Only a member of the socialist Left could suggest ‘fixing the dollar temporarily’. China holds the Yuan down artificially to aid exports, but look at the result – sloppy manufacturing, unsafe food products. The Left-wing PM Paul Keating floated the dollar, rightly; so where what does that say about Tristan Ewins.

SPC’s inefficiency has nothing to do with the ‘high’ dollar. They have the backing of a huge parent company – one of that foreign lot that try to suck money out of Australian tax payers just like General Motors and Holden.

The Government has done the correct – the only sensible thing – by refusing to put OUR money into an inefficient, greedy enterprise. All Australian taxpayers can do, if they care about the problem, is BUY AUSTRALIAN. But, of course, they don’t always wish to do that because, in general, Australian products carry higher prices than imports.

So, it would be down right stupid to prop up a company that will continue to charge more than people are prepared to pay!

As for SPC workers being on “below” average wages: piffle! That comment merely shows a socialist's complete lack of understanding about ‘averages’ to add to his, and other Left-wingers’ ignorance of business and money matters – the reason why Australia was brought to its knees by Labor with its handouts to all and sundry from the taxpayer purse.

A few brief points:

a) How do you make a connection between a fixed exchange rate and product quality?

b) Has it occurred to you that a co-operative could forsake dividends, and that combined with a flatter management structure could make SPC-Ardmona MORE competitive?

c) What about dumping?

d) What about food security, and a growing population (and hence a growing market) both locally and globally?

The author says...A nation which cannot feed itself is dependent upon other nations for this most basic of needs. And as Australia's population grows domestic demand will grow – providing new opportunities

And there in lies the problem, our population is too small for a multi national like CCA to survive on in-house sales.

....All this is better than letting strategic industries 'wither and die' without any plan for the future.

Ar yes, but just what is their plans for the future. Hopefully not just sitting back and relying on a never ending hand out, especially when profits leave our shores.

....SPC workers receive in the vicinity of $50,000 a year

Yes well, we all know what a furphy the average wage is, as it considers all wages when deciding on a figure, which is just that, a figure.

What needs to be examined is the type of work performed, pitted against industry award rates fir such work, then one can determine if they are under paid or over paid as it is pointless gauging them against the average wage as this figure is irrelevant.

While I am not opposed to government assistance, there needs to be some very strict guidelines.

1. The business must be able to demonstrate a medium to long term return to profit and, that those profits can't be simply taken off shore.

2. There also needs to be provision that in the event that OS companies pull the pin, that the asset is passed on to the Australian government, at nil cost, so at least they have the option of taking on the business with a view towards providing employment for locals simply because the multi national decided the profits were too low.

Remembering of cause that unlike a business, governments have the luxury of only have to run on a cost recovery basis, at worst.

Failure to do at lease these is just a continuation of the labor mentality of a tax payer funded gravy train.

I don't have a problem with the idea that SPC-Ardmona be run as a cooperative.

I do believe however that the government has no part to play in such an endeavour - the business either survives and thrives on its own merits, or it doesn't.

The reason (I suspect) that CCA is showing no interest in supporting its modernization plans is that they do not provide a path to long-term profitability. Ergo, any nationalization or partial nationalization will have to provide financial support on an ongoing basis.

Which is the flaw in Mr Ewins argument: nobody seems to believe that the industry can survive without being a drain on someone's purse, either CCA's or ours.

I prefer it not to be ours.

If the large, profitable company CCA is not prepared to further invest in one of it's own businesses why should the tax payers do it?
If the unions are so concerned let them raise the money and take a stake in the business.

Further, SPC's demise started well before the dollar started to soar.

The problem is more one of demand. I very, very, rarely buy canned fruit. Tomatoes, yes, but that is about all. When I was a child we often had canned fruit as desert. Fresh fruit was very seasonal and not always available at a reasonable price. Times have changed and SPC needs to change with them.

Pericles argues that SPC-Ardmona cannot survive without being 'a drain on the public purse'.

But I am suggesting a low interest loan which will ultimately be repaid; Alongside a public co-investment -which is distinct from a 'handout'.

I am also arguing that SPC could be more competitive over the long term because dividends would be diverted into making the company more competitive; And money would be saved as a consequence of a flatter management structure.

