For The Labourer is Worthy of His Hire
The APPM Dispute
My knowledge of Sociology can best be summed up by
the fact that my senior lecturer for three years was
Brian Howe. I remember my final year's paper, which
he lost---I actually failed final year. When he
found the paper, I passed.
The F17 freeway which some of you would know as a
6 or 8 lane freeway that winds up in a suburban street
in North Fitzroy, is one of the more bizarre examples
of road planning ever seen. Brian Howe had his entire
final year Sociology class doing work on this freeway.
It became evident why, because he lives on Alexander
Avenue where it runs into. We didn't know that until
we were invited to his house for a cup of coffee one
night and here is his house on the end of this freeway.
I do not think he would be lost to the world of Sociology
when he joined politics. Neither was I, by the way.
The other interesting thing I would like to say is
about Robe River. When we started this exercise at
APPM we went to great pains to say that this is not
another Robe River and we really went to a large degree
of effort to make sure that was seen as the case.
One night about 2 or 3 weeks ago I was having dinner
at a friend's place in Hobart. I have one of these
little mobile phones and I forgot to turn it off.
At about 10 o'clock the phone rang. It was a journalist
and he said "I am from the ABC---We have just
done an interview with a guy who reckons that this
is another Robe River". By this stage I have had just
enough to drink and I said "Absolute rubbish. I am
sick and tired of hearing about bloody Robe River.
This is not another Robe River." I said "Who said
it." He said "Michael Porter, he says it is not a Robe
River because if the result is the same as Robe River
you will have job security for 100 years the place
will run like a bird." Of course he is quite right.
Just before I start there is a phrase that sums up
what we are trying to do. It was a quote from an American
President some years ago, where he said, that "the
best way to create enemies is to create change," and
at APPM, which is the forestry and paper arm of North
Broken Hill Peko Limited, that's what we are trying
to do. We are all trying to create change and we try
to create change in something of a hurry. Now the
reason for doing this---and we need to go back
into history a little bit--- APPM has been going
as a Company for 54 years. We were the first Company
in the World to use eucalypt to make paper. Prior
to that, most fine paper was imported into Australia.
By fine paper I mean quality paper, writing and printing
paper. Now that's what we are about, we are not really
into packaging for agents or things like that. So
prior to our advent all of our fine paper was imported
and about 54 years ago we started to develop a technology
to use eucalypt. APM started doing it about the same
time. So from that period forward we have had a major
share of the domestic paper market in Australia and
for a long time we have treated our customers accordingly---we have treated them on the basis that we have
had the paper and they have wanted it. So for many
years we really haven't gone to the customers and asked
them what they have wanted. We have said to them that
this is what you are going to get and if you are not
happy we won't give it to you. That really has been
the approach we have followed for many years. We could
get away with it because there was a lot of tariff
protection on paper coming into the country. There
was the problem with transport in getting the stuff
here. We could survive, make lots of money and treat
our customers, I think, reasonably poorly and not worry
about imports or work practices too much. Unfortunately
that has all started to change. The domestic paper
industry has become tight. There is now floods of
imported paper coming in to this country. The tariff
is going to disappear totally in 2 or 3 years and we
have been jolted into a sense of reality.
To deal with that threat we have invested heavily
into quality in our operations. Our major problem
is our volume but we have been very hesitant to spend
any money on increasing our volume. In other words
the capacity of our machines is very small. We have
7 or 8 paper machines and we turn out 230---240
thousand tons of paper per year and probably 60 or
70 different grades. We have some people just back
from America from a mill in Georgia where one mill
turns out 900 thousand tons of paper per year, making
the same grade of paper, day in day out. For us to
combat that is incredibly difficult. What we have to
do is try and get to an acceptable level of production.
This is where we get ourselves caught in a bit of a
quandary. A lot of companies in Australia want to
export because export is good for export reasons.
We want to get to a stage where we can export because
it is the only way we can justify putting in world
scale machinery. If we don't put in world scale machinery
then we cannot hang on to our domestic markets. So
it is a bit different to iron ore exporters, or whatever.
