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http://www.theaustralian.com.au/national-affairs/industrial-relations/resource-giants-brace-for-battle-on-the-waterfront/story-fn59noo3-1226651689467

Resource giants brace for battle on the waterfront

by: David Crowe and Matt Chambers
From: The Australian
May 28, 2013 12:00AM



Will Tracey

MUA assistant state secretary Will Tracey says Chevron is to blame for cost blowouts at its Gorgon LNG facility at Barrow Island. Picture: Colin Murty Source: The Australian

RESOURCE giants are preparing for a waterfront dispute that could disrupt their mammoth export projects as they blame the union movement for driving up costs and jeopardising new investment.

In a key fight over the resources boom, companies are pushing back against the latest pay claims from the Maritime Union of Australia amid wider concerns over poor productivity on the wharves.

But the MUA hit back last night at the industry claims and insisted company mismanagement was responsible for the cost blowouts troubling the resources sector.

While the latest argument is focused on the Fremantle wharves that serve the major West Australian projects, the outcome is expected to set costs for transport to gas facilities nationwide.

Resource company executives said they were seeing increasing disruption at the Henderson precinct at the Port of Fremantle ahead of the expiry of an industrial agreement on July 31.

After securing a 30 per cent pay rise over four years under the last deal, the MUA is pushing for a 26 per cent rise over the next four years. Each side of the negotiation is disputing the size of the salaries at stake, with the industry claiming a cook on a ship serving the resource projects could earn $320,000 a year, while the union insists the amount is only $130,000. As the deadline nears, some resource companies are stockpiling the materials they will need on the sites to survive a long-running strike. ExxonMobil vice-president of Middle East and Australia development Mark Nolan said yesterday that labour costs and productivity were "significant disadvantages" for Australia.

"As we look at these mega projects around the world, those sort of issues drive development decisions," he said.

Resources Minister Gary Gray said the industry-wide cost pressures were due in part to the decision, unforeseen seven years ago, to build seven LNG plants at the same time. But Mr Gray acknowledged the union pressure and rebuked the MUA for disrupting the regular supply of materials to the big resources projects. "We do have to be conscious that unreasonable wage demands do place pressures on projects," Mr Gray said.

Asked about the problems at Fremantle, Mr Gray said there were times when the Henderson industrial precinct had trouble getting supplies to Barrow Island, the location of Chevron's $52 billion Gorgon LNG facility.

"And that is a consequence of actions taken from time to time by the MUA and that is not acceptable," Mr Gray said.

"In order to support a viable local industry and jobs in the metals and fabrication sector we need to have reliable logistics."

MUA assistant state secretary Will Tracey said the union had given the Chevron project a one-year extension to ensure it was not affected by the July 31 deadline. "The problems on the project are all of their own making," Mr Tracey said. "That job's being mismanaged. The cost has gone to $52bn but it's going to go to $70bn."

Mr Tracey said ships were being sent to the island when not fully loaded because contractors wanted to avoid financial penalties if they did not hit deadlines.

Australian Petroleum Production and Exploration Association chief executive David Byers said that local manufacturers paid the price for the disruption because it made it more expensive to supply the gas projects.

"The costs to deliver to a site are going up and there are some components that are not able to be put in place on time," Mr Byers said. "That's in stark contrast with some of the materials being sourced from overseas because they can be delivered to a site on time."

David Crowe is attending APPEA's annual conference in Brisbane as a guest of the organisation.