Parliamentary Report Damns Govt Aircraft Factories

Since the initial Report was completed in 1981 the senior management has also changed with the present GM taking up his position in 1983 and the finance manager moving to GAF the following year. The Committee found it disturbing that the people occupying these positions had not closely examined the initial Report (Report No198) of the Committee. This tended to set the tone for what was to unfold!

Most observers in the industry have never thought of GAF as being a highly motivated and efficient organisation. The general feeling was always that it tended to plod along, entirely safe from real criticism and efficiency drives thanks to its government ownership. Today this is still the case yet the recently tabled Report at least officially uncovers the degree of inefficiency that is unfortunately symptomatic of our second largest defence manufacturing facility. As detailed in Reece this issue (page 4) a day touring GAF can be a depressing experience to anybody who has been brought up in the real world of hard-fought competition.

As a personal observation, this writer was disappointed to see so many people with obvious time on their hands. Most workers did not appear to be motivated, most were obviously bored and quite a few simply sat in small groups apparently wiling away the hours. This regretably had also been my impression in similar visits to the plant in recent years. Not all were bored though. In one facility we entered, housing an array of fully computerised machine tools that were busily going about their business in a Cyclops fashion, there were a group of a dozen or so workers in a side room playing cards and obviously enjoying themselves! This type of activity is what no doubt recently prompted a senior HdH executive to answer my question regarding Hawker’s buying out the Government shareholding in GAF with “why would we want it”.

One of the primary problems associated with GAF this past year has been the on-time performance concerning the production of flap shrouds for the F-18 Hornet These are not only being manufactured for the RAAF aircraft but also under an offset contract direct with McDonnell Douglas for the supply of shrouds to most US built aircraft. The deal is potentially worth in the region of $100m and is the sole employer of the new multi million dollar Bond Shop which alone is responsible for nearly sixty specialist jobs. GAF fell well behind its production schedule on these key components resulting in management having to acquire several sets direct from the USA in order to deliver AFB and AF9 aircraft to the RAAF on time. Other shrouds eventually arrived at Avalon on the last possible day before they would have jeopardised the flight test programme.

The Committee found that the shroud experience could have caused the GAF to seriously lose credibility with the US Dept of Defence and the RAAF. The Committee considered this would be unfortunate as the F-18 offsets form a major component of the Factories output. The Committee also found that GAF was running behind schedule on the Wamira prototype, the production of Jindiviks for the UK, flaps for Fokker and components for the Boeing 757. In fact GAF was behind schedule with virtually all of its products. The situation with the flaps for Fokker is particularly worrisome as the Australian-originated delay almost forced a slowdown on the Schiphol production line at a time when Australian industry stands a good chance of building components for the new Fokker 100 twinjet.

When the management of GAF was questioned at the hearing on the reasons for the Factories recent poor performance they indicated that it was predominantly due to an industrial dispute during August and September 1985. They were however, confident that such a problem would not reoccur as an accord had been signed by management and representatives of the unions at GAF on the 30th October 1985 that would effectively resolve matters before industrial disputes occurred. Up till now this had been a problem as total manhours lost to industrial disputes this decade, the majority of them childish demarcation disputes, was more than 115,000 with the,bulk occurring in 1980 and 1981. The various unions though claim that the loss of production was principally due to incorrect tools and start-up components being supplied by McDonnell Douglas. MDC refute this and point out that the items in question are largely not even US sourced and that the real reason for the delays was due to GAF employees well doing the learning curve in employing new technology as was applied to the F-18 components in addition to the previously mentioned strike. Either way Australia had to foot the bill for not only air freighting several sets of shrouds to St. Louis but actually having to purchase US-made shrouds to replace the missing Australian ones.

In addition to being up to 10 weeks behind schedule (a situation now largely overcome) on the F-18 shrouds GAF was also two weeks behind time on the projected December 1 0 rollout of the ubiquitous Wamira. In the event fate turned its hand and the Wamira died before the situation became an issue. Production of the Jindivik target drone for the UK is also behind schedule as was Fokker F28 flaps and key wing components for the 757 that are being manufactured as a sub-contract from Hawker de Havilland. GAF management have stated that the F-18 shroud situation has done immense damage to the position of GAF in winning future offsets and sub-contract workload on behalf of the Australian aerospace industry. “The uncertainty of GAF’s ability to supply_ to schedule has wrecked GAF’s credibility. The customer is nervous and does not want to do business with GAF. This is reflected in statements by elements in Defence that they do not want GAF to be prime on any order. Boeing have stated unofficially that they will not place another order with GAF while deliveries cannot be guaranteed”, stated the Report.

The recently signed accord, prompted to some extent by the imminent release of the Committee’s Report and the realisation of the fact that gross retrenchments would be inevitable if major offsets were actually lost, will to some extent at least introduce a level of industrial harmony to GAF. But at what price? Many within the industry already feel that the unions run the operation anyway and there is certainly no lack of subtle evidence of this. Most aerospace facilities, for instance, have executive-type dining areas set aside where visiting dignitaries and representatives of overseas firms (potential buyers and sellers alike) can relax, enjoy lunch and often formalise a deal. At GAF no such facility has ever existed and the new cafeteria complex was recently built with unions specifically forbidding management from installing such a facility. The unions would simply not endorse such a philosophy! So when you see someone at GAF – take your own sandwiches.

The other point is that people are virtually unable to be removed from duty. If a machinist has an accident and cannot perform his skill anymore, he is not declared redundant but merely moved to another position, in which, judging from the experience of many people at GAF, he has no training or aptitude. This sort of situation pervades the marketing, sales and communications areas to no end. So bad is the overall level of commercial reality that the two key departments directly beside the senior management offices are Compensation and Personnel Records. What GAF needs to survive is a hard-hitting marketing team with a rejuvenated product to sell right alongside those management offices – not departments committed to looking after broken fingers and annual leave!

According to the Report, a project team of consultants and representatives of the unions and management was set up to examine GAF’s organisational structure. The Report of that team claimed that the Factories must change in the immediate future because they are failing to meet the requirements of the aerospace industry in the modern era. It indicated that in 1983/84 each of the 2,300 people employed by GAF was effectively subsidised to the amount of $21,000. The Report went on to recommend that if the Government Aircraft Factories were to move towards commercial orientation in their activities, then they would have to become an independent statutory authority with an entirely new management structure.

Several other issues would have to be resolved if the GAF are to become a commercially oriented operation in addition to their defence work. The Factories are also going to have to become much leaner, more efficient organisations. Presently only 45% of the employees are regarded as “direct workers”. The rest are either involved in management and supervision or the inspection and testing of products. The GAF should devise a plan to significantly reduce the number of its employees over a period of time by not replacing certain employees when they retire or leave the company, stated the Committee.

The Public Accounts Committee summed up by stating that the GAF will only approach commercial orientation when it becomes a statutory authority. Only then will it be able to make the quick and decisive marketing decisions required and be able to manage its human and financial resources in an appropriate manner. In essence, the GAF is presently prevented from achieving this by its own organisational structure.