SPC Ardmona Case Study: Government Disputes & Employment Relations

This case study examines the dispute between SPC Ardmona and the government in 2013, focusing on allegations of overgenerosity towards employees and the refusal of a $25 million assistance request. The analysis details claims made by the government regarding employee benefits such as allowances, sick leave, and redundancy provisions, juxtaposed with factual data provided by SPC Ardmona. The study highlights the impact of a high Australian dollar and cheap imports on the company's economic struggles, referencing the Coca-Cola Amatil 2016 annual report. Ultimately, the case study concludes that economic factors, rather than labor costs, were the primary drivers of SPC Ardmona's financial difficulties, supported by findings from a productivity commission report. Desklib offers a range of resources, including similar case studies and solved assignments, to aid students in their academic pursuits.

Running Head: EMPLOYMENT RELATIONS
Employment relations
October 11
2018

EMPLOYMENT RELATIONS 1
Table of Contents
Dispute.......................................................................................................................................2
Background factors....................................................................................................................4
References..................................................................................................................................6

EMPLOYMENT RELATIONS 2
Dispute
In 2013, SPS Ardmona involved in the big controversy and this controversy mainly occurred
between the government and management of the organization. In this, prime minister
imposed allegations on the SPC that organization is over generous towards their employees,
and this is the big reason for the issues faced by the organization. This controversy occurs
when the federal government refused the request made by the company to assist them in the
economic struggle with a grand of $25 million. In response to this request, ACCI’s acting
chief economist Burchell Wilson said that the government is not liable for providing
subsidies to businesses. In this context, the government made some claims for the over-
generosity of a company for its employees and that was contradicted by the company by
providing facts stating actual workplace environment for workers. Prime Minister Mr. Abbott
claimed that the issues faced by the businesses are suffering over generosity for its
employees. In the same context, Mr. Prime Minister stated that the government does not
improve the economic performance of any business in any terms. In addition, he said that the
bonus should be on businesses restructuring or improving their profitability. He concluded by
saying that the statement made by the government is bit wrong and the same need to be
refuted with the facts. Mr. Wilson said that this spending restrains from the federal
government which are in the favor of its economy even if such acts are painful for business
entities.
In response to such claims Treasurer of the company Mr. Joe Hockey describes the
agreement astounding and stated that even after this employment minister Mr. Eric Abetz
says that the company is being over generous. In addition to this response, company’s
managing director, Peter Kelly released a statement of two-pages setting out the comparison

EMPLOYMENT RELATIONS 3
of claims made by the government and the actual ground facts about the workplace
environmental conditions within the company.
In this dispute, Mr. Abbott declared that the EBA of the company is too generous for the sick
leaves and redundancy provisions for the employees. In this case, several claims were made
by the federal government and responded with facts by the management of the company.
Some of the claims made by the government and facts provided in the two-page statement
released by managing director Peter Kelly are as mentioned in the discussion.
Employees working for SPC Ardmona are getting over the generous allowance, but in reality,
in 2013, the total allowance that was paid to the production staff was $116,467, which was
less than 0.1% of the cost of goods of business in that year. The government claimed that a
generous wet allowance of 58 cents per hour for cleaners but as per actual data reports in
2013, company paid zero ($0.00) to the cleaners as their generous allowance. As per the
decision made by the government, it is claimed that the employees working there get a paid
leave of nine weeks. On the ground level, Employees working in SPC Ardmona get only 20
days paid leave in a year. Also, the decision claims for a five-day long weekend in Melbourne
for the employees but reality speaks that the Production staff of the company accrues roasted
days off (RDO) during the year for which company requires them to not to take this off
during the peak season. Instead of peak season, the company allows them to take this off in
the starting of November, which is observed as an optimum time for the plant shutdown. This
is the time for a company for maintenance of plant to prepare it for the canning season. Also,
RDOs are not any additional leaves. The government says that that the loading or shift
penalties for the employees are above the award but Penalties of the company are similar to
the other industries of Australia, commonly 20% for afternoon shift and 30% for night shifts
in many of the Australian EBAs. Also, the government claims that the company cashed out

