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T3909 - 1 September

 

TASMANIAN INDUSTRIAL COMMISSION

Decision Appealed - See T4012 and T4023

Industrial Relations Act 1984
s.23 application for award or variation of award

Tasmanian Electro Metallurgical Company Pty Ltd
(T.3909 of 1992)

FERRO ALLOYS AWARD

 

COMMISSIONER R.K. GOZZI

HOBART 1 September 1992

Award variation

REASONS FOR INTERIM DECISION [Further Decision]

This application by the Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO) was for the variation of the Ferro Alloys Award to reflect the outcome of negotiations between Temco, its employees and unions represented at Temco. The underlying basis to the negotiations was to make Temco cost efficient with other ferro alloys producers operating in the same world markets as Temco. To achieve that outcome Temco prepared a "Blueprint for the Future" (Exhibit Temco 3) which stated the objectives in the following terms:

"...The Study (Blueprint for the Future) is aimed at making recommendations to overcome current problems which are inhibiting the efficient operation of the Company. The resulting recommendations incorporate industry best practices and when implemented, will ensure minimum cost operation and international competitiveness."

and later

"There are 21 major recommendations made in the Blueprint. It is our intention to set up consultative project teams to develop the ideas further. As methods for finalisation are developed you will be kept informed.

The Blueprint information should be regarded as a starting point for major reforms and everybody's input is again encouraged as it involves all our futures."

Against that background Temco, employees and their union representatives commenced an extensive analysis of what measures were necessary to improve the overall productivity of Temco. To ensure that the review process and the identification of changes required to be made would maintain its momentum, significant resources were committed by Temco. I was informed in the proceedings that the overall cost to the point of making this application to vary the award was $500,000.

As well as the workplace reform program, employees and unions had as a further incentive to become cost competitive an undertaking by Temco that it would commit capital funds to the conversion of Number 5 Furnace if it was able to be demonstrated to the Company that lasting changes could be made. It is now a matter of record that BHP Minerals approved the expenditure of $14 million to convert the Temco No. 5 Furnace to produce silicomanganese. The conversion saved 100 direct jobs which have a multiplier effect of 200-300 indirect jobs. Obviously this is of vital significance not only to Temco employees but to George Town, where Temco is located, and the whole of Tasmania.

The workplace reform initiatives outlined to the Commission are of great magnitude and have been reflected in the variations requested to be made to the award and in a Workplace Change Enterprise Agreement. The latter document, sets out in detail specific workplace changes under broad headings including Demarcation; Continuing Work Arrangements; Inter Union Demarcation Changes; Intra Union Demarcation Changes; Use of Contractors; Flexible Manning; Employment Levels; Training; Career Path Models; General Section; Manning During Stoppages; Wharf Operations and a Performance Payment criteria. Whilst the Workplace Changes Enterprise Agreement is a document for the parties only, I was requested to retain a copy as part of the documentation presented in this matter.

I congratulate the parties on the vast range of initiatives they have introduced at Temco. Many of the changes to work practices will require a program of implementation. Given the apparent commitment to the changes I am confident that all of the negotiated work arrangements will translate into real workplace reform. The monitoring process outlined by the parties will certainly facilitate this.

The award variations include a new nine (9) level career structure. All Temco employees will be translated into that structure having regard to skills held and competencies able to be demonstrated at the date of translation.

The salaries attaching to each classification grade or level are stipulated as annual amounts with additional annual amounts shown for 7 day continuous shift work and 7 day day shift work. The salaries comprehend flexible working hours arrangements whereby average Standard Hours have been determined for a twelve month period. Employees may be required to work in advance of Standard Hours which will put them in credit. Hours credited may be taken as time off without loss of pay at mutual convenience. To provide a checks and balances mechanism for this arrangement, day workers may only be required to work up to 96 hours in addition to standard hours in any one year ending the 31st May.

Debit Hours have to be made up. The arrangement eliminates the payment of overtime and penalty rates as these have been allowed for in the salary amount for each classification. It is to be noted that average Standard Hours have been set at 80 hours and 84 hours per fortnight for day workers and shift workers respectively.

In addition to the foregoing the salaries and shift work payments contained in the award are inclusive of a vast number of other payments and allowances which were previously applicable at Temco.

The Award contains a number of other provisions all aimed at facilitating flexibility in working arrangements. The Enterprise Efficiency clause is a focus for the parties to continue to pursue efficiencies within Temco. Similarly the ability to use Contractors is enshrined in the Award as it is in the Workplace Changes Agreement.

The changes which have been negotiated by the parties are extensive. They are intended to allow Temco to increase its production on a cost competitive basis. Plant Output is forecast to increase. If it does and the performance threshold of 63065 tonnes is exceeded (lump alloy and sinter) a performance payment will be determined by reference to a formula which has been established and which is set out in the Workplace Changes Agreement.

As indicated the parties have agreed to a monitoring process over a twelve month period from the date of operation of the Award. The Commission has been requested to be involved. This will be a matter for the parties but I indicate the ongoing commitment of the Commission to assist the parties as necessary.

From my involvement in this exercise and having regard to the submissions of the parties, I consider that it is in the public interest to endorse the variations requested to be made. The variations are also totally in accord with the Wage Fixing Principles as they currently stand. The negotiations reflect a commitment by all those involved, employer, employees and unions to making Temco a viable competitor in the ferro alloys world market place. The benefits to all concerned and to Tasmania as a whole, are obvious. I congratulate the parties on their achievements and for securing a vital industry for Tasmania.

The variations are endorsed operative from 17 August 1992. The order will issue in due course.

 

R.K. Gozzi
COMMISSIONER

Appearances:
Mr G. Jones with Mr T. Abey and Mr P. Carris for Tasmanian Electro Metallurgical Company Pty Ltd.
Ms D. Moncrieff for Federated Engine Drivers' and Firemen's Association of Australasia, Tasmanian Branch.
Mr M. Clifford for Construction Forestry and Mining Employees Union, Tasmanian Branch.
Mr J. Glisson for Federation of Industrial, Manufacturing and Engineering Employees, Tasmania Branch.
Mr M. Hill for Metals and Engineering Workers' Union.

Date and place of hearing:
1992
Launceston
August 13, 14