The Federated Ironworkers' Association of Australia (NSW Division) v BHP Steel Sheet & Coil Products Division Cullen J

APPLICANT Mr K Brotherson, Solicitor Blake Dawson Waldron Solicitors LEGAL REPRESENTATIVES: RESPONDENT Mr K Maher Australian Workers' Union, NSW

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: HARRISON DP Friday, 20 June 2003 MATTER NO IRC 5260 OF 2002 Notification under s130 by OneSteel Manufacturing Pty Ltd of a dispute with the Australian Workers' Union, New South Wales re manufacturing strategy.

MATTER NO IRC 2869 OF 2002 Notification under s130 by OneSteel Manufacturing Pty Ltd of a dispute with the Australian Workers' Union, New South Wales re trial procedures.

1 The notifications in these disputes were filed pursuant to s130 of the Industrial Relations Act 1996 ("the Act") advising of disputes between OneSteel Manufacturing Pty Ltd ("the company") and employees engaged at OneSteel's Newcastle Rod Mill, members of the Australian Workers' Union, New South Wales (AWU).

2 The notification in matter IRC 2869 of 2002 was filed on 20 May 2002 and first subject to compulsory conference proceedings on 23 May 2002. The notification described the dispute in the following terms: The dispute relates to employees at the Company's Newcastle Rod Mill indicating that they are unwilling to participate in proposed trials of certain revised work arrangements scheduled to commence in June 2002. The trials relate to revised pulpit arrangements in the compactor area, and furnace arrangements which will no longer require 7 day monitoring by an operator.

The employees are covered by the terms of the OneSteel Manufacturing Pty Ltd Newcastle Rod & Bar Award.

The persons affected by or involved in the dispute are The Australian Workers' Union, New South Wales and the Company.

We request that a member of the Industrial Relations Commission of New South Wales convene a compulsory conference in relation to the dispute.

3 The notification in matter IRC 5260 of 2002 was filed on 16 September 2002 and first subject to compulsory conference proceedings on 1 October 2002. The notification described the dispute in this matter in the following terms: The dispute relates to employees engaged as operators at the Company's Newcastle Rod Mill.

Since 16 August 2002 the Company has been variously meeting with employees, employee representatives and the Rod Mill Consultative Committee to discuss the Company's manufacturing strategy. The strategy is in effect a plan for the future operation of the Rod Mill, including operator requirements in areas such as training, competency levels, work practices, numbers and output.

A meeting of employees on 2 September 2002 passed a number of resolutions which effectively mean that employees are unwilling to participate in further discussions about the manufacturing strategy at this time.

The employees are covered by the terms of the OneSteel Manufacturing Pty Ltd Newcastle Rod & Bar Award. The persons affected by or involved in the dispute are The Australian Workers' Union, New South Wales and the Company.

This dispute is related to other dispute proceedings before the Commission involving proposed trials of certain revised work arrangements (IRC No 2869 of 2002). The other proceedings have been the subject of conciliation by Deputy President Harrison and were stood over generally on 3 July 2002.

It is the intention of the Company to contact the Associate to Deputy President Harrison to seek to have the proceedings in matter number 2869 of 2002 relisted for further conference. We would therefore respectfully request that this matter be allocated to Deputy President Harrison and listed at the same time as the other proceedings.

4 The matters were conveniently joined at the request of the parties on 1 October 2002 and heard concurrently in various proceedings throughout October and November 2002. On 15 November 2002 a proposal was developed for a six month trial of certain aspects of the manufacturing strategy and proceedings in Matter No IRC02/2869 were stood over. Compulsory conference proceedings continued in respect to Matter No IRC02/5260.

5 The trial arrangements were not accepted by mass meetings of employees, industrial action ensued (dealt with in Matter No IRC03/199).

6 On 3 April 2003 both matters were subject to mention, resulting in directions to bring the matters in issue to hearing on 19 and 20 May 2003.

7 Prior to commencement of Hearing on 19 May 2003 an inspection of The Company's Rod Mill at Mayfield took place. Present during the inspection were Mr K Brotherson, solicitor of Blake Dawson Waldron, Mr S Cook and Mr S O'Connor on behalf of The Company; Mr K Maher on behalf of the AWU with Mr W McGuinness, Mr D Perkins, Mr I Stevkovski, and Mr D McColm, employees of The Company.

