In 2017, the car manufacturing industry in Australia will fall silent. What will happen to the thousands of workers who have spent their lives in its service and how has HR faced the challenge of managing and retraining?
The smell of oil and the tang of welding hang in the air in the body shop at the Holden car manufacturing plant at Elizabeth, Adelaide. I’m expecting noise but the space is whisper quiet, even without the simple earplugs I’m obliged to wear.
Moving into one section of the paint shop, there’s an added eeriness when you realise that we are the only humans who will pass through this area today – the process is entirely automated.
The robots have had their place for a while, but it is the people who are the beating heart of the car industry – and always have been. Dotted around the factory are giant photos of vintage Holdens, together with their owners who also work on the production line – their proud faces proof, if any were needed, of the fierce loyalty that the car workers have for the product and the brand.
But in 2017, the Holden factory, along with its counterparts at Toyota, will fall silent. Ford was the first to close its doors at the Broadmeadows and Geelong manufacturing plants in October 2016. Never before in Australia – perhaps never before in the world – has an entire industry gone from operational to closure in such a short time.
The debate over whether the federal government should have continued to prop up the car industry will rumble on. But for now, the focus is all about the car workers and what will happen to them and the communities they inhabit.
For those with people responsibilities working in the industry, managing the redundancy and transition process has been immense. And while others in HR may never face a task of this magnitude, there are lessons to be learnt about how you steer a large workforce towards a new reality – and the technical and psychological hurdles that have to be faced along the way.
For some employees, it will involve moving to new roles in the same company; for others, retraining will lead to new jobs in completely new industries; many will need to adjust to retirement sooner than they expected and for a significant proportion, it will mean redundancy and an uncertain future.
Case study 1: Ford
The Ford retrenchments began in May 2013 when it announced 1,200 redundancies with the closure of its factories in Victoria.
In preparation, the federal government allocated $10m – which Ford matched – to subsidise training and employ job consultants, generating more than 1,300 job commitments in Broadmeadows and Geelong where the company’s plants closed. So that when, after 90 years of production, the last Ford rolled off the production line in October 2016, many of the staff were ‘job ready’; 160 manufacturing team members began work the following Monday in new roles at Ford.
Dave Smith, national secretary of Australian Manufacturing Workers Union (AMWU), says Ford had very good levels of participation among workers in its initiatives around retraining and redeployment.
“People needed to navigate themselves through the modern job market and they got a lot of help preparing resumes and practising interview skills from Centrelink employees who were brought in.”
However in a survey conducted just before the Ford closure, only 13 per cent of employees had begun looking for a new job. But Smith says redeployment in other areas of the business and retraining has meant “a lot of them will be in new jobs already”. Ford claims that investment has generated more job commitments than the number of people being made redundant.
“A key theme across all the plants that closed was putting our people first,” says Wes Sherwood, director of Ford Australia’s communications team. “If there’s any silver lining, it’s that the Australian economy is strong, and unemployment is low.”
The jobs that Ford’s car workers have been retraining for range from truck drivers, warehousing and logistics, to less obvious examples, such as nursing and operating theatre technicians, right through to a couple of pilots and a train driver. As long as a staff member could find a bona fide course, and demonstrate commitment, financial help with course fees up to $1000 has been available for every employee.
And although manufacturing has ended, Ford will continue its extensive product development operations in Australia.
“Contrary to reports, more than 60 per cent of our suppliers will continue working for Ford, post-closure,” says Sherwood. “We have to make parts for the next 10 years for the Falcon, plus we created new opportunities with our thriving product development group designing and engineering vehicles locally.”
Ford has 2,000 people working across the design and engineering facilities in Broadmeadows research centre and the 950-hectare test track in Lara outside Geelong. Alongside traditional clay models, designers have been creating early prototypes using virtual technology, helping speed development time while allowing them to collaborate with company designers around the world.
One success story to come out of this is Carbon Revolution, which employs 100 people in Geelong, several of whom are former Ford workers. The company grew out of Ford’s research into lightweight materials, in collaboration with Deakin University, and recently began production of the world’s first mass-produced carbon-fibre wheels for the Shelby GT350R performance car in the US.
Another 19 suppliers have also won new business with the company’s global operations after Ford hosted a supplier fair and trade missions to the US and China.
“Ford is actually investing $300 million in R&D in Australia this year alone – and our partnership with Carbon Revolution is an example of what can happen as we continue to innovate here,” says Ford President and CEO, Graeme Whickman.
Case study 2: Holden:
While rumours of car plant closures had been in circulation for some time at Holden, the announcements when they came in 2013 and 2014 were devastating for many employees, and needed to be handled with great sensitivity.
Ashley Winnett, executive director of human resources for Holden in Australia says that although Holden’s headquarters are in Port Melbourne, Victoria, “we decided to make the announcement in Adelaide. It’s where the business started, and it’s essential to the DNA of the company”.
For Winnett and his HR team, the announcement was especially poignant, as they had spent the previous six months working closely with unions to negotiate a new enterprise agreement that ultimately came to naught.
In the immediate aftermath, Holden ensured that appropriate support services were in place through its Employment Assistance Program (EAP) with people who were already familiar to staff. Holden chairman, Mike Devereux, then spent two days going to every work group, across both sites, answering questions.
After a period, Winnett says he recovered his reason for being.
“In 2013, we had attempted to save the company. But in 2014, myself and the HR team had to face up to transitioning everyone to life outside of Holden – whether that be retirement, retraining or another job. My job has become all about successful transition.”
Holden opened its Transition Centre in 2014, as a place for their staff to access assistance and information, to help them start planning a life beyond the plant. Then, in May 2015, the first 287 employees were made redundant, 87 of them involuntarily.
