SPC Ardmona decision - ideology before people's livelihoods

Vanguard March 2014 p. 2
Duncan B.

The Shepparton Preserving Company was established by growers in the early 1900’s to process locally grown fruit from the Goulburn Valley. In 1917 SPC incorporated as an unlisted public company, while Ardmona started in 1921.

In 2002 SPC and Ardmona merged to become SPC Ardmona. In 2004 SPC Ardmona bought the Henry Jones IXL jam company.

In 2005 Coca Cola Amatil (CCA), acquired SPC Ardmona for $650 million, as a result of a decision taken by CCA in 2004 to move into food manufacturing.

Times have been tough for many years for SPC Ardmona. As early as 1990, SPC reported a $25 million loss. Job losses and pay cuts for the workers helped get the company back in the black.

In addition there has been the 10 years of drought, the rising Australian dollar, the change of consumer preferences away from tinned fruit, the increase in imports of canned foods and the growth of supermarket house brands.

Under the first year of CCA ownership, SPC benefited from the synergies achieved in putting the businesses together. However, SPC Ardmona has only posted one very good full year result in the past eight years. In other years it has been a drain on CCA’s earnings.

SPC’s profits declined in 2010 and CCA copped $110 million in restructuring costs to get rid of old stock and surplus workers. In 2012 CCA wrote down the value of SPC by $48 million.

Restructuring and redundancies failed to stop the rot. This led CCA to seek a $25 million innovation grant from the Federal Government to allow a move away from canned products to plastic packaging and to develop new products.

The Federal Government money would have been matched by $25 million from the Victorian Government and $90 million from CCA’s own pocket.

However the Abbott government rejected CCA’s application. Abbott said, “This is a government that will make sure that the restructuring that some Australian businesses need, some Australian sectors need, is led by business as it should be.”

A commentator in the Weekly Times (5 Feb) summed up the reasons for the Government’s decision. He wrote “It’s basically an ideological decision. No longer should the tax-payer bail out profitable multinational businesses – especially those where the government thinks the union has too much influence.”

He went on to say, “But the PM’s decision puts the entire Goulburn Valley on the line. Everyone from factory workers, growers, pickers, truckies to those in retail.”

The loss of SPC would devastate the Goulburn Valley. SPC Ardmona adds $165 million to the region. 3000 direct and indirect jobs are at stake. About 50% of the region’s fruit growers would go out of business if SPC Ardmona closed.

Shepparton cannot afford to lose SPC Ardmona. The population of Shepparton is 30,000, with 62,000 in the greater Shepparton area. Nine percent of the population is unemployed, and a quarter of the population is on benefits.

There are 70 empty shops in the shopping centre. There are many small businesses such as maintenance contractors relying on SPC Ardmona.

When rejecting SPC Ardmona’s application, Abbott also attacked SPC’s workplace agreement with the Australian Manufacturing Workers Union. Abbott and Treasurer Joe Hockey tried to paint the wages and conditions of SPC Ardmona’s workers as ‘extra-ordinary” and “over-generous.”

SPC Ardmona itself released information to refute Abbott’s claims.

Even Dr. Sharman Stone, the Liberal Federal member for Murray which takes in Shepparton, very bravely condemned Abbott and Hockey’s attacks on the SPC workers in no uncertain terms, saying that their attacks on the workers “were not the truth.” No doubt she will suffer for her honesty at the hands of Abbott and the Liberal Party machine the next time pre-selection comes around.

Coca Cola Amatil is faced with a decision whether to use its own balance sheet to fix SPC Ardmona or to sell the company. A decision is expected on February 18.

In a late development, the Victorian Government announced on Feb 13 that it will put up $22 million as an investment subject to CCA meeting certain conditions. SPC Ardmona will have to continue to employ 500 people for 5 years or will have to pay the money back.

Australia cannot afford to lose another important sector of manufacturing industry. We are facing the loss of Ford, GMH and Toyota in the car industry. The Alcoa aluminium plant and the Shell refinery in Geelong (Vic) are both likely to close.

The workers in these industries and those who rely on them such as small business people are at the mercy of the multinational owners of these companies.

When they are making profits everything is great, when the profits stop, they shut up shop and throw the workers and others on the scrap heap.

An independent Australia is needed where production will be for the benefit of the people and not the profits of the multinationals.