8 On hearing Mr Brotherson appeared on behalf of The Company with Mr S Cook. Mr K Maher appeared on behalf of the AWU with Mr P Goodshaw and Mr D McColm.

9 Mr Brotherson brought evidence from Ms S O'Connor, the Newcastle Rod Mill Manager; Mr V Stavros; Mr K Grice, Rod Mill Shift Manager - A Crew; and Mr S Ewin.

10 Mr Maher brought evidence from Mr W McGuinness, Level 4 Operator and the Newcastle Rod Mill and AWU delegate; Mr I Stevkovski, Level 5 Operator at the Newcastle Rod Mill; and Mr D Perkins, also Level 4 Operator at the Newcastle Rod Mill and AWU delegate.

11 The substance of inspection involved observance of operation of the overhead crane, firstly from the workshop floor. The crane was used to pick up, traverse and empty a large bin and return it to its pit housing. There was a change of crane driver, then observation made from the crane cabin whilst Mr Perkins operated the crane. During this segment of the inspection a sample was taken involving a side pull of hot material, the relocation of roll tables, and the lifting of roll boxes from the lower level to the rolling floor. Purpose built jigs were identified which are used for the manoeuvring of particular items during the course of roll changes and maintenance activities.

12 Mr Scott O'Connor has been employed by the Company for a total of 16 years, the past two years in the position of Manufacturing Manager, Newcastle Rod Mill. Mr O'Connor deposed that the Rod Mill employs 147 direct employees, including 90 production operators, members of the AWU.

13 Mr O'Connor's evidence is that the Rod Mill produces approximately 500 thousand tons of product per annum with revenue in the order of $400 million per annum.

14 Mr O'Connor deposed that The Company has been aware for a number of years of a need to improve mill performance to meet competitive pressures and remain viable. Mr O'Connor put that to this end he and Mr John Monaghan, General Manager Manufacturing, Rod and Bar, undertook benchmarking analysis against a number of rod mills in Europe and the United States, resulting in development of the Newcastle Rod Mill Manufacturing Strategy ("the Manufacturing Strategy").

15 Mr O'Connor deposed that information available from benchmarking visits has a high level of reliability, despite the brevity of visit and natural reluctance of some manufacturers to provide commercial information.

16 It is Mr O'Connor's evidence that globally Rod Mills are primarily those manufactured and built by firms identified by him as Donnelly and Morgan. The Newcastle Mill is a Morgan mill.

17 Mr O'Connor deposed that observation of throughput, operating techniques and production methods, put with information from the Mill manufacturer and personal experience, produced a very reliable conclusion. Mr O'Connor's evidence is that he reached the conclusion that there is room for significant improvement in plant availability, productivity and commercial performance in the Newcastle Mill compared to others.

18 Mr O'Connor deposed that such improvement can be achieved without diminution of safety practices or achievements in Newcastle, which he put had an impressive record of improvement. Mr O'Connor deposed that his benchmarking investigations revealed a diversity of safety and housekeeping practices, some of which he considered commendable and others to be avoided.

19 Mr O'Connor relied upon a graphical deposition of lost time injury and medical treatment injury events from January 1994 to date (Ex 3) to found his evidence of an improving safety record.

20 Both lost time injuries and medical treatment injuries trend to zero over the period. Recent experience is two lost time injuries since January 2002 with no lost time injuries since May 2002. There have been five medical treatment injuries since January 2002.

21 Mr O'Connor's evidence is that none of these injuries are crane related, the two lost time injuries since January 2002 involve a tripping incident, and the aggravation of an existing knee injury by an employee whilst using bolt cutters in a routine function. 22 Mr O'Connor deposed that a co-operative application of the Manufacturing Strategy held potential to further improve plant safety.

23 The relevant evidence of Mr O'Connor given in cross examination by Mr Maher is found at pp 64 and 65 of transcript in the following terms: "… that's the whole point of having training groups, and getting people trained to be highly capable, so that we can reduce the risk, wherever possible - not only through engineering things out, but through having people correctly trained and capable. … … We operate with people - they are not machines, they are people - they can think for themselves, they are trained and educated, and the idea is to maximise that wherever possible, so that people can make the right decisions, for the given situation."

