FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TARA MINES (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION MANUFACTURING, SCIENCE, FINANCE AMALGAMATED ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr Keogh Worker Member: Ms Ni Mhurchu |
1. Dispute concerning the Company's Survival Plan.
BACKGROUND:
2. In 1996, the Company launched the "Tara 2005 Plan" designed to improve its competitiveness. The key objectives of the plan were: (1) a 25% increase in productivity; (2) £3 per tonne cost savings; (3) protection of employees' earnings.
However, the Unions rejected this plan but proposed an alternative partnership approach. The Company deferred implementing their plan and agreed to the Unions' proposal on the grounds that the outcome of the partnership approach would achieve their key objectives of the Tara 2005 Plan. The partnership initiative worked through a Joint Steering Committee structure (JSC) to achieve the Company's objectives. The JSC published its proposals in November, 1997 with a view to making the mine more competitive and viable. Joint Implementation and Monitoring Teams (JMTs) were established in each of the areas of operation to oversee implementation and to solve any problems that arose.
The Company claims, however, that the JSC proposals have not achieved the required savings. The situation has actually deteriorated further as the price of zinc has steadily fallen. The cost of extracting the ore was now too costly and uncompetitive.
The Unions accept that major changes are required within the plant to make the Company viable. It cannot accept, however, the Company's survival plans in relation to shift arrangements; bonus structures and annualised hours. The Unions have put forward a revised plan which it is claimed will give the Company over 6,000 extra hours per month, bonus savings in excess of £1 million per annum and can be implemented immediately.
The Company argues that unless its Survival Plan is implemented in full and the objectives achieved the operation will be suspended. It must reduce costs to US$1,000 per tonne to have a viable future. The Company claims that its plan is the only way forward and that the Unions' plan would not work in practice.
As no agreement was possible between the parties the dispute was referred to the Conciliation Service of the Labour Relations Commission. Conciliation conferences were held on the 19th of April, 1999, 13th and 31st May, 1999 but no agreement was reached. The dispute was referred to the Labour Court on the 2nd of June, 1999 under Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute on the 18th of June, 1999.
UNIONS' ARGUMENTS:
3. 1. The Unions' revised plan will give the Company an extra 6,000 hours per month and bonus savings of £1 million per annum. The plan can be implemented immediately.
2. The Unions accept that major changes are required within the plant to make the Company viable. The Unions' plan will make this possible.
3. The Unions will not, however, accept weekend working and will not accept shifts longer than 8 hours. Also the proposed changes to the bonus structures is not acceptable to the members.
4. The Company's proposal to work 100% of reserved hours under the annualised hours agreement is also unacceptable to the members.
5. Management's proposals in relation to changes in the shift pattern would require exemptions from the Health and Safety Authority.
COMPANY'S ARGUMENTS:
4. 1. Unless the Company can deliver competitive costs of US$1,000 per tonne of zinc it does not have a viable future.
2. Comparisons with other mines indicate that Tara's labour costs are too high and productivity levels too low.
3. The financial climate in which the Company operates has deteriorated substantially since 1996. In 1998, the Company had an operating loss of US$20.8 million.
4. The outlook for zinc concentrates is that there will be a surplus this year and that this will continue throughout all of next year.
5. If the Company's Survival Plan is not implemented in full and the objectives achieved the operation will be suspended.
RECOMMENDATION:
While a comprehensive agreement was reached in 1997 with a view to making the mine competitive and viable, global circumstances have since changed dramatically. Despite the progress being made, the pace and extent of change is not sufficient for the mine to survive. The price of the product has since reduced, a surplus of product continues to exist and the cost of extracting from Tara continues to be too costly and uncompetitive.
The Company’s position is that the current Tara Mines operationis “uncompetetive, non-viable and cannot survive in a global commodity market.”Management refuted claims that it wants to close the mine until prices improve, and stated that it is fully committed to working the mine and is confident that the operation can be made viable by implementing the cost reductions and productivity measures outlined in the Tara Survival Plan.
The Unions for their part accept the requirement for major changes within the plant, accept that the world-wide situation has changed but believe that the requirements of the Company can be met by the alternative plan that they have put on the table.
There is an acceptance on both sides that there is a requirement for immediate and substantive cost savings in order to ensure the ongoing survival of the plant but, there is a major disagreement on the proposals to achieve this objective.
However, the Court is faced with the unusual situation of both sides producing proposals and claiming their particular plan can achieve the objective.
Discussions have taken place between the Company and the relevant Unions and while there are still problems to be addressed it would appear that the major areas of disagreement centre around shift arrangements, bonus structures and annualised hours.
On the annualised hours, the Court is not convinced that the argument by the Company to go to 100% entitlement for use of buffer hours will in fact deal with the problem raised during the Court hearing. The Court recommends that the use of buffer hours be clearly defined and disciplinary procedures be used where individuals are not co-operating under the definition. On the particular section where there appears to be problems in relation to the annualised hours, the Court recommends that the parties sit down and address that particular issue.
Management claims that the shift proposals are essential due to non-productive down time, and the bonus payments must be geared to driving productivity.
The Unions argue that management’s plan requires a risk assessment of the proposals before receiving special Health and Safety Authority exemption.
The Unions claim that their plan will give the Company over 6,000 extra hours per month, bonus savings in excess of £1 million per annum and can be implemented immediately.
The Company argues that its plan is the only way forward and that the Unions' plan “while in theory could work, will not work in practice.”
It is clear to the Court that the plant will cease operations if a viable plan is not put in place. It would be unfortunate if the plant was to close with two proposals on the table, the dispute being on which was to be implemented to ensure the viability of the operation.
The Court having given careful consideration to all of the issues involved recommends that the Unions’ plan be implemented, with a review after three months, if not reaching the targets.
In return for the Company accepting this recommendation the Unions must agree to immediate implementation of the management’s Tara Survival Plan, if the Unions' plan fails.
In making this recommendation the Court is accepting, at face value, the Unions commitment to deliver on its plan.
The Court while conscious that the Company has major reservations in relation to the viability of the Unions' plan would point out that the necessary savings would flow within months, either from the success of the Unions' plan or alternatively from implementation of the Tara Survival Plan.
Subject to acceptance of this recommendation the Court recommends that the parties meet to agree the details of implementation, discussions to be completed within two weeks and implementation to be no longer than four weeks.
The Court will be available to the parties, if required.
Signed on behalf of the Labour Court
July, 1999______________________
L.W./D.T.Finbarr Flood
Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Larry Wisely, Court Secretary.