The Case of SPC Ardmona
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Added on 2020-03-28
The Case of SPC Ardmona
Added on 2020-03-28
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1Balancing Competing Interests: The Case of SPC Ardmonaby Course: Tutor: University:Department: 25th September 2017
2Balancing Competing Interests: The Case of SPC Ardmona1. INTRODUCTIONBACKGROUND SPC Ardmona is an Australian based company traded as SPC, Shepparton PreservingCompany.It is currently owned by parent company coca cola Amatil that specialises in large-scale fruit packaging. It is the largest current producer of premium packaged fruits andvegetables in Australia, accounted for processing 150,000 tons of fresh fruit and tomatoesfrom its proud supporter of Goulburn Valley community. However challenging economicconditions had led to the contraction in output of SPCA. It started in 1990 when Australianfood industry had faced a decade of significant difficulties. Firstly due to consumer change intaste and preferences to freshly produced fruits and secondly due to increase in overseascompetition (Hiscock, 2015).1.1 DISPUTE Many other factors affected SPC such as its export market share in Canada who switched itsimport to the United States from America. High-interest rates and recession worsened thesituation leading to the closure of most businesses in the sector resulting in a whopping lossof 2.6 million dollars by SPC. Such a huge loss discouraged the stakeholders leading to theelection of a new board. The incoming board contracted KPMG Peat Marwick to review itsaffairs and make necessary recommendations which were to be acted upon by themanagement. As a result, some of the actions taken by the company included reducingpermanent workforce, the closure of two off-shot loss-making business, termination of jointventure business and pay –less and re-staffing. The banks were still not contented with suchinitiatives and therefore demanded additional security in granting loans. This called for the
3implementation of further actions to cut the production cost. Some of the other plans taken ofwhich both the management and the union disputed over include weekly pay cuts foremployees, roistered day offs, high pay on weekends. This had altered the industrial awardsand had created an issue among the unions and government.2. Environmental factors that contributed to the dispute2.1 Economic factorsThe economic condition of Australia wasn’t good; it was going through a deep recessionwhere people were losing about 600 jobs a day, and 80% of Victorians were registering forunemployment benefits (Ball, 2014). The other factor was the market demand shift towardsfresh farm produce and the infiltration of cheap Chinese imports. China being an internationalleader agri-business, exports its canned foods which are relatively inexpensive in Australiawhose food industry has not developed in food canning.A group called “friends of SPC” was formed with the Former mayor, Jeremy Gaylord as itshead with the mindset that closure of SPC could have an adverse effect on Shepparton. It was the largest business in Shepparton contribution 40$ million into the local economywhereas employing around 300 permanent and 1000 seasonal workers in the peak timebetween January and April.2.2 Political FactorsThe political lobbying that led to the government’s rejection of the plea by SPC Ardmona forfinancial support of $25 million was a step that far much overshadowed the broader issue thataffected the food industry of Australia.
4The state opposition ( the coalition of the national and liberal party) indicated their supportfor SPC contrary to the government. Furthermore, there was support from various laborgroup. The trade union also was politicized in its quest for the justice of the employeesalthough its effect was not much felt like that of the state (Bailey and Peetz, 2015). SPCcommissioned a survey where 88% of the public supported the company and employee innegotiation deal to keep the company alive and secure the jobs.2.3 Social Factors Some of the recommendations by the KPMG affected both the permanent and casualemployees of SPC. These included reducing permanent workforce, the closure of two off-shot loss-making business, termination of joint venture business and pay –less and re-staffing,weekly pay cuts for employees, roistered day off, and high pay on weekends. Some of thesedecisions contravened the some of the provisions of the Fair Work Commission of Australiathus sparking industrial strikes and petitions (Stewart, 2011).3. Stakeholders in the dispute 3.1 The employerThe SPC management acted on the recommendations from the KPMG and the prospectivebanks that were to offer to fund. The recommendations majorly included the reduction oflabor costs by disengaging 25 percent of the permanent employees through voluntarydismissal and normal attrition. Also, the offshoot businesses that made losses were shutdown, termination of the contract with the canned food processing company, and thereduction of fruit prices from farmers . The new management recruited a new managingdirector who replaced all managers except the personnel manager thus coming up with a newmanagement team. This move was preferable because the new management consented to the
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