24 Mr O'Connor's evidence is that the Newcastle Rod Mill will confront the need for significant investment within five years to adapt to market demand for higher tolerance product and the development of colder rolling practices. Mr O'Connor deposed that without achieving improvements identified in the Manufacturing Strategy, it is unlikely that the necessary capital will be forthcoming to meet that need.

25 The principle issues arising from the Manufacturing Strategy subject to these proceedings are: 1. The removal of a dedicated crane driver position, thus reducing production manning from 26 to 25 per shift, the overhead crane to be operated by employees on shift with appropriate qualifications and experience as required.

2. A program of skill enhancement to be achieved by the establishment of a training team. 3. The engagement of supplementary labour by fixed term hire or labour hire to fill long term vacancies or allow training.

26 Mr O'Connor deposed that these are initial steps which will make significant contribution in assisting the company to match the performance of competitors. He deposed that all parties need to be attuned to the concept of continuous improvement, in particular to a change in philosophy from peak demand manning, to steady state manning. Mr O'Connor described "steady state manning" as sufficient personnel to meet normal operating circumstances as compared to "peak load manning" which attempts to have sufficient personnel to cover every eventuality that might occur.

27 The relevant evidence of Mr O'Connor is found at points 11 and 12 of his statement of evidence (exhibit 2) in the following terms: 11. The current crewing levels of the Newcastle Rod Mill are in my opinion set to meet peak requirements for labour. This means that in normal operating circumstances there is labour which is less then fully utilised. For example, the overhead crane driver position which the Company seeks to remove is generally, during normal operations, only required to perform between 2 and 3 hours work per shift on day shift, with even less work on afternoon and night shifts.

12. There will of course be occasions where there is a need for the overhead crane to be operated for greater periods during a shift. An example of this might typically be a down day. However, at the present time these occur approximately once per fortnight. Another example would be a roughing roll change which also occurs about once per fortnight. It would be the Company's intention if successful in removing the permanent overhead crane driver position, that in circumstances such as down days or roughing roll changes that an employee from the shift crew would be assigned for the required period to the overhead crane. Alternatively, if a shift crew member is not available an employee with the appropriate tickets and skill would be brought in on overtime to cover that work.

28 Mr O'Connor's evidence is that in the latter part of 2002, two documented trials were undertaken, one in the present circumstances of a dedicated crane driver; and another in the manner contended for in these proceedings.

29 Mr O'Connor's evidence is that in the trial of crane manning without a dedicated driver there were no recorded delays attributable to crane operation, and in his analysis nothing was identified which would prevent implementation of the proposed crew reduction.

30 Mr O'Connor emphasised the need for an improved training structure and the use of supplementary labour, deposing that there are currently vacant positions arising from long term absence which could be filled immediately.

31 It is Mr O'Connor's evidence that the use of supplementary labour by either fixed term hire or utilisation of employees of a labour hire firm is necessary to ensure the skills enhancement program is undertaken in a timely and effective manner.

32 Mr O'Connor's evidence is supported by the Manufacturing Strategy discussion paper (attach. A to ex. 1) to which are appended historical figures of conversion costs, Rod Mill results 1993 to 2002, and detailing manning arrangements. During the course of his evidence Mr O'Connor emphasised that there would be no overall reduction in employees from abolition of the crane driver position; and that where shift workers were required to take part in concentrated training on day work, there would be no reduction in wages or shift penalties paid. Mr O'Connor was also unequivocal in his evidence that the Manufacturing Strategy did not involve a replacement of Company employees by labour hire.

33 The evidence of Mr O'Connor is supported by that of Mr Vassilos Stavros, currently employed as Shift Manager, C crew, at the Rod Mill. Mr Stavros has been employed by the company for some 24 years.

34 Mr Stavros deposed that on a typical production shift there would be an average of two or less hours work on the afternoon and night shifts for the overhead crane driver; and up to three to four hours work on the day shift.

35 Mr Stavros deposed that the information arising from the trials referred to by Mr O'Connor revealed no impediment to Management's proposal to remove the dedicated crane driver from shift.

36 It is Mr Stavros' evidence that there are currently eight operators on C crew with the necessary qualifications and experience to competently operate the crane.

37 Mr Kevin Grice is employed as Shift Manager, A crew, a position he has occupied for approximately two years. Mr Grice has been employed by the company for some 12 years.

38 Mr Grice's evidence confirms that of Mr O'Connor and Stavros. Mr Grice deposed that there are five employees on A Shift with the necessary qualifications and experience to operate the crane competently.

