Toyota Oz Seeks Labor Concessions to Keep Local Manufacturing Alive

Toyota Australia is taking action to renegotiate its union contract, saying it needs changes to ensure its survival as a local manufacturer.

The existing labor agreement for the 2,500 workers at its plant at Altona, outside Melbourne, does not expire until 2015.

Toyota says in a statement it wants changes that include the removal of outdated and uncompetitive practices and allowances that increase Toyota's labor costs and reduce its global competitiveness.

The workers will vote on the changes Dec. 5, with the result to be released the next day.

Two weeks ago, the automaker announced it was seeking up to 100 voluntary job cuts at the plant.

Local assembly now is in full crisis mode. GM Holden has a pay freeze agreement in place as its struggles to continue local manufacturing and Ford is ending Down Under production in 2016.

Toyota’s move comes as Industry Minister Ian Macfarlane concedes the Australian auto manufacturing sector may not survive, in part because of the level of government support that may be needed to prop it up.

Macfarlane told The Australian newspaper it is possible GM Holden will decide to end its Australian manufacturing operations, and this will leave little leeway for saving Toyota's manufacturing.

“There's a possibility that the industry is not able to be saved in terms of the level of support it might require,” the minister is quoted as saying.

Macfarlane says the future will hinge on the ability to devise a coherent plan, to explain what a plan would look like and how it will contribute to a sustainable future for the industry.

“What we have got to do is have a sound, robust process, which I will use to convince those in our cabinet that aren't supporters of another car plan (that) we should put in place another car plan.”

Macfarlane now is in Japan for talks with Toyota.

Toyota Australia President and CEO Max Yasuda and Executive Vice President and Chief Operating Office Dave Buttner met union officials and manufacturing employees to ask for their continued support.

Details of the terms and conditions that are to be reviewed will be discussed with the union and employees during the coming weeks.

“Everyone is working extremely hard to ensure Toyota's long-term manufacturing future in Australia, but we must do more if we want to move towards being globally competitive,” Yasuda says. “Our continuous improvement towards global competitiveness is crucial to securing production of the next-generation vehicle and maintaining our export program.”

“We need to improve our productivity and reduce the cost of each of our locally built vehicles by A$3,800 ($3,614) by 2018. Although we have made progress, the speed of change has not been fast enough.”

Manufacturing employees are due to receive two scheduled pay raises next year as part of their current workplace agreement, and Yasuda says Toyota wants to honor this.

A transcript of an interview with the Australian Broadcasting Corp., posted on Macfarlane’s website, shows the minister, speaking from Japan, defending his decision to have the Productivity Commission conduct an inquiry into the feasibility of local assembly.

“Everyone understands that if you're going to make an economic decision in terms of hundreds of millions of dollars of taxpayers’ money, it has to be based on sound principles, and that's what the PC inquiry is all about,” Macfarlane says.

The commission is due to give its interim report by Dec. 20 and its full report by March 31, with a government response expected in April or May.

“My goal is to get a car industry plan together as soon as possible,” he says. “There is division in the community about whether we continue to support the car industry and I understand that. Obviously that division is reflected within government ranks and I understand that.

“What I need is absolute rock solid evidence as to why we should keep the car industry in Australia and that's what I'm setting out to do.”

Asked if he is prepared to travel to the U.S. and meet General Motors officials, Macfarlane says other commitments means he hasn’t got the time.

“I've explained to the executives at GM through (GM Holden Chairman and Managing Director) Mike Devereux that if they need to talk to me, it would be useful if they came here to Australia, bearing in mind my commitments to the Parliament in Australia,” he says.

“They said they would prefer an answer by Christmas. I accept that. The reality is I can't give them that answer by Christmas.”

Macfarlane later says he would go to the U.S. “if necessary,” but adds he believes it’s fair “that if industry executives need to talk to me, that on occasions they actually come to Australia, rather than Australians always running after multi-national corporates in Detroit.”