The alternative is maybe 6000 jobs going in Shepparton and the surrounding area - with a big hit to the government (and hence us) re: tax revenue and the welfare bill.

BTW I am certain that the financial resources available to the ACTU are negligible when compared to the resources available to corporate Australia and the Federal Government. I'd estimate total affiliation fees to the ALP from unions to be perhaps a few million, for instance. (and maybe not even that) Compared with Gina Rinehart who is worth about $20 billion on her own.... That's one person (Rinehart) compared with a movement which organises almost 2 million Australian workers. (ie: note the discrepancy in financial resources, and the consequences for democracy)

Unions generally need to dedicate their funds to their core mission of organising workers, bargaining over wages and conditions, and contributing to civil society as a broader social movement.

I believe the co-operative structure is the only hope for... Pretty much everything, really (QANTAS, Holden, Ford...).
I also don't have a problem with governments providing low interest loans to well structured businesses -provided of course they can come up with a realistic business plan, clearly showing how they will repay the loan, which should be secured by the shareholders.
I see no reason why such loans couldn't be made over long terms, say 50 years. Long term contracts may help overcome the 'swings and roundabouts' of changing governments (keep the bastards honest).
I suspect however, the problem is largely about size. When companies get “too big to be allowed to fail” like CCA, they really need to diversify and constantly expand, to cover their own inherent incompetence (Peter Principle) and the inevitable decrease in economies of scale.
What we're seeing all over the world is the gradual failure of infrastructure, brought about by shareholders demanding short term returns, and popularly elected governments trying to remain popular. I suspect CCA was depending on a Labor Government handling their infrastructure expenses for them.
Smaller co-ops would be better funded (or assisted) by local governments who after all, would be the major beneficiaries of local investment.

Should government be using the taxes it takes compulsorily from me to subsidise the subsidiary of a large global company? That truly sucks: socialised losses and capitalist profits.

If the union movement wants to grease the palm of a global they have the millions they themselves tax from workers. OK unions, your claimed profitable business to go. That $25million is peanuts to Big Union, but a lot to a pensioner who cannot afford those products anyway and is reduced to window shopping in the shopping aisle.

Is it true that those workers can get nine weeks ARL a year? NJo matter, Big Union knows how to run the shop and Big Union has an investment there for its taking any day of the week. So go for it!

The whining Left can be your shareholders. There are many of them.

A thing which many seem to overlook is the SPC market.
Who buys the products?. Why?
It's food - admittedly a neccessity, but there is huge competition from other suppliers of foodstuff.
As a consumer with limited discretionary spending, I want a product that's good quality, readily available and I want it at the cheapest price.
There are ways that SPC can compete with foreign imports - hold the quality but lower the price to make the product more attractive financially, or increase sales to the extent where overseas markets can be served thus amortising production and distribution costs.
Level playing fields only apply if you want to play in the first place, so don't try artificial national image-building.

Me, I am breaking out the Vacola bottling outfit, polishing up the EK sedan & waiting to see where this all goes. WE (Straylyuns) haven't had a proper Aussie manufacturing industry for over 30 yrs, unions, Labor, multi nats, & snake oil salesmen AKA Liberal/CLP have all had their input...us silly buggers let it all happen under our noses. Bring back the Ostrakos Vote I say!

Ponder,

Well said and that could be a fruitful line of inquiry for this thread.

I do voluntary work and many are aged, living independent lifestyles. Even those who planned and made the sacrifices to provide for later are now skint and doing it hard. Ramped up Council rates and user pays make the old poor very fast.

There is not a single person I meet in my voluntary work who wouldn't like to eat more fruit and vegetables, and they prefer local produce. The price of particular foods, (say) fresh and canned is not inelastic. Many people on pensions, on fixed incomes and low-income earners do without the foods that are good for them and they want to buy because the price is out of their reach. They cannot shop in the way of the comfortable middle class 'Progressive' experts that hold forth on OLO and in the media, doubtlessly quaffing their 'organic' skinny latte coffee as they do so.

