The demerger: Does it deliver?

The demerger: Does it deliver?

On Friday, October 5, Wesfarmers released over 200 pages of documents related to its proposed $20 billion demerger of Coles, after the Supreme Court of Western Australia ordered a shareholder vote on the matter.

If shareholders approve the plan, which is also subject to court and regulatory approvals, Coles will commence trading as one the 30 largest listed companies in Australia on November 21.

The documents revealed several key pillars that Coles said would position the business for success over the next decade, including a focus on fresh food and own brand products, continued investment in everyday low prices, growth of online and click and collect offers and more tailored stores based on data.

Coles also revealed an agreement with Witron Australia, a subsidiary of Witron Logistik + Informatik, to develop two new automated distribution centres (DCs) in Queensland and NSW over the next five years.

The documents did not state how much the DCs would cost to build, though Coles said its capital expenditure guidance of $600-800 million for FY19 includes the project and it would recognise provisions of $130-150 million due to redundancies and lease exits resulting from a handful of soon-to-be obsolete DCs.

Nevertheless, analysts have jumped on the approximated cost of the DCs as a potential financial bottleneck for the new company. Bank of America Merrill Lynch analyst David Errington said spending on the DCs could surpass $1 billion and would make it difficult for Coles to deliver on its target dividend payout ratio of 80-90 per cent.

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Nyrstar to keep jobs, says minister

Nyrstar to keep jobs, says minister

South Australian lead and zinc producer Nyrstar will aim to keep all its existing employees despite reports of 100 job losses, Mining Minister Dan van Holst Pellekaan says.

The Australian Workers’ Union says 40 full-time and 60 contract workers will be made redundant at Nyrstar’s Port Pirie smelter but Mr van Holst Pellekaan says the company has told him otherwise.

“They have a mix of employees and contractors and they’ve made it very clear to me that their ambition is actually not to lose any of their ongoing employees,” the minister said on Wednesday.

The state government underwrote $291 million of a $660 million recent site redevelopment at Port Pirie in order to keep jobs in the city.

In May, Treasurer Rob Lucas said the company would defer payments to its international financiers by 18 months until November 2019.

AWU South Australia branch secretary Peter Lamps said the union was made aware of the potential cuts through media reports, which could place the company in breach of the workers’ agreement.

“The union is considering all options including a visit to the Fair Work Commission,” he said.

“Unlike previous redundancy programs on site where there was a demonstration of transparency, that transparency has turned to opaqueness.”

He said the union has made a number of attempts to contact Nyrstar, but the company has not been able to clarify its position.

Opposition mining and employment spokesman Tom Koutsantonis, who was involved in the initial deal, said some job losses were expected after the redevelopment.

“What we got told is there would be a massive flex up of employment while construction was underway and that’s normal,” he said.

“Once you transition to the operation of the plant there would be some efficiencies, but not on the scale we’re hearing now.”

But the union argued most construction-related redundancies had already been processed.

Nyrstar, a Belgian company, employs about 700 workers at its Port Pirie smelter.

Mr van Holst Pellekaan criticised the previous government for not including a jobs guarantee in its negotiations with the company.

“The prospect of any job losses is certainly concerning,” he said.

“What’s very concerning also, of course, is the fact that we needn’t be in this situation.”

ASC to cut more shipbuilding jobs

ASC to cut more shipbuilding jobs

Adelaide-based defence shipbuilder ASC is looking to cut a further 63 jobs as work on the navy’s new air warfare destroyers winds down.

ASC is close to completing the third and final ship and says that means it may need to cut 56 production jobs and seven salaried positions.

It will consult with its workforce over the next six weeks and is offering voluntary redundancy packages.

“ASC Shipbuilding takes this action reluctantly and only following a rigorous process of identifying and filling redeployment opportunities to other areas in the ASC Group,” the company said in a statement on Tuesday.

ASC said no workers would leave the business immediately and the number leaving could be reduced if further redeployment opportunities were identified in the coming weeks.

The company said it might also be possible for some workers to return once work on the Hunter Class frigates begins in 2020.

Those ships will be built in Adelaide by ASC which is expected to operate by then as a subsidiary of BAE Systems.

The Australian Manufacturing Workers’ Union said the further loss of jobs from ASC was evidence the federal government had failed to secure the workforce for Australia’s future defence shipbuilding programs.

“Unless there is a trained and skilled workforce in place, the future building programs for frigates and submarines will be badly impacted,” AMWU assistant national secretary Glenn Thompson said.

“We are losing those skilled workers who have recently completed the air warfare destroyer program and unless this latest round of redundancies are overturned, they will be lost to the industry, and possibly even leave SA to find new jobs elsewhere.”

Federal opposition defence spokesman Richard Marles said Tuesday’s announcement represented the third round of job cuts at ASC over the past 12 months, taking total job losses to 372.

Mr Marles said the latest cuts also went against federal government promises that it had stabilised the shipbuilding workforce in Adelaide.

“Every jobs promise the Liberals make results in workers losing their jobs,” he said.

South Australian Premier Steven Marshall told state parliament on Tuesday that the federal government understood the importance of defence shipbuilding to SA.

He blamed the previous federal Labor government for creating a “hiatus” between the end of the air warfare destroyer contract and future plans to build offshore patrols boats, frigates and submarines in Adelaide.

“We are working extraordinarily hard on the issue of preparing the workforce here in South Australia and managing that transition,” he said.

“The work didn’t dry up in the last two weeks.”

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Job cuts at Port Pirie Nyrstar smelter despite government-aided redevelopment

Job cuts at Port Pirie Nyrstar smelter despite government-aided redevelopment

The Australian Workers’ Union says the operator of the Port Pirie lead and zinc smelter is set to cut 100 jobs at the site.

Smelter owner Nyrstar said it was “reviewing its long-term organisational structure” to secure a sustainable future for the smelter in South Australia’s Mid North.

The union said Nyrstar told it there would be 40 full-time and 60 contract redundancies out of about 700 people working at the smelter.

AWU branch organiser Michael Hopgood said the union may contest the redundancies if safety was compromised.

“There may be employees that are required to have more than one person in one job,” he said.

“Now if the company are trying to reduce those numbers by saying that one person can do the job of two, well we would have significant concerns with that.”

Mr Hopgood said while the union was prepared to negotiate with Nyrstar, it would not rule out going to the Fair Work Commission.

Nyrstar has not denied the cuts, and said it was “reviewing its long-term organisational structure”.

“A number of transformation initiatives are intended to assist in ensuring that the Port Pirie smelter will have a sustainable future,” the company said.

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