EMPLOYMENT RELATIONS 4
the sick leaves of employees every year and in reality, this was removed from the EBA in
2012 (Long, and Griffiths, 2014).
In addition to this statement stating the claims and facts, Mr. Kelly emphasized that the
company was assessing the work practices for months and made significant improvements as
well in its production efficiency.
Background factors
In the response to all the claims made by the government, Mr. Kelly emphasized that the
major reason behind all the difficulties that the company facing is the sustained high
Australian dollar. He states that it is only the high sustained Australian dollar that is leading
to the flood of cheap imported fruit canned fruits which are overtaking the supermarket and
creating these economic difficulties to the company. This Flooded cheap import of canned
fruits is responsible for the decimation of the company’s export market (Dean, and Farley,
2014).
The company said that in the facts analyzed by the productivity commission, reason behind
all the difficulties that the company is struggling from are not the labor costs and workers’
allowances. But it is the economic factors that created this economic storm leading to several
damages to the company and created all these difficulties to the company (Garnett, 2014).
High Australian dollar made a direct impact on international market affecting its import and
export practices. This made the import practices cheaper that made a direct benefit to the
import products and the competitive market took this advantage to enhance their business. In
this practice, the company had to struggle for the sale of company products manufacture in

EMPLOYMENT RELATIONS 5
the Shepparton plant. Low sales impacted the overall profit of the company in that year which
was further affected by the non-impairment charges made by the government (NEWS, 2014).
In its annual report published by the parental company, Coca-Cola Amatil 2016, the company
states that SPC Ardmona has recorded a modest underlying loss in relation to its profitability.
Although, the company assisted the promotional activities to reduce the rate of share decline,
it was not proved sufficient to offset the continued competition in the price market (CCA,
2017). The company states that the statutory decrease in the net profit is due to the non-
impairment charges made on the company. This declines all the claims that were made by the
government to refuse the requested grant of the company. The company was struggling with
its economic crisis due to all the factors that the company has provided in its statement as
well as in its annual report and made a genuine grant from the federal government. In
response to the claims made by the government on company's generosity for its workers that
was a clear insult of workers of the company. Report of the productivity commission, made
by analysing all the facts and figures and it concluded that the claims do not match with the
factors analysed by the commission. This report supported the company and directed the loss
or economic crisis of the company as a result of all the factors that were affecting the
economic environment in the competitive market (Cullen, 2014).

EMPLOYMENT RELATIONS 6
References
Long, W., and Griffiths, E., (2014) SPC Ardmona denies its too generous to workers,
[online]. Available from:
http://www.abc.net.au/news/rural/2014-02-04/nrn-spc-pay-claims/5237440 [Accessed on
11/10/2018].
NEWS, (2014) Business group backs SPC decision, slams corporate welfare, [online].
Available from: http://www.abc.net.au/news/2014-02-03/business-group-praises-
government-on-spc-ardmona-decision/5235198 [Accessed on 11/10/2018].
CCA, (2017) making progress together: annual report 2016, [online]. Available from:
https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2017/2016-Annual-
Report.ashx [Accessed on 11/10/2018].
FWC, (2013) Decision: SPC ARDMONA OPERATIONS SHEPPARTON/MOOROOPNA
(FOOD PRESERVERS) ENTERPRISE AGREEMENT 2012, Melbourne: Commission
Gregory.
Cullen, S., (2014) SPC Ardmona jobs in doubt after Federal Government denies $25 million
assistance request, [online]. Available from: http://www.abc.net.au/news/2014-01-30/spc-
ardmona-funding-announcement/5227610 [Accessed on 11/10/2018].
Dean, J., and Farley, E., (2014) Shock in Shepparton over SPC decision, [online]. Available
from: http://www.abc.net.au/news/rural/2014-01-30/nrn-shepp-reacts-to-spc/5228994
[Accessed on 11/10/2018].

EMPLOYMENT RELATIONS 7
Garnett, O., (2014) Opposition says Abbott got the balance wrong on SPC, [online].
Available from: http://www.abc.net.au/news/rural/2014-01-31/fitzgibbon-thinks-abbott-got-
it-wrong-on-spc/5231508 [Accessed on 11/10/2018]