“We do understand that the situation is heating up,” one industry executive tells FreightWaves.
A 24-hour strike began today (Tuesday, February 5) at the Hutchison box terminals at Port Botany, Sydney, at 06:00 am (11:00 a.m., Monday February 4th, U.S. Pacific Standard Time). The strike is a complete cessation of operations for a whole day in comparison to the previous action (a 30-minute downing of tools every two hours at the Hutchison terminals at Sydney and Brisbane) in mid-January.
A spokesman for Hutchison in Australia downplays the effect of disruption in a statement to FreightWaves. “There’s a 24-hour stop work but it’s planned and won’t cause any major disruption as there is no ship due in for servicing,” he says.
Negotiations for an enterprise agreement (a type of collective work contract; see below for more details) will resume on Thursday, he adds.
‘Community’ protests take place
Labor protests have also spread to more terminals throughout Australia. Hutchison announced it had subcontracted the handling of several vessels to competitor stevedoring company, Patrick Terminals. Shortly after, a mysterious “community protest” arose that blockaded the gates to the Patrick terminal for an afternoon at Port Botany, Sydney.
In general terms, “community protests” (involving the blocking of ports and terminals) arose when a union was unable to take lawful industrial action. In such situations, industry executives will typically accuse the adversary union of orchestrating community protests. Union officials will typically deny any such action.
FreightWaves has visited the site of one such “community protest” in the past and has noted the presence of union officials and union paraphernalia – banners, flags, t-shirts and so on. It is also a matter of public record that the Maritime Union of Australia, specifically, has previously and covertly organised workers to take unlawful action and then denied responsibility for so doing.
Industrial action could escalate. The union has tooled itself up for a fight. Public documents show that the union has sought, and received, advance permission for legally protected industrial action for an indefinite period. The union can, by giving appropriate notice, organise an unlimited number of work stoppages of 30 minutes every two hours; work stoppages of any of four hours, 12 hours and 24 hours, that can be arranged in consecutive periods; bans on overtime work; bans on shift extensions; bans for an indefinite period on shifts starting outside certain times; and bans on the performance of upgrades after the shift has started.
Hutchison Australia and the harbour of horrible history
Hutchison began operating in Australia in July 2014. It is one of three box stevedores in Australia and it has about a six percent share of the market. It has about 300,000 container crane lifts of the industry total of about 5.1 million container lifts, according to the Australian Competition and Consumer Commission, which produces a series of industry reports.
Even though Hutchison is relatively new to the Australian waterfront, there’s not a lot of goodwill between the union and company. A little over a year after it began operations in Australia (in August 2015), the company gained notoriety when it sent mobile phone texts to approximately 100 workers late at night informing them that they had been made redundant with immediate effect. That very quickly provoked the creation of an industrial action “community protest” camp, with banners and barbecues and an employee picket, right in front of the gates to the ports. Even students from the local university took part in the picketing. The company, meanwhile, deployed a string of security guards to block the access roads.
Stevedoring companies in Australia have long had troubled industrial relations with their workers. That history includes lock-outs, strikes, industrial action of other kinds, employers chasing “wharfies” (dock workers) off the docks with Rottweiler guard dogs, workers literally camped in front of gates, managers being flown in as strike-breaking workers by helicopter, ex-soldiers trained in Dubai as strike-breaking labour, and, going far back enough in history, riots and violence.
Australia has a system of “enterprise agreements.” Workers (via their unions) and their employers can make an enterprise agreement which is basically a collective contract of employment that typically covers everyone in a given workplace.
Terms of the contract will include pay, redundancy payments, worker holidays, bonuses, allowances, consultation rights and a wide variety of other employment-related matters.
Workers collectively can vote to demand that their employer enter into an enterprise agreement. Workers – who usually appoint their union to act on their collective behalf – then enter into a series of negotiations with their employer to agree on the terms of an enterprise agreement.
Enterprise agreements typically last three or four years. Before a given enterprise agreement expires, a union and an employer will begin negotiating for a new enterprise agreement. However, when the company and the union can’t agree, or when there is a bad relationship between the two, or both, then there can be a intense industrial dispute in the form of lawfully protected strikes, lock-outs and other action.
And this is exactly what is happening now at Hutchison.
Squeezed on all sides
According to industry sources, Hutchison is in a tough place. Because of the consolidation of the maritime container shipping lines, Hutchison lacks pricing power over its customers. It is also a struggling new market entrant; with only a six percent market share after five years, it hasn’t exactly wowed the industry. Meanwhile, to make matters worse, its competitors are able to offer lower prices owing to the larger volumes they are handling. In addition, they are extracting revenue from other sources, particularly from the highly contentious practice of charging infrastructure surcharge fees to the trucking industry.
Hutchison also reportedly signed a very expensive initial enterprise agreement. For instance, Hutchison terminal workers get 12 percent superannuation contribution (an employer-given contribution to their retirement fund) because of their existing Enterprise Agreement; most other Australians only get the legislated 9.5 percent contribution. Hutchison longshoremen also only have to work 30 hours a week.
It is very difficult to calculate how much a longshoreman is paid because the pay package can vary according to whether the employee is a trainee or apprentice, the grade of employee (there are seven grades) and then there are extra payments for overtime, penalty rates (for working on public holidays, Saturdays and so on). Industry sources indicate that Australian dock workers make good wages – but it is difficult to confirm. Some media sources have indicated that wharfies can achieve a six-figure salary.
And the problem for the company is that, once it has signed up to an expensive enterprise agreement, the Maritime Union – or, indeed, any union – would be loathe to allow a reduction in pay, terms and conditions.
Hutchison is in a tough place – it cannot charge more to its customers or other suppliers; it does not have enough market share to generate large amounts of revenue; it is faced with high – and likely to increase – labour costs and its competitors can offer lower prices.
“How does Hutchison compete?” Peter Anderson of the Victorian Transport Association, an industry trucking body, says to FreightWaves. “It can’t compete with competitors on price. It needs to cut costs and renegotiate its enterprise agreement. They need to hold firm – but they’ll buckle [otherwise] they’ll lose all their customers. They’ve got a question: ‘do I force my hand now, or later? Do I die now, or die tomorrow?’ The alternative is to tackle their labour costs or they will close their doors. But the union fails to recognise that Hutchison needs to make money. If it were me, I’d be thinking, ‘I can’t trade insolvent’. All the union will do is get people thrown out of work. The MUA are just meat-heads. And you can quote me on that.”
FreightWaves sought the input of the Maritime Union of Australia for this article; however no one answered the telephone or returned calls.