“Most people made involuntarily redundant were not prepared,” says Jodie Stewart, transition centre manager. “In response we took a ‘Job Ready’ approach to assist employees market themselves to prospective employers, by creating a tailored resume, advising on writing letters, practising interview techniques, and learning how to talk about their transferable skills.”
To date, the Transition Centre has had over 15,000 visits from current and past employees.
Pride of place in the centre is the job newsboard, where staff celebrate successes by posting their name and the job they’ve secured. It reveals the diverse range of jobs that Holden workers have moved into, including parlaying their skills into innovative business ventures.
One former worker with experience in plastic fabrication has designed and built ice baths for sportsmen and women. The product has been picked up by a number of professional sports teams, and the designer travelled to the Rio Olympics, promoting the product to the world.
In August 2016, Holden held a jobs fair attended by more than 800 employees, providing an opportunity for them to connect with 41 employers with actual jobs into which many Holden employees have subsequently moved.
Other businesses are also eyeing the pool of talent at Holden. South-west Victorian civic and industry leaders are pushing for the estimated 1,000 car workers due to be made redundant in South Australia, to be redeployed across the border. The Glenelg Shire Council has partnered with the Committee for Portland and logistics company Porthaul to entice workers at Holden’s Elizabeth plant to relocate.
“We have jobs across the board really in terms of supply chain, including truck drivers,” says Greg Burgoyne, Glenelg Shire CEO.
Case study 3: Toyota
In February 2014, CEO Akio Toyoda flew in to Australia to announce that the car manufacturer would be ending production in 2017, after 54 years. A combination of the Australian dollar, the high cost of production, free trade agreements and the country’s fragmented auto markets were the reasons given for the company’s closure.
Standing in front of 2,500 workers at the plant in Altona, his speech was simulcast across all sites. Pam Riley, corporate manager in Toyota’s Human Resources division recalls: “He insisted that Toyota would not abandon its Australian employees, and would commit to assisting as much as it could, to ensure the most respectful transition possible.”
The company began by looking at federal and state government data to establish where the growth industries lay. They identified health care, construction, retail and education as key areas where their employees could find jobs.
“By March 2014, we had a framework for a transition program, and came in with a solution we call DRIVE,” says Riley. “It is a holistic program that supports end-to-end career management – it’s not just about outplacement. The focus is on ‘future proofing’ our employees by providing full sponsorship for them to either acquire new skill sets, or adapt existing ones.”
Toyota recruited and developed career consultants from within to facilitate DRIVE, supporting them to attain their certification IV in career development.
Jela Martinovic is one of Toyota’s staff delivering an upskilling program. Her advice to fellow DRIVE clients is that even if you are undecided about the next step, going in for an informal chat helps to identify potential career paths.
But for some workers, retirement has seemed the most logical option, a choice that Toyota also aims to support.
“We have a program to support employees planning for a successful retirement,” says Riley. “We see retirement as the next phase of someone’s career. It’s important to plan beyond the financial, making sure they maintain a level of satisfaction and fulfilment. For example, how will they spend those 40 hours.”
The impact of the closure of Toyota and Holden when they come will be quite different from Ford, says Dave Smith of the AMWU.
“When Ford closed it was only producing 70 or so cars. Toyota is still building 90,000 a year, so they are still quite busy.”
Being a Japanese firm, Smith says the management culture driving transition has been different.
“They’ve done some really good things and made retraining courses available, but where they have struggled is to engage the less educated people in their workforce. Toyota don’t want anything to do with the external union, only the local reps. In my view their retraining program would be better if people were working together.
Following the car closure announcements, a $155m Growth Fund was set up – as part of the Commonwealth Government’s agenda for capital investment into the impacted areas, and to support the individuals affected. Funds also came from Holden, Toyota, the Victorian and South Australian governments and included $30m from the car companies ringfenced for their employees, to train them for jobs while they are still employed.
The Commonwealth created a governance committee of representatives from Holden, Toyota and other stakeholders, appointing Terry Kennedy to be the national facilitator for the skills and retraining initiative.
“I’m here to join the dots,” says Kennedy. “Sharing what’s working well, in terms of engaging with impacted employees, to take up the services and programs on offer. Also, identifying gaps in risk, and bringing all that back to the governance committee.”
With the majority of workers located in assembly and production, one of the biggest challenges was retraining staff who only saw themselves as car workers to realise that their skills were transferable.
“We profiled their training and what the car workers actually do, and found a high level of transferable skills,” says Kennedy. “All have been well-trained in OH&S, multi-tasking, and working in teams. In fact, a lot of other firms were contacting the car companies to ask, ‘When are they coming?’ So we set up a website for potential employers to indicate opportunities as they arose, and to connect those to auto employees who are registered on the site.”
Hundreds of smaller firms employ thousands of workers to supply parts and will naturally be affected by the closures. In response to this, $20m was set aside from Commonwealth funds to help auto supply chain businesses diversify out of the domestic automotive sector. Holden extended the services of its Transition Centre to supply chain staff, and Toyota set aside $3m specifically to help supply chain workers.
Despite these efforts, Smith says that prospects for retraining and re-employment varies a lot. “Have a look at where the car plants are located. In Port Melbourne, Holden and Toyota workers have better prospects of finding a job than those working in Elizabeth and the northern suburbs of Adelaide, where there is 40 per cent youth unemployment. Holden is the largest employer in an area that is already socially disadvantaged. The whole community, built around manufacturing, feels the brunt of it.”
All the car companies will retain some presence in Australia, whether that be in sales and marketing, design, or research and development. The main assistance package to the industry, the Automotive Transformation Scheme (ATS) is likely to conclude in 2017. Some industry experts favour continuing funding until 2020/21 to give businesses within the supply chain time to diversify. The cost of the scheme they argue, will be outweighed by the cost to government of job losses and public-funded redundancies.
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