39 Mr Stuart Ewin is employed by the company as Operations Engineer, Newcastle Rod Mill, and has held this position for approximately two and half years.

40 Mr Ewin's evidence is that he is responsible for assessing training needs for operators and designing appropriate training packages and implementation.

41 At points 4, 5, 6 and 7 of his statement of evidence (exhibit 4) Mr Ewin states: 4. The Company sees training of operators as a critical part of its efforts to lift the productivity and performance of the Rod Mill. I am aware that training and the development and utilisation of skills, including flexibility in the range of tasks and jobs which operators may perform, are key components of the Company's Manufacturing Strategy for the Rod Mill.

5. There is a 5 level operator structure in place at the Rod Mill. This structure has been in place for some years, and the majority of employees are classified as Operator 3. A copy of the current training matrix for the 5 levels of operators is annexed and marked "A".

6. The Company has been concerned for some time that many operators have either not received the training applicable to their classification or that the training they have received needs to be updated. As part of the Company's focus on training, a firm of training consultants have been engaged to assist in the assessment of training needs. The work of this consultant suggests that approximately 60% of operators require some form of training. It also appears that at least 15% of operators have not undertaken all the requisite training for their current classification level.

7. In particular, the Company believes that training of operators can significantly contribute to lifting the performance of the Rod Mill in respect of safety, operational availability of the Rod Mill and product quality. For example, a single percentage movement in operational availability of the Rod Mill equates to approximately $625,000 per annum. Similarly, variation in process affects the quality of product. Operator proficiency is a significant contributor to process variation. The Company estimates that variation in operating process costs the Company approximately $4 million per year.

42 Mr Ewin deposed that in order to control quality a stable production process is required, supported by "process control thinking", and in this regard the level of skill and knowledge of operators is critical; consequently the more effort applied to training and understanding of the process the more stable production with both commercial and safety benefits.

43 It is Mr Ewin's evidence that it is expected that at any one time the training team will consist of three to four operators rotating through this group as necessary to match skills with training needs. Mr Ewin deposed that the minimum period of time in the training team would be one week, and the most likely maximum three months, during which time employees would retain shift earnings and be available for overtime in accordance with the established overtime system.

44 Mr Ewin emphasised the need for fixed term or labour hire employees to relieve operators assigned to the training team in order to facilitate this initiative.

45 The evidence of Mr McGuinness is that he had been employed by The Company for nearly 27 years and is currently AWU Sub-Branch President in the Newcastle Rod and Bar Mills. Mr McGuinness is currently engaged as an Operator Level 4 in the Rod Mill.

46 Mr McGuinness deposed that he had been involved in discussions concerning the Manufacturing Strategy proposed by The Company and had come to the conclusion that the proposal to reduce the number of production operators would lead to more manual handling injuries. Mr McGuinness further deposed that a reduction in the number of shift positions would negatively impact on The Company's capacity to rehabilitate injured employees by limiting the number of rehabilitation positions having regard to a smaller number of operators undertaking a wider range of tasks.

47 Mr McGuinness further deposed that a reduced number of operators would increase the difficulty in obtaining experience and competency for safe and effective operations. In particular, Mr McGuinness was of the view that it is necessary to have experienced crane drivers instruct and educate employees to undertake that role.

48 Mr McGuinness deposed that he perceived difficulties in the training team approach arising from a lack of resources and held concerns that the use of short term labour would eventually lead to a reduction of full time employment at the Rod Mill. Mr McGuinness predicated this latter conclusion on comments he attributed to Mr O'Connor during discussions in 2002 that Mr O'Connor would prefer to use labour hire "to handle peak workloads or upturns in areas".

49 During the course of cross examination by Mr Brotherson, Mr McGuinness was taken to the preamble to the OneSteel Manufacturing Wage Settlement 2001 (Ex 11). This preamble states: This settlement has been struck recognising that: · Whilst secured by a strong balance sheet, OneSteel continues to face significant challenges to lift business returns to acceptable levels · The need for improved business performance and the competitive environment in which OneSteel operates mean that making ongoing workplace improvement is a must and not something that occurs only during wage or EBA negotiations · OneSteel's workforce and their representative unions are committed to ensuring the long term viability of the business.

