Darkest days since the Ansett collapse?

The fear-mongers are out and about.

Victoria’s economy faces its darkest days since the Ansett collapse in 2001, with Alcoa expected to fast-track its decision to close its Geelong aluminium smelter days after Toyota announced it would end car production at Altona.
The future of SPC Ardmona’s fruit processing plant at Shepparton could also be decided by early next week, with the board of Coca-Cola Amatil meeting on Tuesday to discuss ”options” for the plant.

So let’s put that into perspective – Ansett went into voluntary administration just after 9-11 and ceased flying in March 2002. So with those dates in mind I had a look at some Victorian data from the ABS (the data I employ are seasonally adjusted). As it turns out the next version of this data set will come out later today – but I doubt the ABS will be revising data from 12 years ago.

Looking first at Victorian unemployment.

Victorian unemployment

Now there are a lot of people who reckon the unemployment figures are dodgy – so I also had a look at (Victorian) aggregate hours worked.

Victorian Hours worked

Now it does look like there was a flat period around the time of the Ansett collapse – but that started in 1999. More likely flat economic activity (as measured by hours worked) contributed to the Ansett collapse rather than the other way around. Mind you the company had long-term financial problems.

The bottom line is that the collapse was very traumatic on a micro level for the various stakeholders but is hardly a blip in the long-term data.

There is, however, one very important parallel between the collapse of Ansett and the Toyota decision – as Mike Nahan explains:

As a former Ansett executive stated: ‘I can recall on many occasions speaking to staff and union leaders saying, “If we don’t change some work practices, this company is going to go down the drain.” They never, ever accepted that. They believed Ansett was a cash cow that could just be bled to death’.

This entry was posted in Economics and economy. Bookmark the permalink.

31 Responses to Darkest days since the Ansett collapse?

  1. Baldrick

    … and of course there’s no connection with Ansett, SPCA, Toyota, Holden, Ford, Mitsubishi and a heavily unionised workforce.

  2. Token

    So has the dire economic warning meant the Age has decided to think of the Victorian economy end its emotive opposition to the East West tunnel?

  3. Bear Necessities

    … and of course there’s no connection with Ansett, SPCA, Toyota, Holden, Ford, Mitsubishi and a heavily unionised workforce.

    Hey, now you mention it, there does seem to be a pattern.

  4. Mayan

    There was a brief article on HenryThornton saying that, with a floating a dollar there must one day come floating wages.

  5. Crossie

    Qantas is also on borrowed time, their customer service is patchy at best and their prices too high. Their cabin crew is graceless and reluctant. When flying in and out of Australia they are my last choice. Most people I know who flew with Qantas are also unimpressed. With that sort of reputation they would be wise to change their whole culture though I don’t see it happening.

  6. Tom

    The fear-mongers are out and about.

    Of course. It’s Fairfax, it’s an election year and there is an LNP government to destroy.

    The Age has campaigned relentlessly and headlessly to bring down the enemy state LNP regime, with virtually daily Greenfilth-tailored rants against its signature freeway project and message-peddling for the communist union rent-a-crowd riffraff trying to stop it.

    There is no dispassionate analysis, just the endless childish leftard activism of a campus student newspaper.

  7. H B Bear

    QANTAS is really two companies. The legacy international and domestic long haul, comprising the old hags and homos Crossie describes so well, on working conditions of 30 years ago when passengers were forced to pay whatever the airline and government told them to. And the rest.

    It must be 50:50 whether QANTAS does what most US carriers have already done – enter administration to break all the employment conditions and then re-enter the market with wages and conditions that at least allow them to compete with the artificially advantaged ME carriers.

  8. boy on a bike

    I am friends with a lot of ex-Ansett staff. I don’t think any were unemployed for more than a few weeks, if they chose to look for another job.

  9. nic

    I had a relative who was in management at Ansett. Im sure it was the best job he’d ever had.

  10. Leigh Lowe

    The headline to the post implies that the demise of Ansett was a bad thing.
    It was simply the market taking care of indolence/feather-bedding by the unions and poor management, particularly by Thir Peter Abelth.

  11. duncanm

    They believed Ansett was a cash cow that could just be bled to death

    They were right.

    re: Qantas – couldn’t agree more. The last refuge when looking for international flights. It just doesn’t measure up to almost any other international carrier, especially the big Asian airlines.

  12. sabrina

    Ansett’s problems started well before 9/11. Like all other problems, a mix of successive incompetent management (including News Corp and Air NZ both of which stripped assets, and they got off lightly) and union greed resulted in what we all know.

    The government stepped in screwing the taxpayers for handout; at least this government is not doing it. But it is clear, neither the management nor the unions have learnt much from that.

  13. Leigh Lowe

    The government stepped in screwing the taxpayers for handout; at least this government is not doing it. But it is clear, neither the management nor the unions have learnt much from that.

    Technically I think the screwed airline travellers via a ticket levy from memory, but point taken.

  14. Leigh Lowe

    They believed Ansett was a cash cow that could just be bled to death

    I hate to be a pedant (not really) but you don’t bleed a cash-cow – you milk it.
    It doesn’t work otherwise.

  15. nic

    The last refuge when looking for international flights. It just doesn’t measure up to almost any other international carrier, especially the big Asian airlines.

