SPC Ardmona

Congratulations to the Abbott Government for showing spine and refusing to throw taxpayers’ money at SPC Ardmona. Although I suspect the principal reason for the decision has to do with the ownership structure – Coca Cola Amatil owns 100 per cent of SPC Ardmona. In turn, 30 per cent of Coca Cola Amatil is owned by the US company Coca Cola Holdings.

If Coca Cola’s name was not associated with SPC Ardmona I suspect that it would have been more difficult for the Government to resist throwing money its way.

There are two reasons for SPC’s failures. First, the workplace agreement, as noted by Judith and others, is over-the-top.

But the principal reason is probably that it sells products no one really buys anymore. There have been significant changes in the pattern of food consumption over recent years, and the average Australian doesn’t eat canned fruit to the extent they did in the past. The relative price and availability of fresh fruit has declined and people prefer to serve fresh fruit rather than the canned variety.

Even if SPC fixed its enterprise agreement, and even if the Government threw money at the beast, it would face this market reality.

I expect canned fruit is going the way of SPAM. An older generation may still buy these products, but the market is on the decline.

Meanwhile the Hon. Bill Shorten MP wants to follow in lockstep with his Union overlords. The Rudd Government promised at the 2013 election to send $25 million to SPC Ardmona and $90 million to Coca Cola Amatil (incidentally chaired by David Gonski).

It seems that Gonski’s preferred financing tool – in both the education sector and in the business sector – is to attract taxpayer largesse. But he isn’t the only company director attracted to rent seeking. While US MBA students learn how to innovate and create wealth, the principal subject in an Australian MBA is how to lobby Governments for a share of the taxpayers’ purse.

About Samuel J

Samuel J has an economics background and is a part-time consultant
This entry was posted in Federal Politics. Bookmark the permalink.

52 Responses to SPC Ardmona

  1. craig2

    Damn, which subject was “Handouts”? I missed that one.

  2. 2dogs

    the market is on the decline

    The commercial solution here is for Shepparton to start looking at moving from fruit to meat, both farmers and cannery.

    Beef farming is less profitable, but is less time consuming than fruit. If they threw a few mines around the area, farmers could work in the mines as a day job and farm beef at home, as many do in mining areas.

  3. bobby b

    “I expect canned fruit is going the way of SPAM.”

    Did you mean, over the years its sales figures have risen steadily, it has grown from a regional to a national to an international icon, the number of product varieties has grown from one to somewhere around twenty-five, and it brings in a very nice (and steadily increasing) yearly profit for its producer?

  4. Bruce of Newcastle

    Gonski does have a point. It would be so hard to reform the EBA’s that they have with the SPC unions that trolling for handouts is probably the only economically reasonable thing the company could do short of shutting down and moving the plant somewhere sane.

    Unfortunately the unions are in a bloody minded phase where they will destroy a company and put the workers they represent out of a job rather than negotiate anything sensible.

    The parasites are now so firmly entrenched in the patient that the only way to get rid of them is to kill the host. A new method of treatment has to be found whereby practical compromises can be reached, and where the parasites themselve evolve to a more cooperative and less toxic role.

    I suspect a big problem is that union heirarchy people are always looking for their career path towards the ALP. Therefore they are keenest to establishing their factional CV to the exclusion of the interests of the workers. Holding the line gives more cred in the factional stakes than compromising, especially when the failure of the business can be spun as to blame someone else.

    So maybe the best first step to getting a better industrial environment is to break the union-ALP career path, to remove this incentive for bad behaviour. Make it illegal for union heirarchy to stand for state or federal Parliament while in office and for ten years afterwards.

  5. boy on a bike

    Perhaps we should say:

    “I expect canned fruit is going the way of jellied eels

  6. 2dogs

    Absolutely, bobby b, there is a growing market for canned meat in the ex-poor countries – Spam is quite popular in China, for example.

  7. crocodile

    If it were only SPC, perhaps you may have something. It seems as though business closures, downsizing and offshoreing are a common theme these days. It’s the high dollar ! It’s the cheap imports ! It’s the unions ! It’s the gummint ! When I get a spare millisecond I’d more interested in seeing what impact declining national productivity growth over the last one and a half decades has had on all of this.

  8. Rabz

    The relative price and availability of fresh fruit has declined

    The price may have declined, the availability certainly has not.

    But yes, the packaged product is always the inferior option.

  9. AP

    Your last sentence is a complete load of rubbish. Evidence please, for both propositions. I’d like to see at least the names of the offending subjects, and evidence that we are not taught “how to innovate and create wealth”, as well as the corresponding evidence that US MBAs are not taught lobbying (yeah right! hahaha) and are taught how to innovate and create wealth.