So we are now facing these big machines with very
large efficiency from Europe, from North America, and
more recently from Indonesia and Brazil. Brazil by
the way still picks up a 5% developing country preference
on tariffs from paper coming in here and yet they have
got one of the most advanced paper industries in the
world. We have found ourselves in the last few years
with this dilemma. We have decided that we would rationalise
our product range. We would invest heavily in quality
and we have invested in recent years 50---60 million
dollars a year to maintain our quality, and I think
we have done that reasonably well.
In relation to becoming a true exporter we have tried
to develop the Wesley Vale pulp mill, which some of
you would no doubt know about. I am not going to talk
about that today. Just to make the point; that project
did not fail any environmental assessment. There simply
was not any assessment process capable of dealing with
the project and over the last 3 years we believe that
we have resolved most of those points. We are actually
waiting on three things now, to get this project going
again. The first is resource security legislation.
We are currently having a rather intense battle in
Canberra and, regrettably, our battle at the moment
seems to be with the Coalition, not with the Government.
It is still hopeful that this can be resolved. Once
that legislation is passed, we have to find a partner,
and we won't find a partner until that legislation
is passed. Finally we need the Commonwealth Government
to finish it's environmental studies on Tasmania's
forest and we believe they can do that very quickly.
So that is what we are doing to become internationally
In relation to our domestic business, as I have said,
we have invested heavily. We have got involved in award
restructuring over the last 3 years at our mills and
to some degree we have been successful in achieving
some gains in the context of award restructuring.
However at our Burnie mill a lot of those gains will
take 3 years to come to fruition, and there is a capital
investment on our behalf of some ten million dollars
alone if we are to warrant our obligations under award
The view that we have taken in recent months is that
the progress we have made in reviewing awards and in
improving the performance of our employees and our
staff simply has not been going quick enough.
A few months ago we took the measure of examining
all the restrictions on our business in terms of work
practices and over award agreements and we established
a working party. Some of you would know some of the
people on that. One of our advisers was Herb Larratt.
We spent about a year going around all our sites,
having a look at where we believe we could do better.
Having decided where we could do better, we then took
a legal look and decided what things we could do legally
and what we couldn't do, and what was discretionary.
The decision was made that we would give 30 days notice
to our unions on 3rd March this year (1992) that we
would withdraw from all over award agreements with
four exceptions, which were:
- (a) the 25% over award weekly payment made to our employees;
- (b) a 35 hour week which applies to most of them;
- (c) our contribution to a fund which is known as the
APPM ACTU Superannuation Fund;
- (d) and payments under our redundancy agreements.
So those four things, which are industry standards
anyway, we decided, at this stage, not to withdraw
from. At the end of the 30 day notice period all other
agreements we would cancel and our legal advice was
that 'we could do that quite legally'.
We have now come to the end of that 30 day period,
last Friday in fact. I think it is worth recapping
to see what has happened over those 30 days, and the
reality is, not much has happened at all. We took
a very conscious decision from the staff that we would
sell our message both in terms of why we had taken
the action and what we were actually doing, as strongly
as it could possibly be put. We have learned the lesson,
probably better than anybody else, what happens when
we do not communicate properly to your employees and
to the public. The Wesley Vale Pulp Mill cost us and
our partner 21 million dollars. One of the major reasons
that we lost that, was the inability we had to sell
our message, so we learnt that lesson and we made sure,
this time, that it wouldn't happen again.
On the 3rd March we sent letters to every employee
covered by an award in the Company. We put up notices
on all our mill notice boards and we held a major media
conference in Hobart where our chief executive, Bill
Post, explained in detail to the Media precisely what
we were doing. We have maintained our position with
the Media ever since and we believe that it's gone
a long way, certainly in the public eye in Tasmania,
to addressing some of the concerns and in fact only
on Friday I received the latest public opinion survey.
There is still about half the State which does not
know what we are doing, but of the half that do, about
80% support our actions, and that is about the best
we can possibly hope for.