The simple reality is that many foods that were regarded as 'essential' and were cheap by our parents are now perceived as luxuries by millions of consumers. Take the students who live near me, who are devastated that the Qld government, specifically that fool of a Transport Minister, Scott Emerson MP, [of Segway fame!] has overnight removed their transport assistance. Sly - his new guidelines exclude the great majority of present recipients. The extra $40+ a week to use public transport for PT work and lectures attendances has to come from somewhere. Any wonder that noodle sales are skyrocketing, canned Aussie fruit stays on the shelves and a cheap can of imported pineapple is a treat?

Maybe union heavies could live like a student, a low income earner, pensioner or self-funded retiree for a while to understand how the other half live.

I love reading nevertrustwhatiwrite's posts their so full World net daily talking points. Reality don't live in his house.

The government needs to make a call about what industries it believes we must have in austrlain and except that they are likely going to have to provide support for them. the reality is there is little in Australia that is not done elsewhere better.

government funding of the movie industry anyone.

Fixing the dollar may help to protect some manufacturers but it will create a raft of other problems. It will also remove the main method by which the real income gains from the terms of trade shift have been distributed to the wider community – through lower prices for consumer goods.

Food security is a red herring. Australia will continue to produce far more food than it consumes; it will just no longer produce tinned fruit – which, as sparkyq says, few of us want any more. The land will be used to grow thing people actually want.

The multiplier is also widely misused in the economic case for industry assistance. Yes, a dollar of spending may generate jobs and incomes beyond the industry that is supported – assuming there is a high level of unemployment and under-used capital (otherwise, the jobs ‘created” arejust shuffled from one use to another). Bu that dollar has to come from somewhere, and if it comes from taxes on more productive industries, the net effect will be fewer jobs and lower incomes.

The Abbot government does indeed have no interventionist policy to support “sunrise” industries. That is one point in its favour

Tristan Ewins,

1. A fixed exchange rate can only be fixed by the government, and, as is clear in China, workers don’t have to be as careful. You are the one suggesting the high dollar should be ‘fixed’, and that’s just more government interference.

2. ‘Could’ being the operative word. Once a greedy worker, always a greedy worker no matter what you call the organisation. SPC should have a flatter management system now, if that would really make a difference.

3. What about dumping, indeed. No dumping – better for SPC you think? No. They would still be doing what they have been doing perhaps even worse with no competition. There’s a lot of talk about anti-dumping, but can you really see Australian politicians stopping China, or any other country in the global economy dumping?

4. Food security rests, first and foremost, on the backs of farmers who are continually ripped-off by the likes of SPC. Farmers have to do it tough; so can processors.

It’s clear that you know nothing about economics or business, Tristan. You say that a “low interest loan which will ultimately be repaid”. Oh, yes? You simply cannot be sure of that –what about the car companies who have left or are leaving. Do you really belief that our weak politicians will get those loans back? At the moment, this government cannot afford to loan out taxpayers’ money; and, certainly not at low interest. That’s down to the Labor Party. Much of the problem with Australian businesses is Labor’s outrageous use of taxpayers’ money on corporate welfare, and 'make-work' projects.

And this co-investment idea is nonsense. Governments, which don’t seem to be able manage to do the jobs that they are supposed to do, have no business investing public money in areas they know nothing about. The best governments can do is review the tax system, cut the red tape hindering many enterprises, cut costs and CURB THEIR OWN SPENDING of money that belongs to the public. Big government will be the death of private enterprise in this country.

Doesn't change the numbers much, Mr Ewins.

>>Pericles argues that SPC-Ardmona cannot survive without being 'a drain on the public purse'. But I am suggesting a low interest loan which will ultimately be repaid; Alongside a public co-investment -which is distinct from a 'handout'.<<

If it were possible to put SPC-Ardmona onto a profitable footing with a cash injection, the Board of CCA would have done so with alacrity. Why am I so sure of this? Simply because the costs of closing down are themselves significant from the company's viewpoint, and would have been factored in with the cost of capital, availability of low-cost loans etc, before any decision was reached to cast the company adrift.

And if you can't see your way to make a dollar, it doesn't matter how long the loan repayment stretches, it will always be out of reach.

>>I am also arguing that SPC could be more competitive over the long term because dividends would be diverted into making the company more competitive; And money would be saved as a consequence of a flatter management structure.<<

Before you have dividends to re-invest, you need profits. And any management - and parent company - would have examined the flat-management option before cutting the cord. It's what they do.