The improvements to wages and conditions contained in this settlement attempt to find a fair balance between maintaining market competitive employment conditions and the ability of the business to sustain additional labour costs.

50 Mr Brotherson also took Mr McGuinness to the terms of the Productivity Payment Scheme (PPS) found in Appendix 2 of the OneSteel Manufacturing Pty Ltd Newcastle Rod & Bar Award ("the Award") [2002] 335 IG 178. The relevant aspect relied upon by Mr Brotherson is clause 2, Purpose of the Agreement, thereof (335 IG at 220): 2. Purpose of the Agreement

The parties acknowledge that the continued viability of the OneSteel Manufacturing Rod & Bar Mills is dependent on achieving significant gains in Business Performance. Hence, maintenance of existing benefits and the introduction of additional payments can only be justified and financially supported through constantly improving business performance.

Therefore it is the purpose of the Agreement to assist in achieving the critical business plan objectives. To this end, the parties commit themselves to co-operating in measures to achieve lower operating costs, improved quality, improved delivery performance and increased productivity, all of which will contribute to improved business performance and job security. Recognise the contribution of employees to improved performance as this occurs.

51 Mr McGuinness acknowledged commitment to the preamble, to the Award and to the PPS.

52 Mr McGuinness was further taken to the accident and injuries records contained in exhibit 3. Mr McGuinness was unable to sustain objections voiced by him, being obliged to concede that the medical treatment injuries did not arise from crane operation. Mr McGuinness was further obliged to concede that enhanced training is in the interest of all concerned and carries with it benefits in job satisfaction, safety and job security.

53 Mr Brotherson took Mr McGuinness to the arrangements existing with maintenance unions for the use of contractors and supplementary labour, suggesting that similar arrangements could be made with the AWU. To reinforce the acceptance of casual employees in manufacturing establishments by an agreed code Mr Brotherson referred Mr McGuinness to the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award 2001 (2002) 335 IG 371 ("the Kellog's Award") (Ex 12).

54 Mr McGuinness acknowledged the fact of various employment arrangements, however, maintained exception to this approach at OneSteel, expressing caution as to what he described as unsettling effects. Mr McGuinees maintains his underlying concern over casualisation of the workforce.

55 The evidence of Mr Stevkovski is that he has been employed by The Company in the Newcastle Rod Mill for some 18 years and is currently engaged as a Level 5 Production Operator, primarily required to work as a Roll Hand ensuring that the high quality bar is produced prior to moving to the next step of the production process.

56 Mr Stevkoski deposed that prior to late 2002 Mr Nikolovski was the dedicated crane driver on shift and was, on Mr Stevkoski's observation, particularly competent. Subject to Mr Nikolovski's retirement the crane driving has been shared week about by Mr Breeze and Mr Hession, whom he also regards as experienced and competent drivers.

57 Mr Stevkoski deposed that on occasions, primarily on overtime on other shifts, he has worked with "inexperienced drivers", on which occasions he put that the manual workload is much greater, mental alertness is greater and the risk of injury is higher.

58 In commenting on the recent trial Mr Stevkoski deposed that he suffered an injury due to heavy manual handling as a direct consequence of the crane driver being removed to attend to other work. Mr Stevkoski deposed that on withdrawal of the crane driver to another task he continued to work on his own, using a four pound hammer to remove a wedge plate and then removing by hand a roll guide weighing in excess of 20 kgs. His evidence is that while lowering the roll guide to the workshop floor, he suffered a back injury.

59 In cross examination Mr Stevkoski conceded that he should not have continued with the task. There was also criticism of supervision present at the time who should have properly prevented or restrained Mr Stevkoski from continuing with the task having regard to the weight of the roll guide. The evidence of Messrs O'Connor, Grice and Ewin went to this incident, all concluding that Mr Stevkoski should have waited on assistance. Mr Ewin put that a manual handling course provided to employees supported this approach. Management concede that this incident indicates that further training and education of employees and supervisors is necessary.

60 The evidence of Mr Perkins is that he is currently employed as an Operator Level 4 in the Rod Mill and has been a production operator for some 13 years. Mr Perkins has been a crane driver for seven years and has been the dedicated crane driver on his shift.

61 Mr Perkins' evidence is that the workload during the course of the shift determines how much time an operator has to be in the crane, asserting that the use of an average figure is misleading when attempting to demonstrate Mill crane utilisation.