    QF’s Premium Economy on the A380 beats Cathay for price and product hands down.

  16. Brett_McS

    Excellent interview on the car industry, but what is that accent? South African?

  17. hammy

    This disastrous one-term Abbott/Hockey government is rapidly destroying the previously prosperous Australian economy.

  18. Chris M

    Qantas – couldn’t agree more. The last refuge when looking for international flights. It just doesn’t measure up to almost any other international carrier, especially the big Asian airlines.

    I use Qantas for all domestic and for US bound flights (the latter booked on American) but wouldn’t consider them on a European flight due to their association with, and stopover in, a despotic terrorist enabling country. I’m also growing tired of their constant promotion and sponsoring of homosexual TV shows.

    That said the Asian carriers cabin crew are indeed very much preferable however as a pilot I would prefer the Qantas flight crew training i.e. the ones at the pointy end. Useful if things go south.

  19. Fisky

    The problem with the Australian economy is that profits are too low and wages are too high. Abbott must slash wages by 10% across the board at once.

  20. boy on a bike

    3,700 blood sucking immigration lawyers have lost their jobs since Abbott666 came to power in a coup.

    Hoorah!

    Now – can we put them up against the wall?

  21. Matt

    Perhaps this is too simplistic, but would it be wrong to see this as an example of supply side economics in action? Supply is removed (Toyota/Ansett) which leads to a decrease in economic activity.

    Presumably the reverse then is also true, with the caveat that the ‘supply’ needs to be profitable in order to exist at all.

  22. Squirrel

    “Baldrick

    #1187724, posted on February 13, 2014 at 9:11 am

    … and of course there’s no connection with Ansett, SPCA, Toyota, Holden, Ford, Mitsubishi and a heavily unionised workforce.”

    Thanks for joining the dots, and might I respectfully add “….unionised workforce, particularly in sectors exposed to international competition.”

    The real problem, in my view, is the sectors which remain entirely, or largely protected from foreign competition – most notably the public sector, and others (construction, some trades, elements of the services sector etc.) which are contributing to the very high cost of doing business in Australia – and which tend more (when it suits) to look overseas for ideas on how much they should be paid, and less so on how good their work could, or should, be. And let us not, of course, forget the ridiculous cost of commercial and residential accommodation – by no means all the fault of the building unions (many can take credit for this disaster).

    In the absence of serious and sustained action to deal with all of these factors, it is difficult to see – even with a completely non-unionised workforce – sustainable industries to provide employment for a nation of 23m (and growing). In the meantime, I imagine the Australian public will follow the European example and turf out governments which can’t make the problems go away well within their first term, and that this pattern will continue for some time until, eventually (hopefully) enough people wake up to the fact that changing governments does not change the facts of life.

  23. daggers

    I swore off Qantas a while back – flight delays, attitude of cabin staff – but went back a year ago and have found it better. Pricewise they beat Cathay every time now and that wasn’t the case a few years back.

  24. Dan

    Perhaps this is too simplistic, but would it be wrong to see this as an example of supply side economics in action? Supply is removed (Toyota/Ansett) which leads to a decrease in economic activity.

    Looking at the figures there wasnt much of a supply…sales of the Falcon down from 80,000 to 15,000 in just a few years. Losing your job is never good but seriously you can’t run a car factory when nothing is rolling off the assembly line even if the taxpayer is paying the entire wages bill for the factory floor staff.

  25. I hate to be a pedant (not really) but you don’t bleed a cash-cow – you milk it.
    It doesn’t work otherwise.

    Obviously you don’t play Supercoach. Cash cows are fattened up for slaughter at double the price you paid for ‘em. I think you’re thinking of a golden goose, of which you farm the golden eggs, but never kill it if you have any brains.

  26. brc

    Perhaps this is too simplistic, but would it be wrong to see this as an example of supply side economics in action? Supply is removed (Toyota/Ansett) which leads to a decrease in economic activity.

    Yes, but you forget virgin expanded quickly to fill the hole left, and did it with a more efficient workforce at lower prices. That is better for the economy.

  27. Pedro

    “They never, ever accepted that. They believed Ansett was a cash cow that could just be bled to death”

    An old mate of mine was an Ansett shoppie, and that certainly seemed to be his attitude. Could not believe that the company had closed down.

  28. craig

    Hammy,

    Labor took office in 2008 when the jobless rate was at 4.9%. Labor was kicked out in 2013 and the jobless rate was in the high 5′s. Care to comment on past crap governance and rising jobless figures? No? No comment about IR laws and practices that have created a snowballing effect for the incoming government? No? No comment about shooting yourself in the foot while giving yourself an uppercut in the same action? No?

  29. rickw

    “That said the Asian carriers cabin crew are indeed very much preferable however as a pilot I would prefer the Qantas flight crew training i.e. the ones at the pointy end. Useful if things go south.”

    I’ve done a lot of flying on QF and other airlines. I have to say that when the weather is bad, there is nothing better than being on a QF flight, they either nail the landing or do an early go around.

  30. Combine_Dave

    When was the last time Singapore Airlines, Eva Airlines or China Airlines lost a plane?

Comments are closed.