So over that last 30 days the Unions really haven't
been too sure how to handle it. The smarter Unions
have decided that the Company is very very serious
and the smarter guys picked it up very quickly. The
not so smart ones I guess still haven't understood
that. A day or so after we made these announcements,
our two Unions, the metal and engineering, and the
PKIU made application to the Industrial Relations Commission
for a dispute to be found and that was heard in Sydney
on about March 6th or 7th. The Commissioner then was
Deputy President Reardon. He suggested the parties
go into conference---we agreed and we sent our
solicitors. They answered some questions that the
Unions raised---the matter was reconvened a couple
of days later in Melbourne. He decided that he could
not handle the matter any further due to his work commitments
and passed it over to D.P. Munro.
The Unions then made an application for a compulsory
conference and that was heard 3 weeks ago in Melbourne.
Munro ruled that he could not order a compulsory conference.
He said there was no value in doing that if there
was no willingness to negotiate. We always said that
we wouldn't negotiate away these points so he would
not rule a compulsory conference. Two days later the
Minister for Industrial Relations, Peter Cook, got
involved and wrote a rather intriguing letter to Munro
saying that he wasn't attempting to comment on the
merit of the dispute or otherwise but he was concerned
about the threat of industrial action and he suggested
that the Commission have another look at it. The Deputy
President then immediately wrote to all the parties
and said---I am paraphrasing this---'I am
somewhat confused. There is no current application
before me. There was for a compulsory conference and
I have dealt with that. That matter I have re-listed
for hearing again, on April 7th, so I don't really
understand what the Minister wants me to do but would
the parties please advise me'. That was 3 weeks ago---nothing has happened since. The matter rests
to be re-listed again for this Tuesday and we will
see what happens.
The Unions have 2 or 3 times threatened to bring on
industrial action in operations. That has not happened.
We have spent an enormous amount of time having meetings
on the sites explaining to our employees why we have
to do what we are doing and I think we have a pretty
broad acceptance from them. A lot of them don't like
it, but they have understood that if we do not touch
the 25%---the 35 hour week, the actual effect
on the hip pocket is very very slight. To a lot of
guys who want to come to work and want to be seen to
be reasonable and want to get on with it, don't want
these restrictions any more than we do. They find
demarcations, the rorts that go on, I think, just as
frustrating as we do. I am not naive enough to think
that we have the entire workforce on side. We certainly
have a fair chunk of them and I think a lot of them
understand why we are doing it.
Over the last 30 days we have continued our campaign
of informing our employees. We have responded to each
and every criticism raised in the media by the union
movement and we have been quite pro-active in doing
that. Over the last couple of days I guess as the
date came closer for these changes to be introduced,
it has started to heat up. Martin Ferguson has been
invited down to Tasmania to address a series of stop
work meetings tomorrow. We have steadfastly refused
to discuss this matter with the ACTU. We were invited
initially 3 weeks ago, and we said no, and then almost
from shock I think on the ACTU's behalf, they couldn't
believe that we had been invited to attend and we refused.
So they have invited us twice since and each time
we have refused, and said 'no, there is nothing to
We are not prepared to bargain away our future!
So Ferguson is coming down on Monday, as long as he
can get an aeroplane I guess, with the fuel shortages.
Which I kind of suspect he wouldn't be all that unhappy
if he couldn't get there. I don't think the ACTU wants
to be involved in this particularly. They are certainly
critical of the way we have gone about this, but I
don't believe they're critical so much of what we are
trying to do. Anyway Ferguson arrives tomorrow to
hold a series of 2 hour stop work meetings and we have
done a couple of things. We have put up mill notices
and we took out full page advertisements in all the
Tasmanian Newspapers yesterday and have said quite
clearly to our employees that we have had a lot of
people come to us to say that they want to work so
we will provide work and we will use staff. We will
do whatever we have to do to keep the operations running.
Secondly if people do not come:
- a) they won't get paid when they come to work, and
- b) we will argue that they are in breach of their contract
of employment and we will take disciplinary action.