62 Mr Perkins' evidence is that he has experienced shifts where the crane is used minimally and others where the crane is required "all shift". Mr Perkins deposed that high crane use is experienced during the course of roll and section changes and on down days.

63 Mr Perkins relied upon his experience as a crane driver to ground his deposition that a much safer work environment for operators is created when an experienced driver is in the crane.

64 Mr Perkins asserted that the quality of training of crane drivers will be further diminished, comparing the example of his own training wherein he received direct tuition from an experienced driver for the first three months and on-ground observation for a further three months, against the present practice which he contends is less rigorous and effective.

65 Mr Perkins identified the most difficult and demanding crane tasks as roll changes; the removal of stands; the removal of billets from the furnace; and the removal of cobbles, adding that the removal of cobbles and billets from the furnace and taking of samples requires a side pull of hot metal which he deposed should only be carried out by a very experienced driver.

66 In cross examination Mr Perkins was obliged to concede support for continuous improvement. He acknowledged that the nature of continuous improvement involved review of production costs, plant availability, skill level, proficiency of operators, and doing things differently than they had been done in the past.

67 Mr Perkins accepted the obligation to support the company in the process of continuous improvement, recognising that flow on benefits of job security and ability to provide conditions of employment can emanate from improved business performance.

68 In putting these acknowledgements Mr Perkins put that, whilst he could not directly question the benchmarking information detailed in the Manufacturing Strategy by Mr O'Connor, he had no basis of personal experience to accept them. Mr Perkins remained opposed to the conclusions reached by Mr O'Connor.

69 Mr Perkins objected to the day worker proposal for the training team, putting that if he were forced to do day work on a regular basis he would be unable to meet family commitments and would be obliged to resign from his employment.

70 Mr Brotherson relied upon the evidence of Mr O'Connor to support his submission that a compelling business case had been made out for removal of the dedicated crane driver on shift, the establishment of a training team, and the use of term hire or labour hire to facilitate training and fill long term absences. Mr Brotherson noted that this arbitration follows a period of exhaustive consultation and conciliation which allowed an opportunity for close examination of all issues. Mr Brotherson noted the scepticism of AWU witnesses to the benchmarking information detailed in the Manufacturing Strategy, submitting that denial of these facts was a peril to the interests of the employees.

71 Mr Brotherson further relied on the evidence of Mr O'Connor of the need to increase plant availability and to attend to issues of cost control with some vigilance as a necessary aspect of attracting required investment for future operations.

72 Mr Brotherson relied upon the evidence of Messrs Stavros and Grice to support his argument that there are sufficient skilled crane drivers on each shift to undertake that task as and when required, and to reinforce experience from recent trials that the amount of crane driving work on each shift, whilst varying with circumstances, was in the order of two to three hours per day absent unusual events.

73 Mr Brotherson relied upon the commitment to continuous improvement made by the AWU found in the Wages Settlement Agreement and the PPS appended to the Award, to support his submission of an existing obligation to co-operation.

74 Mr Brotherson relied upon a selection of five decided cases which, in his submission, set out the principles to be considered. These are The Federated Ironworkers' Association of Australia (NSW Division) v BHP Steel Sheet & Coil Products Division, Cullen J [1992] NSWIRComm 5; John Lysaght (Australia) Limited v Automotive, Metals and Engineering Union and the Federated Ironworkers' Association of Australia, New South Wales Division, Hungerford J [1994] NSWIRComm 31; John Lysaght (Australia) Limited - Port Kembla - Slit Recoil Line - Rates of Pay Award, Hungerford J [1995] NSWIRComm 18; Notification under Section 130 by OneSteel Trading Limited of a Dispute with The Australian Workers' Union, New South Wales and Others re proposed contracting out of non-core work, Harrison DP [2001] NSWIRComm 337; Australian Federated Union of Locomotive Enginemen and State Rail Authority of New South Wales, Moore and Williams JJ and Johnson C295 CAR 188.

