employees in the automotive industry to form Australian Manufacturing Workers Union (AMWU). The significant changes to job structures and demarcation in the automotive industry has resulted 240 job classifications into three non trade levels and sex trade levels. As a result of this process all automotive assembly sector awards since 1988 have contained new classification structures setting out the job requirements in terms of competencies, qualifications, general duties and responsibilities. Therefore, the institutional framework has been supportive and complementing the managerial strategies discussed above.

In the early 1990s there has been a decline in the number of workers employed in the automotive industry, within the vehicle manufacturing sector and across the industry as a whole. This was due to the Nissan decision to abandon operations in Australia and the closure of Mitsubishi plant. In the late 1990s Mitsubishi deal with Adecco made a new employment deal which enabled it to be numerically flexible that is not available to other manufacturers. With the Mitsubishi-Adecco deal casual loading would be with held form employees, who would receive an accurate loading payment either at the end of their period. The agreement also gave variable temporary casual employees. The agreement also gave variable temporary casual employees to weekly hire status on either full time or part time. Toyota has also introduced a system where by the contract workers can be hired when a permanent worker takes leave of absence for more than four weeks. Non monetary benefits were renewed and entitlement payments were introduced. The job security has been the major issue for the trade unions and the employees. The trade unions preferred more of job redundancy rather than retaining their employees. Though the wages are important to the employees and unions the job security has been the main concern due to the increase in technology and adoption of lean production system and closure of industries. The trade unions are against the performance based pay due to the conflicts between the employees.

Due to the competition in the import industry the Australian automotive industry future remains uncertain. The government change and the change or the policies changes on tariff protection and fluctuations in the exchange rate of the Australian currency and the question mark of globalization companies of long term investment in domestic automotive assembly are uncertain and show uncertainty of the long-term future in Australia. The small size of the Australian market also gives an uncertainty in the long term viability and strategies adopted by the company should produce quality and also due to small market size the trade union employees demands might be more and the cost of hiring the employees are also unpredictable but the continuing influence of the national systems of employment relations can be seen in the globalization industry. The industry beneficial policies for the government can be introduced for the development and the trade unions can make an agreement to work under contract basis which can give job security s well as a good wages.