Industrial relations lawyer Andrew Douglas told SmartCompany manufacturing generally had a cap of 20 weeks for redundancy payments and Autodom and APV Automotives were not alone in being crippled by high redundancy payment requirements.
“One of the problems with the automotive industry is it has such tiny margins and everyone knows the external pressures on the industry, which are wages, the Australian dollar and just-in-time contracts which require delivery of goods at relatively short notice at low costs,” he says.
“Just-in-time contracts, which are commonly used in the industry, means business can’t invest in capital equipment as the costs are so low and can’t change their structure because redundancy costs are so high.”
Douglas says costs in the industrial environment are too high and too inflexible.
“Businesses cannot afford to pay out redundancies, so they are backed into a corner so the whole thing collapses,” he says.
Douglas says unions have to look at scrapping these redundancy caps and getting back to realistic redundancy payouts.
“The unions need to agree to lower wage, higher flexibility and reducing redundancy caps and there is no way the Australian Manufacturers and Workers Union would participate in that discussion, which will be to the destruction of the automotive industry in Australia,” he says.
The Australian Manufacturers and Workers Union’s Victorian assistant secretary Leigh Diehm hit back at the administrator’s comments about redundancy costs, branding them “a disgrace”.
“I wouldn’t say that if companies are running well and performing there should be no concern about redundancy entitlements as they don’t fall due unless the employer makes redundancies,” Diehm says.
“It is a bit of a disgrace that the administrator is saying that so early as they have not even established if there is bad management.”
Diehm says an interim deal had been stuck with the banks to cover Autodom’s 400 employees’ wages until Wednesday.
“There are several problems with Autodom, the tariffs being number one with the Australian dollar being so high. We are going to work through this and hope it won’t be the same situation as the CMI collapse.”
“We are not saying there are not issues in auto components at the moment but we hope everyone can put their heads together and work their way through it.”
A meeting of all Victorian employees is scheduled for Wednesday, November 7 and the first creditors meeting will be held on Wednesday, November 14.