75 The principles are clearly enunciated by his Honour Hungerford J in John Lysaght (Australia) Limited - Port Kembla - Slit Recoil Line - Rates of Pay Award in the following terms: The way in which issues of this nature are assessed by the Commission, involving as they do potential intervention in the employer's operation and management of its business, requires the Commission not to assume the role of the employer. Rather, the approach is, and this is of longstanding and established principle, to attend to whether the employer's action imposes unfair or unreasonable demands on employees, not infrequently referred to as industrial injustice, or where safety is involved. Relevant cases in the steel industry in that respect decided by the Commission were cited in my recent decision in John Lysaght (Australia) Limited - Port Kembla - Slit Recoil Line - Rates of Pay Award[1]. However, it is appropriate to repeat the observations of the High Court in Re Cram; ex parte N.S.W. Colliery Proprietors' Association Limited[2]: Many management decisions, once viewed as the sole prerogative of management, are not correctly seen as directly affecting the relationship of employer and employee and constituting an "industrial matter". A dispute about the level of manning is a good example. It has a direct impact on the work to be done by employees; it affects the volume of work to be performed by each employee and the conditions in which he performs his work. So also with the mode of recruitment of the workforce. The competence and reliability of the workforce has a direct impact on the conditions of work, notably as they relate to occupational health and observance of safety standards. Employees, as well as management, have a legitimate interest in both of these matters. … These considerations indicate that the objection voiced by O'Connor J. in Clancy to the regulation and control of business enterprises by industrial tribunals is not a matter that goes to the jurisdiction of the tribunals. Rather it is an argument why an industrial tribunal should exercise caution before it makes an award in settlement of a dispute where that award amounts to a substantial interference with the autonomy of management to decide how the business enterprise shall be efficiently conducted.

The significance of the reasoning in Cram, as to the need for caution before a decision is made amounting to a substantial interference with the autonomy of management in efficiently conducting a business enterprise, is to be seen in the observation of their Honours that employees, as well as management, have a "legitimate interest" in such matters as concern the work to be done by employees, the volume of work and the conditions in which the work is performed. I think that the Agreement here is a most powerful demonstration of that "legitimate interest". The point may be illustrated by what Cullen J. said in The Federated Ironworkers' Association of Australia (NSW Division) and BHP Steel Sheet & Coil Products Division[3] as to the use by the Company of contractors in light of the effect on the industrial relationship of the former Sheet & Coil Products, Port Kembla, Steel Industry Development Agreement (SIDA), the forerunner to the present Agreement, as follows[4] : In other words, the company is not entitled, pursuant to the two agreements which it has made with the unions, to implement a policy of using contractors purely on policy grounds. It is bound, as are the unions, by the terms of the Agreements made which, in my opinion, have to be read together. SIDA is in more general terms, but gives particular emphasis to the need to improve business competitiveness. However, the mechanisms have been established pursuant to the JCC to enable the unions to participate and, if necessary, to influence management decision making.

And, later, his Honour concluded[5]: Further reduction of staff in the Mechanical Services Department should not take place except by agreement until the issues concerning transfers and training of employees have been finally determined between the parties. This involves joint consultation involving the company taking fully into account any counter proposals by the unions. The use of contractors during that time will necessarily be limited to requirements beyond the capability of the present staff of 55 employees.

I respectfully agree with his Honour's comments and approach .

76 Mr Brotherson submitted that the evidence established that the reduction in the number of shift positions by abolition of the dedicated crane driver will not result in any individual employee being made redundant.

77 Mr Brotherson relied upon the safety record, in particular the achievements since May 2002 in which there have been only five medical treatment injuries, none involving crane operations, and no lost time injuries, to rebut any assertion that removal of the dedicated crane driver should be prohibited on safety considerations.

78 Mr Brotherson relied upon the evidence of Mr Ewin to support his argument that there is a clear need for enhancement of training and that it be undertaken in an organised and definitive manner; and to do so would provide benefits to all concerned.

79 Mr Brotherson submitted that there was no real opposition to the training requirement and that dissent only arose in respect to the day work arrangement, and then in the form of disturbance of personal arrangements. Mr Brotherson noted that employees rotate through day, afternoon and night shift on a weekly basis, submitting that any personal inconvenience was far outweighed by the benefits of the training proposed.

80 Mr Brotherson submitted that the establishment of the training team did not attract any real argument to its position, putting that any issue of family commitments as raised by Mr Perkins was capable of easy resolution through discussion between the parties.