  10. Tel

    That was my point some months ago about a lot more people eating fresh fruit and keeping some canned fruit on the shelf for occasional backup. Any economist who avoids the supermarket is no economist at all… food, energy and shelter are the heart of the family budget. I don’t know why the fruit growers would care where the stuff goes though, a sale is a sale.

    Make it illegal for union heirarchy to stand for state or federal Parliament while in office and for ten years afterwards.

    That’s totally impractical, we live in a Democracy, the whole point of Parliament is that anyone can stump up and have a go. We have to trust the voters, that’s what makes freedom loving people different from, say, Clive Hamilton.

    By the way, what happened to Combet taking charge of solving this issue? Wasn’t he going to show his art and negotiate a deal?

  11. Rabz

    It’s the high dollar ! It’s the cheap imports ! It’s the unions ! It’s the gummint !

    You forgot this:

    It’s the exorbitant wages !

  12. Rabz

    By the way, what happened to Combet taking charge of solving this issue? Wasn’t he going to show his art and negotiate a deal?

    It seems the utterly useless wrongologist parasite has remained true to form.

    Still, he’ll always have his ALPBC bimbo ($329,113).

  13. Tel

    Mr croc, allow me to point out that the world changes. That’s why entrapeneurial activity is important, because we must continually adapt to change. Populations are growing, Asians no longer want to live as peasant farmers, resources are under pressure. If we stay the same we are actually going backwards.

  14. crocodile

    It’s the exorbitant wages !

    Not so sure about that being the main contributor. National wage growth has been on the decline for nearly a decade, despite a stellar mining industry. High relative wages are not necessarily a problem as long as they are matched by commensurate returns in output.
    http://www.macrobusiness.com.au/2013/02/wage-growth-continues-to-moderate/

  15. crocodile

    Mr Tel, My point exactly.

  16. The other classic example regarding SPC Armonda’s product range is their canned tomato line which they bleat is being affected by “dumped” Italian products. As anyone who cooks will tell you Italian tomatoes are superior in quality. If there is any discounting going on by the dozen or so Italian importers it is competition amongst themselves and not SPC which is the inferior choice.
    The view that SPC’s product range is unpopular and out of date is correct.
    Over to you Coca Cola Amital. I am curious as to why they bought the company in the first place. Perhaps it just a mistake?

  17. Crossie

    Of course fresh fruit is preferred to the canned variety so why aren’t we exporting it to the Northern hemisphere. I would have thought that conditions are ideal for that sort of arrangement. We have fruit in season when the North does not so let’s sell it to them in their winter. Or have South Africa and Argentina beaten us to it already?

  18. Anne

    While US MBA students learn how to innovate and create wealth, the principal subject in an Australian MBA is how to lobby Governments for a share of the taxpayers’ purse.

    Wow! That’s a startling statement. IS THAT TRUE?

  19. rebel with cause

    But the principal reason is probably that it sells products no one really buys anymore.

    This. And the farmers have known this for ages – they have been tearing out trees for at least six or seven years now. Especialy the pears – they like a boggy, wet soil which means they need a good watering, and people just don’t eat pears like they used to.

  20. Rabz

    From The Sloan’s recent post on the SPC Ardmona EA:

    Take a S5 production worker (middle of the range), for instance, currently hourly rate of pay is $26.15.

    That’s $10 p/h over the minimum wage. Plus all the ridiculous allowances detailed by Judith as well.

    Exorbitant wages are a very big factor in the ‘unsustainability’ of the fruit packing plant, especially given that they would probably be the plant’s main expense.

  21. rebel with cause

    why aren’t we exporting it to the Northern hemisphere.

    For the same reasons Australia isn’t importing loads of northern hemisphere fruit and veg during our winter.

  22. GrigoryM

    While US MBA students learn how to innovate and create wealth, the principal subject in an Australian MBA is how to lobby Governments for a share of the taxpayers’ purse.

    Wow! That’s a startling statement. IS THAT TRUE?

    Just a smidgin of Samuel J hyperbowl? ;)

  23. Ant

    The federal government should uproot every ABC office and studio in the country and re-establish the lot in the SPC plant in Shepparton.

    Imagine all the bullshit they could can.

  24. .

    What we need is a pro-prosperity trade agreement.

    The parties agree to:

    1. (Obviously) cut/abolish tariffs and non-tariff barriers.
    2. Cut labour on costs by x% per year for n years.
    3. Remove restrictions on foreign ownership and capital raising by blah blah within n years.
    4. Agree to end subsidies and bailouts within n years.
    5. Agree to cap taxes and spending viz the Washington consensus.
    6. Agree to cut or cap regulatory costs ala the Washington consensus.
    7. Get as many as possible to sign it unilaterally with MFN guidelines.

  25. Infidel Tiger

    . While US MBA students learn how to innovate and create wealth, the principal subject in an Australian MBA is how to lobby Governments for a share of the taxpayers’ purse.

    MBA’s are arts degrees for people in suits. I’d fire anyone that had one.