It is very easy to waffle on about alternative strategies. But you are making the extremely arrogant assumption that nobody else has thought of them, examined them in detail, and made decisions based upon their knowledge and experience.

On the evidence of your article and subsequent posts, I would surmise that you have never actually worked in a business.

Would I be right?

Pericles; You are suggesting that SPC-Ardmona simply cannot be made profitable.

That's not apparently what CCA thinks; They believe that with the government co-investment that it could well be made profitable. Otherwise they wouldn't have made the suggestion.

But there are certain issues getting in the way; Like dumping for instance; and the drive for CCA not only to have profitable businesses - but to maximise share value and dividends... (that means less profitable parts of the business get culled even if they make a reasonable profit) By this reckoning an enterprise can be profitable - 'but not profitable enough'.

From the public perspective you have to ask yourself what the cost for us would be of NOT doing anything... And that is lower tax receipts, a higher welfare bill, and massive social displacement in Shepparton.

But look at it this way; If SPC goes co-op again it can devote the dividends towards repaying the govt. Meanwhile the workers and producers etc can continue as beforehand with the existing wage structure and conditions... Over the long term - once the loan was repaid - then there would be a big boost to their competitiveness as well.

You also ignore the issue of food security - and whether or not the high dollar will last long term.

You seem to think managing a business is a precondition for having an informed opinion. That just sounds like a poor excuse to dismiss the arguments of your opponents so you don't have to meaningfully engage - or heaven forbid admit that you - or Abbott - sometimes don't get everything right.

Barnaby Joyce certainly didn't look thrilled with the SPC-Ardmona decision either... I guess you'd be dismissing his opinion - and Sharmon Stone's opinion - as well?

“Mr Davis (CCA CEO) remained among Australia's best-paid executives last year, earning a total pay package worth $7.8 million. His salary was $2.3 million. The rest of his package came from superannuation and performance-related incentive payments and other perks.”

Yep, it's all the fault of those greedy workers.

If we used the highly credible Mondragon Co-operative as a template;

“Specific pay ratios were set in 1955 and held until the 1980s. The person at the top
could earn no more than six times the salary of the person at the bottom of the
cooperative. If the boss wanted a raise, everyone got a raise. In the United States, in
1996, the ratio is about 115 to 1 in major corporations. Recently, the ratios at
Mondragon have increased to 15 to 1, because the rest of Spain has recognized how
good Mondragon's managers are and lures them away with higher salaries.”

Notice the Mondragon model prioritises employment over profits, yet still manages to be highly profitable and competitive.

Tristan Ewins, "That's not apparently what CCA thinks; They believe that with the government co-investment that it could well be made profitable. Otherwise they wouldn't have made the suggestion."

Sounds very much like their risk and our (taxpayers') money. It is just as likely that it would be the first of more dips into the trough of taxpayers' $$. Other globals have done the same ie employed the poker tactic of encouraging the opponent to keep on bidding on the fall of cards. Start with a low amount and keep on going until the pot is big and the opponent well and truly committed.

We should heed the lesson from the car manufacturer who promised ten more years to Julia Gillard, but having taken the taxpayers' $$, departed anyhow.

This would likely be the first cash injection with many more to come. The Navajo Indians say, "Upon the rider discovering his horse is dead, he should immediately dismount". However if 'Big Union' wants to stump up the tosh and manage as effectively as they say they can, they are welcome to have a go themselves.

Thanks Grim - agree absolutely re: the merits of Mondragon!;

On the beach - the difference is that I am talking about a genuine co-investment rather than a 'handout'.

Tristan Ewins,

I accept that you are genuine in what you are suggesting and Grim's idea also has its appeal. It takes an ideal world though.

However, for once I would like to see union bosses -mighty mouths like Paul Howes who are all care and no responsibility, but get to decide who is the (Labor)PM- put their 'Big Union' money and claimed expertise into running a cooperative.

Howes was the 'expert' who rubbished family farms, saying that 'ma and pa farms had to end' and demanded restructuring. Easy for Howes to say, while he is guaranteed his excessive remuneration package and travel, and retirement benefits also paid for by union members.