81 Turning to the question of short term hire or labour hire Mr Brotherson noted that there is no award impediment to the engagement of persons in this manner. Mr Brotherson acknowledged that such form of engagement has not previously been used in the Operations area, though the use of contractors is common in maintenance activities. Mr Brotherson relied upon the example in the Kellogg's Award and provided a further illustration from the Tooheys Ltd Auburn Brewery Enterprise Award 2000 (2002) 332 IG 1365 as examples of the use of various forms of engagement in manufacturing processes.

82 Mr Brotherson submitted that such arrangements are common in industry and should not be denied to the OneSteel Rod Mill.

83 Mr Maher acknowledged the principles applied by the Commission in matters such as these, noting that there were many more than the five cases referred to by Mr Brotherson in which these principles are enunciated and applied.

84 In dealing with the concerns addressed by Mr Perkins in respect to the disruption of family commitments arising from a shift change, Mr Maher stressed the need, on both compassionate and legal grounds, for a proper consideration of those matters, adding that the history of co-operation between the AWU and The Company in dealing with genuine issues in a reasonable and proper way was extremely successful.

85 Mr Maher relied upon the evidence brought to maintain his argument that safety considerations arise from the removal of the dedicated crane driver position, putting that there was apparently little to gain in this change, given that the evidence of AWU witnesses is that Mill crane drivers are fully utilised on the workshop floor carrying out meaningful work when not driving the crane.

86 Mr Maher expressed some doubt that removal of the dedicated crane driver would in fact increase plant availability. In making this submission Mr Maher put that the AWU does not restrict or seek to stop The Company from making its organisation more efficient and productive; putting that the AWU has demonstrated its bona fides in this regard in supporting sensible change in the steel industry over the past 20 years.

87 Mr Maher reiterated the concerns of the employees as put in evidence that the introduction of short term hire and labour hire could lead to an unacceptable casualisation of the industry.

88 The relevant principles to be applied in this matter are those set out by Hungerford J in the Slit Recoil Line case and are beyond issue here.

89 The weight of evidence in this matter overwhelmingly supports a determination in favour of The Company in respect to each of the issues raised in this matter.

90 The present circumstances are that a dedicated crane driver operates the crane for such time as might be required during the course of a shift and at other times leaves the crane to assist with duties on the workshop floor. The evidence is that there are a number of qualified crane drivers on each shift, any of whom at the direction of supervision could undertake any of the tasks required. There is no basis, on the evidence before me, that alteration to the current arrangement by removal of the dedicated crane driver and consequent reduction of the number of positions on shift to 25, would adversely effect plant operations or impede improvements in safety demonstrated in these proceedings. Training Team

91 The need and benefit of enhanced training is clearly made out. I am further satisfied that any individual inconvenience of a real and genuine nature will be properly addressed by the parties in ensuring that necessary training is acquired in an efficient and effective manner. The parties retain access to disputes settlement procedures to process any particular issue. Fixed term hire and labour hire 92 The use of these forms of labour engagement will, on the evidence before me, create employment as well as facilitating training and manning issues, which emerged in these proceedings to be of some mutual concern. The AWU witnesses were themselves concerned that training was not being conducted in accordance with a definite program.

93 I find it somewhat incongruous that, whilst mounting opposition to the removal of the dedicated crane driver on shift, the AWU witnesses opposed means by which long term vacancies were filled in a manner which provides adequate manning on shift and protects the security of employment of those persons legitimately absent (some for health reasons beyond their control) for an extended period of time.

94 The above determinations in respect to crane manning, training and supplementary labour are made having regard to the fact of this matter and the principles to be applied. In so doing the obligations upon the AWU to continuous improvement found in the Wages Settlement and Award have not been overlooked. These obligations remain ongoing and should form the foundation of consultation and co-operation in the implementation of the Manufacturing Strategy.

95 I strongly encourage and recommend the AWU delegates and employees to participate fully in the process of consultation, review and implementation of the Manufacturing Strategy into the future. To do so is in their collective best interests. I regard the process of consultation, review and implementation to be a mechanism of inclusion by which the Manufacturing Strategy will be developed, modified and strengthened as experience of both management and employees unfolds.

96 Nothing in this process removes from the AWU and its members the right to question dissent or access to the disputes settlement procedure, however, involvement in the process will ensure that any question or dissent is informed, and that criticism is constructive.

97 I determine that the Company is at liberty to remove the dedicated crane driver from shift, establish training arrangements, and engage supplementary labour in the form of fixed term hire or labour hire as advanced in these proceedings. oo0oo

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