  26. johno

    There are two reasons for SPC’s failures . . . the workplace agreement . . . (and) . . .that it sells products no one really buys anymore.

    That can’t possibily be true. I’ve watched the Left’s ABC coverage of this story and they have never mentioned either of these reasons. Barry Cassidy even said Tony Abbott was wrong to blame high wages.

    As Lord Wentworth has pointed out, the Left’s ABC has a legal obligation to report the truth, so, following the Great Lord’s logic, if the Left’s ABC hasn’t reported it, it can’t be true. :-)

  27. Rafe

    Alongside the wages and conditions, consider the lower cost of living in Shepparton and other places outside the capital cities. It is absurd that wages have to be fixed nationwide when the cost of living is highly variable. Consider Tasmania v the mainland for a graphic illustration of the point.

  28. Andrew

    Sharman Stone has called Joe Hockey a liar in regards to the SPC Ardmona.

  29. ugh

    “MBA’s are arts degrees for people in suits.”

    Well said @Infidel Tiger.

    Great deal for unis though – they can charge tens of thousands for a graduate certificate and people keep buying them.

  30. .

    Yeah they may be crap and an absolute racket but so is membership of the Australian Institute of Company Directors – but both open doors to clients based on access and perception.

  31. .

    I went through CCA’s (ASX:CCL) finances for the last available financial year and they have a dividend payout ratio of 81% and frank their dividends at 75%. They had earnings growth of 4.5%.

    They also had reported net profit of 460 mn, free cash flow of 588 mn and for 760 mn or so shares, a earnings of 0.73 AUD per share.

    They can go fuck themselves if they want to extort 115 mn from the taxpayer.

  32. iamok

    Infidel I have an MBA from 20 years ago so I take some umbrage at your comment. Like any degree they are what you make of them, but it was in my experience, challenging, limited by definition as it cannot be all thing to all people, but ultimately rewarding. It is not something I have tattooed to my forehead as that was never the point for me, and unfortunately many share your view and think MBAs are either tossers, useless generalists or both.

    It did force me to start that large grey mass inside my head working a bit harder and for that I am very grateful.

    I did notice a “dumbing down” of the course just as I was finishing and with what some of academia has become nowadays heaven knows what is being covered, or not.

  33. .

    An MBA from 20 years ago was worthwhile.

    As with all university degrees, there is consistent and simultaneous dumbing down, credentialism and falling intrinsic value to graduates who actually got good grades.

  34. Baldrick

    But the principal reason is probably that it sells products no one really buys anymore.

    … and the workers are supported by a Union organisation, where outside of the closed-shop SPCA workplace, no one really supports anymore.

  35. Infidel Tiger

    The idea that MBAs lead to innovation is so fanciful we’ll all need to be sectioned for even considering it. The only wealth they help obtain is for the university and the increased hourly rate charged to the wood duck client who thinks they mean something.

    Tertiary courses for innovation! Fuck me that’s funny!

  36. Empire Strikes Back

    the principal subject in an Australian MBA is how to lobby Governments for a share of the taxpayers’ purse.

    Not sure what they doing now, but Melbourne Business School used to invite the likes of Gary Banks to lecture MBA students. I know this because a dentist friend who was doing an MBA complained to me about it. When pressed for her reasons, she confided that Banks had given occupational licencing a bullocking and (predictably) she didn’t like it.

    They can go fuck themselves if they want to extort 115 mn from the taxpayer.

    I’m not sure it’s extortion Dot. Our nation has an inglorious history of nobbling capital to reward special interests. If I was a director of CCA, I would at least explore the option. If you’re not asking, you’re not getting. It is the responsibility of the custodians of our taxes to say “go fuck yourself”.

    Credit to Joe for having a serious crack at changing the narrative.

  37. manalive

    … it sells products no one really buys anymore …

    I think that’s right, a letter in today’s Australian complains of the glug they put in their canned fruit.
    The only product I’ve bought in the past was canned crushed tomatoes which is also bulked up with thickeners and inexplicably sodium, never again.
    I stick to the Italian brands (I don’t know if they are imported in bulk or in cans) which amazingly contain just tomatoes and tomato juice.

  38. rickw

    “Alongside the wages and conditions, consider the lower cost of living in Shepparton and other places outside the capital cities. It is absurd that wages have to be fixed nationwide when the cost of living is highly variable. Consider Tasmania v the mainland for a graphic illustration of the point.”

    Agree, but there has also been a dramatic increase in the cost of housing in rural centres. The cost of housing across this sparsely populated country is absurd. We should have US house prices eg. I looked at houses in Houston last year, you could be decent stuff from $60k upwards and the Houston market had already increased significantly.

  39. .

