Federal Court rejects Toyota’s pay deal

TOYOTA is facing yet another hurdle in its bid to continue manufacturing in Australia, after the Federal Court rejected its plans to put forward a new pay deal to its employees.

Justice Bromberg ruled that Toyota Australia’s proposed changes to the workplace agreement constituted ‘further claims’ and therefore breached the agreement and contravened the Fair Work Act.

The action was brought against Toyota by four of its senior employees who argued that the company was not entitled to vary its agreement until it expired in March 2015.

The Japanese giant is now the only remaining automotive manufacturer in Australia, following GM’s decision earlier this week to stop building Holdens here from 2017 and Ford’s announcement in May that it will quit its local operation in 2016.

Toyota said in October that it must strip $3800 out of the manufacturing cost of each of its vehicles produced at its Altona plant if it is to maintain its local operations beyond 2018.

This time-line marks the arrival of the next-generation Camry mid-sizer that is built in Australia alongside the V6 Aurion sedan.

The company had planned to put a vote to its 2500 employees today on a new workplace agreement that it said would remove “outdated and uncompetitive terms and conditions.” Two scheduled pay rises scheduled for 2014 at a cost of around $17 million will still go ahead prior to the start of the new agreement in 2015, but this would need to be offset by boosting productivity and cutting costs in other areas.

This is believed to include a reduction of benefits and entitlements and a halving of the 21-day Christmas break to manage strong orders.

Toyota had mooted the plans last month, just weeks after it announced it would cut 100 jobs from its local operations. It has also previously confirmed that its Japanese parent company would make a decision on the fate of the Australian operation in 2014.

Cost-cutting efforts come as a part of Toyota’s ‘Australia Future Business Transformation’ 2012 to 2018 plan that is aimed at making the local operation more efficient and globally competitive in the face a high Australian dollar and cheaper imports.

Toyota Australia president and CEO Max Yasuda said the decision by the Federal Court was disappointing but that it would continue to investigate other means of cutting costs.

“We believe that we are within our rights to vary our Workplace Agreement provided the majority of our employees support the changes through a formal vote,” he said. “The company is doing everything that it can to secure the future for our employees and their families.

“GM Holden’s planned closure in 2017 will put our manufacturing operations and the local supplier network under unprecedented pressure, so it is now more important than ever before that we make urgent changes.

“A decision will be made next year on the next generation Camry and export program and we need to take urgent action if we want to stay at the negotiating table for future investments.

Toyota said in a statement that it was considering its options and whether it will appeal the Federal Court’s decision.