It seems there are many who run with the hare and hunt with the hounds.

Tristan
What objections do you have to complete government control and direction of all production? Why not collectivise agriculture?

looks like Socialism & Capitalism are heading for the edge of the cliff. Good I say if it helps waking some of the greedy morons up.
Let's hope it results in the reintroduction of sense.

Tristan
What objections do you have to complete government control and direction of all production? Why not collectivise agriculture.?

On the contrary, Mr Ewins, I am one hundred percent sure that the business can be made profitable.

>>Pericles; You are suggesting that SPC-Ardmona simply cannot be made profitable.<<

However, we are discussing this in the context of i) a business owned by CCA, who have their own measurement of profitability, more than likely based upon the cost of capital, and ii) a business that has over a period of time created expectations in terms of employment and remuneration.

Avenues to profitability might include such actions as reducing the amount they pay to producers, reducing the amount they pay their staff (including management, of course), reducing their staffing levels, reducing prices so that they could sell a greater volume etc. etc. And undoubtedly one such measure could be to turn it into a cooperative venture with producers and workers.

I would buy the company in a heartbeat, and make the necessary changes myself, if I was given a free hand to do so by the various parties. But you can bet your bottom rouble that there would immediately appear a long line of rent-seekers, staking their own claims to special treatment in such a turnaround project, and in the process ensuring that it would end up in exactly the same state in which you find it today.

Unprofitable.

>>That's not apparently what CCA thinks; They believe that with the government co-investment that it could well be made profitable. Otherwise they wouldn't have made the suggestion.<<

That's just nonsense. If they believed that an investment would make a difference, they would have made it themselves. Ask yourself, what is the difference between $25 million provided by the government, and $25 million provided from your own resources?

Answer: if you can get some sucker to put a buck in your tin, why wouldn't you?

But it wouldn't change the intrinsic profitability of the end result of that investment, one iota.

The reality is that most businesses here now are on thin ice as the return on Investements/ risk is fast becoming not worthwhile.

If you take a fruit shop or butcher shop for example, most today still often have to sell their products at prices they were getting ten years ago, with one factor being the ever constant, ruthless push by the major retailers who, under successive govermentS competition policy, have been allowed to grow and prosper literally unchecked.

Same applies for large businesses trying to compete with cheap imports, resulting in cheaper products offered by major retailers.

The other problem is that too many consumers chase the cheapest price possible on necessities.

Now while many do this out of neccecity, others think nothing of paying $45 per liter for milk, in the form of a coffee from the local shop.

We are our own worst enimies and we are now seeing the results of our actions.

Thinking we can save industries by simply injecting funds is laughable.

Valid points, Pericles.
I would certainly agree that for the gumment to hand over dough to CCA would be a suckers game.
The question is, should the Gov offer support -perhaps low interest/no interest loans for the existing management and workers to buy out CCA? Given of course a realistic business plan and sound constitution.
I strongly believe the answer to both greedy unions and greedy executives is the democratic framework, and Mondragon offers a tried and proven template, which could also be applied to certain car manufacturers and an airline.

If people can't differentiate between profit & anticipated profit than we might as well chuck it all in now. If there is a profit then there's no need to get worried. If that profit is not as much as they'd have hoped than that's just stiff. pay yourselves less & the profits will go up.

I should have said pay yourselves what you're worth & the profits will increase.

Indi, what do you consider is a fair salary for a company CEO such as SPC.

When thinking of that, keep in mind just how many workers they have to control, then, compare them to say Hugh Jackman, a man who earns about sixty million for making just one three month movie.

It funny how so many people dispize the pay of a CEO, yet think nothing of a movie stars earnings.

Just curious!

If there were a genuine socialising component in the Australian economy we might have institutions like a people's bank, like the original idea of the Commonwealth Bank, that could evaluate proposals like this - in a rigorous way - and potentially make investment loans of this sort.

The thing is that the whole economic structure seems largely organised on capitalist lines. So there are few socialist structures which might facilitate this sort of thing.

I agree with the writer's general line that socialism needs to be rethought. Its like anything its experimented with and its weaknesses need to be revealed and learned from. I would not want to see a repeat of the Stalinist type model of a command economy with a centralised decision making model and bureaucracy. Mind you when I was in university that was regarded as "state monopoly capitalism".

