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John Findley Blog

John Findley is a China specialist having lived, off and on, in China for around 30 years. He now lives in Newcastle. He is a highly experienced senior executive and now runs his own migration business (a genuine independent contractor) supporting high-end executives to work in Australia.

Open letter to Ken Phillips on management and SME employment

Thursday, February 27, 2014

Hi Ken,
Did you see Richo's column in The Australian this morning?  I don't know what I can do or what ICA can do, but Richo is right.
I have years of experience in heavy and light industry; the workers are lovely people but they are not as adaptable as the dry economists wish they were.

These salt-of-the-earth workers were led by treacherous unions into disastrous industrial agreements; the workers would not have thought of these bizarre, Marxist attempts to take over the means of production. They were betrayed by ideologues.
We have arrived at another stage in a long end game; but it's not the first I've seen. I was running a small manufacturing business when tariff walls came down in the ’80s.  Many businesses in my industry were ground into the earth by imports; their staff found great difficulty in getting work, it took years for some.  These workers were from small businesses where the management were tradies made good.  Whilst they had made money, these managers weren't equipped to deal with a rapidly changing market environment.  I was lucky, I identified a niche market in Asia (in the ’80s!!) and grew the business through that period underpinned by those Asian contracts.  But I came from a corporate culture quite different from that of the industry managers generally.
Some case studies from the ’80s might be worthwhile.  It's not something I'm equipped to do, but academia ought to earn its stipend and produce some research.  Here's one article.
Producing a vision for the future is vital to the government's success; even in the near term with the WA senate vote. Whilst it may be politically expedient that the displaced workers be seen to be getting assistance, they won't be displaced for several more years.  And the workers aren't about to leave their employment early because of the absurdly generous termination conditions in their contracts of employment,
Bruce Billson has the key portfolio. Some  initiative must be rolled out, for example”
  • Put the money into BUSINESS CREATION;
  • Maybe some small business incubators could be established;
  • Look to subsidising jobs in businesses that are prepared to put up their own risk capital;
  • Put money into business mentoring and export management training;
  • Put money into the EMDG system, earmarking a big proportion for small business.  Don't let the bureaucrats get too hung up about SMEs funding holidays on the EMDG grants; it will happen to some extent, but it is likely to have better long-term benefits and be more productive than chucking money into TAFE training for displaced workers;
  • Make sure the EMDG funds are disbursed promptly and quarterly, not annually in arrears and only after onerous claim procedures, claim disallowance and long delays;
  • Don't throw the money around blindly on training of workers.  The TAFEs will love that, but they are too academic.
I am not much on these things, so now it's up to the policy specialists.  But the ideas should be put into the market quickly, and not strangled by the red tape raptures of the bureaucracy.
Anonymous commented on 27-Feb-2014 05:37 PM

Even I disagree with your analysis of the solutions for Billson. You have identified the management issue correctly. Richo is ignoring the management issue.

I've a manufacturing client who is spending $10m upgrading their plant. The international company could close down their Melbourne operation tomorrow and easily replace the product from overseas. I'm having coffee with a small manufacturing concern next week who's going great guns in the plastics extrusion business. Why are these both surviving? Good management mostly.

Why should the taxes of the well managed companies subsidies the bad management of underperforming companies? That’s surely a recipe for a weak economy and harms the good managers and workers in those businesses.

What’s needed is open markets, fair contracts, cheap dispute resolution, maximization of management capacity, sensible OHS laws, government bureaucracy focused on their clients (ie the ordinary people) and bureaucracy subject to market forces etc etc. Most of these things can be delivered through better government with minimal expense. I don't favour government teaching businesses how to do business or trying to decide what business should happen. Let the people do that


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