    Infidel Tiger
    #1177453, posted on February 4, 2014 at 10:18 am
    The idea that MBAs lead to innovation is so fanciful we’ll all need to be sectioned for even considering it. The only wealth they help obtain is for the university and the increased hourly rate charged to the wood duck client who thinks they mean something.

    Tertiary courses for innovation! Fuck me that’s funn

    There is a masters in entrepreneurship.

  40. .

    When pressed for her reasons, she confided that Banks had given occupational licencing a bullocking and (predictably) she didn’t like it.

    Lulz…has there ever been a case of anyone passing themselves off as an accredited dentist?

    No one would want to go to someone not skilled in dentistry. The stuff up would be hideous and probably very, very painful.

  41. candy

    Sharman Stone has called Joe Hockey a liar in regards to the SPC Ardmona.

    Andrew, she seems way way out of line to me, even given that all LNP representatives can air their views in freedom.
    Do you think Tony Abbott has concerns about her future?

  42. Infidel Tiger

    Sharman Stone Fruit is a demented leftist bint. She should be fired from a cannon into the Murray River.

  43. Driftforge

    Alongside the wages and conditions, consider the lower cost of living in Shepparton and other places outside the capital cities. It is absurd that wages have to be fixed nationwide when the cost of living is highly variable. Consider Tasmania v the mainland for a graphic illustration of the point.

    I’ve been muttering regularly to one of my local members that the minimum wage needs to be set locally rather than nationally. There is interest, and may be some scope, but apparently it means that the state has to un-refer its industrial relations powers from the federal government, and there is some question as to whether that is possible.

  44. Carthaginian

    Everybody seems to be avoiding the small matter of the quality and consistency of the product that SPC -Ardmona produces:
    Apricot halves that are either just pulp or crunchy,
    fruit salad comprising 2 rotting grapes 3 pieces of glace cherry in amongst the crunchy pear and fragments of peach all swimming in a lake of juice which is there to “make weight”
    Frankly the Chinese imports are a better product, their peaches are a different variety but the quality and flavour is excellent.

    Canned fruit? What alternatives are there when a fruit is out of season?

  45. Empire Strikes Back

    No one would want to go to someone not skilled in dentistry. The stuff up would be hideous and probably very, very painful.

    What got her goat up was Banks’ assertion that foreign credentials might be just as good as a local qual, being a member of the ADA, regulated by the Dental board etc. At the time she thought this preposterous. This was about 10 years ago.

    Funnily enough, my dentist is a Chinese Malay émigré and the best dentist I’ve ever had.

  46. Token

    It seems that Gonski’s preferred financing tool – in both the education sector and in the business sector – is to attract taxpayer largesse.

    That is the way the big money is earned, put a crony of the left on the board and get them lobbying for:

    1. Endless grants
    2. Endless regulation which keep small competitors tied up & out of the market

  47. mareeS

    “What alternatives are there when a fruit is out of season?”

    A different fruit that is in season.

  48. .

    No, you import. I’m not going to not eat cherries when I feel like it because some moonbeam wants to enforce their absurd “eat local” or “seasonal only” crap on me.

    Do these muppets in Marrickville eat cows or rats? Which one is local?

  49. iamok

    DBA is another folks. Wouldn’t waste my time on it.

    Innovation and entrepreneurship are in my view more intrinsic. Courses can add some value but from experience I reckon you’ve got it or you haven’t. It’s like people going to an accountant for strategy planning advice. Most are not in the least strategic by predisposition.

  50. craig2

    Iamok,

    You insinuated that your MBA of yesteryear is superior to today’s MBA, does sitting in class and writing notes make it a more ‘pure’ way of studying? Exactly how is today’s MBA been dumbed down? Regarding the DBA, it allows you to embrace the latest cutting edge information, if your MBA was 20 years ago, I can guarantee you’ll be behind with your business knowledge irrespective of your experience.

  51. stackja

    Liberty Quotes
    “To lay with one hand the power of the government on the property of the citizen, and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes, is none the less a robbery because it is done under the forms of law and is called taxation.” — Samuel F. Miller

    The folks in Atlanta would approve ‘to aid private enterprises and build up private fortunes’…

  52. iamok

    Craig2 – Did I imply anything? Not meant I can assure you. Purely observation on course structure as I was moving on 16 units to 12, fast tracking and all that. I am in no position to comment on the current MBA structure, but can say from some knowledge of academia I am more critical now than I was then. It still took me a couple of years after finishing until the MBA really made sense in application. That is pretty common anecdotally.

    DBA – didn’t and don’t see the point when I wanted knowledge and tools I could apply. If you did one and are happy with it peace be with you. Horses for courses and all that. I have probably learnt more in the last 20 years than the near 40 before that but is that the MBA or not? In part from some great mentors, from a few bruises and a few wins, with I hope a bit of wisdom and insight. My brother did a PhD and he is great at a very specialised field and is of course a Dr.

Comments are closed.