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Holden hits back on pay claims

Payback: Holden workers will get lump-sum payments as reward for sacrifices in the GFC.

“Conservative” pay deal will help secure Holden’s future beyond 2020: Devereux

14 Feb 2012

GM HOLDEN has defended as “reasonable” and “conservative” its latest three-year pay offer to 3000 of its workers, lashing out at claims of excessive reward at a time when it is negotiating taxpayer co-investment in its hard-pressed Australian manufacturing operations while also trimming its factory workforce.

Holden executives dismissed a newspaper report that workers would get pay rises of up to 22.3 per cent over the next three years of a fresh enterprise bargaining agreement (EBA), saying that under the terms of the offer, base pay would rise three per cent a year for three years, with up to a further two per cent a year if Holden achieved a range of targets in sales, productivity and profitability.

As well, workers would get fixed lump-sum payments – $1750 in the first year and $1000 in the second and third years – as compensation for hardship endured by factory workers who were placed on half shifts when car sales plunged in the global financial crisis.

Although the three-year EBA is still up to a month away from being finalised with the workforce – covering about 75 per cent of the payroll – angry Holden chiefs hastily organised a phone conference with the media to hose to down the report that stirred up a hornet’s nest of public and political reaction.

Holden chairman and managing director Mike Devereux described as “innovative and creative” the new variable pay rate that depended on Holden success in a range of Holden business targets.

 center imageLeft: Holden chairman and managing director Mike Devereux and executive director of human resources Mark Polglaze.

“So when we win on those items, we pay the workers more money,” he said. “When we don’t win on those items, we don’t pay the workers more money.

“So the whole team is being measured exactly the same way, from the factory site to the executive suite. It is a pretty egalitarian approach to compensation.”

Mr Devereux said rather than derail Holden’s manufacturing future in Australia as claimed by critics, the pay deal helped to secure it.

“What we are trying to do here is that we want everybody thinking for the long term on Holden’s viability and success, not for just the next couple of years of this agreement but past 2020,” he said.

“We have been talking about that for the last year or so of my time here – how do we secure the long-term future for this industry, and this deal actually goes a long way towards doing that by aligning everybody to wanting to have the most efficient and most productive use of each hour of labour, and how many hours of labour do we apply to vehicles, to make those vehicles, how great those vehicles are, the quality of those vehicles, and how the marketplace reacts to those cars in the form of market share.”

Mr Devereux said the “very intelligently crafted deal” rewarded workers for company success, “but also protects our structural cost by not having them increase forever at fixed rates”.

Holden and its GM parent company have been in talks since early January with the federal government over a Holden request for federal co-investment to help secure future Australian-made models at its Elizabeth plant in South Australia.

Like Toyota Australia, Holden’s export business has been severely impacted by the strength of the Australian dollar, making locally made products uncompetitive in overseas markets such as the Middle East and United States.

Last month, Holden announced it would delete one of the two shifts at Elizabeth, reducing its workforce by natural attrition while moving most of the afternoon shift on to the morning shift.

At Toyota, 350 jobs – 10 per cent of its Altona factory workforce – is also set to face the chop.

In recent talks at the Detroit motor show, senior executives of Holden’s parent company, GM, reportedly told Australian and South Australian government representatives that closing the Elizabeth factory was an option.

Mr Devereux dismissed claims that the new pay rises flew in the face of requests for taxpayer support, saying the negotiations with the federal government concerned investment well into the future, from the second half of the decade to beyond 2020, and not in the next three years of the latest agreement.

GM Holden executive director – human resources Mark Polglaze yesterday described the new three per cent per year base pay rise arrangement as conservative, saying it was “sub average national wage rises, sub CPI (consumer price index) increases and sub auto industry comparison”.

Toyota Australia late last year reached agreement with its factory workers for a 13 per cent pay rise over 42 months after a long-running dispute, including rolling strikes.

Mr Polglaze said the additional variable pay component for Holden employees had a ceiling of two per cent, and was only paid if Holden achieved business metrics related to financial performance, quality of its vehicles and factory productivity.

“It aligns the rewards that we provide to our employees with all the employees across the business, in an innovative approach to award-covered bargaining,” he said.

“It certainly is the first time in recent memory that we have had an approach that includes variable pay, particularly for our hourly workers, and (it is) something that we are frankly pretty proud of.

“Overall, I think we have been responsible we have been innovative in a deal that is really going to help us move forward in a structured way.”

Mr Polglaze dismissed a suggestion that the leaking of EBA details would derail the pay deal before it was concluded, saying the unions also had been upset with the way the workers’ pay deal had been portrayed.

He said the lump-sum payments were just reward for workers who had lost between 25 per cent and 43 per cent of their pay for up to 18 months out of the previous EBA period, with many voluntarily giving up work hours to share the diminished work load at the factory in the GFC.

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