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Thursday, October 20, 2005

"Creative destruction" by Air New Zealand

Six hundred workers are to be thrown onto the economic scrapheap by Air New Zealand. The company, which is 82 per cent government-owned, has decided to transfer the heavy maintenance of its aircraft off-shore to Europe and Asia. This is expected to save $100 million over the next five years (ie $20 million a year on average). This is a company that made $250 million profit this year and expects to make $100 million next year. The redundancy costs will be $13 million.

Air New Zealand claims it cannot find enough work for all its maintenance engineers. Deputy Prime Minister, Michael Cullen, washed his hands of the announcement, saying that it is "company business".

This is the government welcomed by the Council of Trade Unions as having a "commitment to an investment approach to economic and social development". The announcement by Air New Zealand of the sacking of a highly skilled workforce is a massive disinvestment in New Zealand. It is reminiscent of the closure of the railway workshops in the early 1990s which destroyed a similarly skilled workforce and dismantled another significant section of this country's industrial infrastructure. The CTU must demand that the government intervenes to prevent this act of economic vandalism.

The early twentieth century economist, Joseph Schumpeter, called closures like this the "process of Creative Destruction, (which) is the essential feature of capitalism". Well he was right about the destruction, but what is creative about it is not so clear. The newly elected Labour-led coalition government should act urgently and "creatively". It must step in to take direct control of Air New Zealand. These jobs can be saved if the government has the will to do so. If the government will not act, the workers can. They should take a leaf out of the Argentinean workers' book and occupy the maintenance hangers to keep them going.

The loss of these engineering jobs is completely unnecessary. It is not about the engineering operation losing money. It is all about return on capital. It is about extracting more profit to ready Air New Zealand for another round of privatisation. The company chairman John Palmer is blatantly promoting a sell-down of the government's shares. The government would do better to take-over the whole company. It could be run as a peoples' co-operative under the control of the workers who, after all, know better than anyone how to operate the enterprise most efficiently.


Joe Hendren said...

Welcome Len :)

While I agree it would be great symbolic move, and a good way to put some pressure on the Government, for the Air NZ Engineers to keep the shop going for a few days after Air NZ deemed it should close, I am not sure it would be possible to keep it going long term.

For this to happen, Air NZ would have to continue as the principal customer, and they have already said they would prefer to fly their planes to low-wage economies to get their planes serviced.

Occuying and maintaining the premises is more practical with a cafe or a subway, where the money men can't stop the customers coming in the door. From what I have read about Argentina, these are the kinds of industries were workers co-operatives have been successful.

I heard Ken Douglas on TV bemoaning the fact the deal with Qantas did not go through, so he was effectively calling for privatisation as well.

Len Richards said...

The Naomi Klein doco. about the Argentinian worker-run co-operatives shows workers running tractor factories and the like. Things are different there with a collapse of industry creating the situation where workers took the action of occupation and re-starting enterprises on a large scale.
Here, in NZ, it is about time someone did something other than despairingly accept the right of employers to destroy peoples' jobs and lives.
The government should take Air NZ out of the 'circuits of capital' and run it as an efficient provider of air transport for the benefit of all in the country. A workers' collective/co-operative could probably do this more effectively than the top-heavy, top-down (and over-paid) management structure currently in place.