Thirdly, we have written to the ACTU, on Thursday,
and have said if these stop work notices have come
under their signature that we would reserve our right
to take action against them to recover any loss or
damage that we might incur. That has certainly got
the attention once again of the media, at a national
level, for almost the first time. We are quite serious
and we will do that if we can demonstrate that we have
One other thing we announced on Friday---which
was described to me yesterday by quite a few media
representatives as being provocative---is that
if we lose market share due to industrial action we
will never recover it. If we are out of the market
place for some months due to prolonged industrial action
we will never get those customers back. We have taken
every step we can to maintain our market position and
we have done that by making stock and also by supplementing
our stock with some paper from the United States.
That paper arrives in Burnie in what we call an unfinished
form---that means that it still has to be cut
in sheets and packed over the next couple of days.
We are not saying how many tons of paper there are.
It is sufficient to say that there is a lot of paper.
We also put that in our advertisements yesterday saying
that we are very serious---we are not going to
lose market share. If we lose market share, ultimately,
we will lose jobs. We are not prepared to see our
workers suffer---so we have done everything we
can to supplement our stock. The unions have described
that last night and this morning as being naive but
they haven't explained why we were naive in bringing
in paper. Again, we will do anything we can to get
that paper across the wharf into our mills, wrapped
and packed and ready to go if we need it.
In fact, in all of this, I had my most difficult interview
last night with a journalist from 'The Mercury' in
Tasmania about 10 o'clock at night, which I guess is
not a good time to talk to journalists. Certainly
our ads yesterday have been seen to be provocative.
My point is that they are honest and that we have
told people what we are doing and then individual workers
can make up their own minds as to what they want to
So to round off, I need to explain in some detail
why we are doing this. It is not a cost cutting exercise.
We cannot go out and simply say---we want to
save x%---it's not that simple. There is a different
arm to this as well. In the bush we are also taking
efforts to reduce our costs. We have notified our
bush contractors who supply us with logs that we want
to reduce costs by about 20%. We believe we have done
that with the log hauliers working up on the east coast.
We have already taken 10% out of their costs and will
now peg their costs until inflation eats away the other
10%. Up the north west we still have 15% to go. The
contractors have handled that well. In fact the chairman
of the Tasmanian Logging Council has come out and said
that this is now a challenge to all logging contractors
to reduce their costs. He believes they can do it.
So that's gone reasonably well. In relation to our
paper operations, it's simply not a cost cutting exercise.
It's about really trying to create a whole new culture
of work---a new way of working, a new way of doing
things and allowing people to reach their full potential
and allowing us as managers to run the show properly.
One of the criticisms we have copped from the union
movement is that we have taken this drastic action
and we are not even in a loss making situation. That's
exactly why we are doing it. We are trying to do it
before we go into a loss. We think if we wait until
we are in the red then we would be held accountable
to our shareholders for destroying the business.
What we are about, really, at the moment is trying
to make enough money to re-invest. We are making a
profit, but it is no where near enough for our investment
program. The minute we stop investing, that's when
we are really going down the tube rapidly, and we
are not prepared to see that happen so it's more than
just simply, as I said, an exercise in cutting costs.
It's about creating a new culture, it's about creating
a new way of doing work. All we are trying is to get
us to a level of profit performance that we can re-invest
and offer long term job security. Now what will happen
over the next few weeks, I don't know. To a large
degree that will be determined, I think, by what happens
tomorrow, because if people do take stop work action
against us tomorrow, our argument is that's not consistent
with our aim of having people who want to work in this
new environment and we would certainly look at what
action we could take. That may turn the whole exercise
up a couple more notches, but we are not prepared to
back down. The company is very very serious in how
it goes about this and hopefully, with the support
of a lot of our work force, we will see our way through
Thank you for your time today. I think it is important
that we get this story across on what we are doing
in case it does start to take on a national profile.
So if this does develop over the next few weeks, at
least you have got some background to what we are doing.