But I find the capitalist model that increasingly channels most of the wealth and power into the hands of the 1% leaving the 80% with a trickled-down 20% unattractive too.

This is just a comment. I don't think of myself as economically literate enough to argue with economists. But I do know that there are trained economists on the more socialist side of the debate.

An interesting, if unoriginal, concept frankbr

>>...we might have institutions like a people's bank, like the original idea of the Commonwealth Bank, that could evaluate proposals like this - in a rigorous way - and potentially make investment loans of this sort.<<

If such a vehicle were to evaluate such proposals, what criteria would you - the taxpayer - require them to apply in their decision-making process? Would they be more, or less, financially rigorous than the tests applied by their commercial counterparts? If the former, you would not get an SPC investment/loan past the gatekeeper. If the latter, how would you publicly justify and defend that extra laxity, and concomitant risk, in their approach to using your money?

If the same level of rigour is applied to your situation by both the "people's bank" and the commercial lenders, and passes muster, then your project would presumably be open to competitive bids from all concerned, in order to get the best rate. So, for your "people's bank" to win the business, they would have to undercut the commercial lenders, thereby increasing their exposure to losses. How would you justify to the public such a cavalier application of their funds?

But you don't really have to answer that. Because any such institution would be so heavily biased towards furthering its own political ends, actual fiscal reality would not be allowed to intrude upon the decision process.

Even further, the amount of red tape that government departments apply to any form of financing will be grandfathered into the "people's bank" processes and procedures. By the time you got dollar one in the bank account, the business will have long since gone to the wall.

Incidentally, many countries already have a Peoples Bank. Here's one of them:

http://www.pbc.gov.cn/

Jardine; To start I don't claim to be any authority on agriculture by a very, very long shot. But here goes. I will try...

A problem for the farmers is uncertainty - with drought and the high dollar; and to keep farms viable farmers need support from the state... Now there was a time when a Marxist would say we should allow 'small scale' farms to go to the wall, with the end product of collectivised agriculture. This was seen as progress. Though against that there's the power of tradition with families staying on the land... And there's a need to help isolated rural communities to 'get connected' - for instance with high speed broadband... A compromise response to the collectivisation argument could be farmers going into *partnership* with agricultural labour co-ops... And with state insurance paid for to provide for the contingency of drought etc...

Anyway - If the Liberals want to go all 'laissez faire' on the Nationals and let farmers go to the wall perhaps its time the Nationals re-thought the whole Coalition thing - and did a deal with Labor that protects BOTH farmers and workers - and the most vulnerable and welfare-dependent as well....

There are a lot of interesting comments of this thread, however many ignore the reality of the modern world. Ask a farmer what his grandfather got for a bushel of wheat, then ask him what he is getting. Ask him what his grandfathers cost of production was, and compare this to his. If he is sensible he will flog the lot and move to the gold coast.

Farmers have been told to diversify, get bigger etc until they are sick of it. New crops are the saviour, than a blight on the landscape.

If the farm has any debt at all it is always under threat. When you go under the guy next door will club together with a few others and buy the land. Unfortunately he will then have to buy new bigger machines to harvest the crop, and get a return his grandfather would be horrified with.

Just curious!
rehctub,
I don't know how much the CEO of SPC is earning but judging by the situation SPC is in he shouldn't be getting much at all but I guess he does. I know some Qld Loacal Council CEO's are on 300 grand + benefits. That to my thinking is immoral considering they do nothing of any real tangible value. The mayor of 3000 soul town earning as much as the mayor of Sydney or Melbourne does not smell right either but earn that much he does. The reason why Australia is gradually falling into disrepair is because we have no discipline in any field nor any integrity. The people who perform important tasks get paid a pittance yet the hyped-up positions which are of no relevance whatsoever are paid small fortunes.
Australia could be a truly grand country again if only those who call themselves Australian behaved like Australians.

Hugh Jackmann only earns that much because people obviously want him to get that much, I guarantee you although I think he's a likeable character I don't think I have ever spent a single Cent on him. So, he's not getting rich from people like myself. Movie stars would very quickly earn a lot less if we had real education & reduced the number of sheeple.