Manufacturers within the building sector claim they face a unique problem. Alan Johnson reports on their prospects of finally overcoming this obstacle.
Manufacturers who supply the building and construction industries face the same macro-economic headwinds as other Australian manufacturers. However, they also have to overcome incomparable trade union impediments to productivity including unrestrained industrial disruptions, unproductive labour entitlements and a work calendar distinctive for its focus on excessive days of tools down – not up, coupled with anti-competitive penalty rates.
However Mike Kane, CEO & Managing Director of Boral Limited, is optimistic the present Royal Commission into Trade Union Governance and Corruption is recognising these impediments to real productivity improvements and will deal with them.
Speaking at CMIC14 (Cement Concrete Aggregate Australia Conference) in September, Kane highlighted how unproductive labour entitlements in the construction industry are costing Boral’s concrete business; and costing other suppliers in the industry too.
“In Melbourne, for example, there are 26 rostered days off (RDOs) per year, where the Construction, Forestry, Mining and Energy Union (CFMEU) controlled sites shut down. Most other sites are operational because they have built-in flexibility with their RDOs – if they have them – to ensure the entire job doesn’t shut down,” he said.
“But because all work stops on the CFMEU controlled sites, demand from our affected metro concrete plants is approximately 50% less on RDOs than other Mondays. However, this only impacts us when Boral is allowed onto these sites.”
Kane described this as an enforced inefficiency, at affected operations, of over 5% per annum compared to what is possible, with weekend lock downs impacting in a similar way.
He explained that there are five lockdown weekends each year outside the Easter and Christmas breaks, with demand on the Friday before and Tuesday after the lock down 50% less than normal Fridays and Tuesdays.
“This is the equivalent of an enforced inefficiency at Boral’s affected operations of over 2% in any year compared to what is possible.” he said.
Kane also pointed to the eight additional days taken after 4 January and between Easter and the following weekend in an average year, resulting in an enforced inefficiency of a further 2% compared to what’s possible.
“All up, our concrete operations in metro Melbourne are almost 10% less efficient than they would otherwise be because of the extra days that the major construction industry doesn’t work,” he said.
He says the embedded practices in Melbourne are worse than other cities but still in Sydney there are 14 RDOs per year where the CFMEU controlled sites shut down because everyone is taking a coordinated rostered day off.
This, Kane said, is the equivalent of an enforced inefficiency at Boral’s concrete operations of between 2 and 3% per annum compared to what’s possible.
To accelerate change, he said the construction industry needs to recognise what has been happening.
“[It is] a situation where rogue elements of a powerful union have used their industrial muscle, intimidation and threats to exercise absolute control over entire projects,” Kane said.
“We have a duty to ensure our industry is productive, so it survives and prospers – for the benefit of all Australians.
“A fully productive construction industry is necessary to the overall health of the Australian economy and to rising standards of living. Without ongoing reform, Australians will always be worse off compared to what is possible.”