Samuel's Blog

It’s not a matter of whether it “needs” to close, it’s a matter of what Shell want to do with it

I was somewhat alarmed yesterday when the news about Shell closing a refinery came out, and the union official who spoke about it on the radio was going on about how the union doesn’t believe that the refinery needs to close, and the closure should therefore be stopped. I can understand unions being concerned for their members, but I think that sometimes that need to realise that businesses do not exist to employ people, rather they exist to make a profit and they employ people as a side-effect of that, so forcing a business to be less profitable is not in the interests of the members of unions.

In the case of the refinery which Shell plan to close, it is simply not competitive in the global marketplace now that Asian refineries are producing so much more oil than it is. As a result, Shell plan to change from refining oil at the Clyde refinery to processing imported refined oil at the facility. Some jobs will be lost, but far fewer jobs than would be lost if Shell was forced, as the unions seem to want, to continue to run the refinery at a loss. It should also be noted that Shell has:

repeated earlier comments that it would relocate as many workers as it could to other Shell operations.

(h/t The Australian)

So, Shell wants to keep as many of its already-trained and presumably loyal employees as is practical by using them for other functions within the company, doing things which actually are profitable and could result in even more employment in the future, as tends to happen in healthy, profitable businesses.

You’d never know that if you ask the unions though.

The AMWU claims 500 direct jobs are at stake, while a further 1700 could be lost in downstream industries like petrochemicals and plastics if the historic refinery is shut.

(h/t NineMSN)

Nonsense. Shell will continue to refine oil elsewhere, as will other companies, and Shell will be replacing the no-longer-locally-refined oil with imported oil. Downstream industries will not be forced to sack people due to a lack of refined oil as there won’t be a lack of refined oil. As for Shell’s employees, as already stated, Shell will offer them employment elsewhere within the business, and any employee who does not work elsewhere within the company for whatever reason is free to find employment elsewhere, and you can be sure that some of Shell’s competitors will be interested in hiring trained people.

Sadly, the unions go on

[The Australian Manufacturing Workers Union NSW secretary Tim Ayres] said it was time for the NSW government to seek assurances from Shell about the potential impacts of the closure, such as in reducing competition, raising prices and disrupting oil supply in NSW.

“If I was in (Premier) Barry O’Farrell’s shoes, I’d really want to be assured that we’ve got certainty over fuel supply,” he said.

“We really think it’s a big test for the NSW government,” he said.

“They should be rolling up their sleeves, getting engaged with Shell and with industry, and making sure we’ve got a viable future for that site.”

(h/t NineMSN, again)

So they want the government to force Shell to keep the site open at a loss, so that a (imaginary) degradation in competition will not occur. Ignoring the fact that Shell will continue to put as much refined oil in to the market for a moment, how far does this plan by the unions extend? What happens if this refinery ends up costing so much that Shell Australia can no longer pay its bills and has to put everyone out of work…do we make the government force them to continue to operate and force their creditors to write-off the debt. Similar government interference in the United States has already led to a financial collapse in recent years.

No, what matters here is not whether the refinery “needs to close” as the unions would put it, but rather what Shell want to do in order to make a profit and continue to be able to employ people as a result. If Shell want to close it down, then so be it. If somebody else wants to buy the site (or some other site) and try their hand at competing, then so be it. It’s called the free market, and it works by allowing businesses the freedom to shape their businesses as they see fit, to prosper, and as a result to employ people. From time to time this results in some job losses, but it also results in more employment. The freer the market, the greater the levels of overall employment.

The unions may argue with this and think that having the government dictate terms of employment and operation to businesses is the way to go, but it has failed each and every time. If Union bosses were really interested in the needs of their members, they would focus on wage and condition claims, but instead it seems that the vast majority of people in the upper echelons of the unions are more interested in claiming a spot in a centralised government-run economy than in looking after their members…is it any wonder that with antics like this, people are leaving unions in droves?

Samuel

1 comment July 28th, 2011 at 12:58pm

When we go to war, we should be in it to win it

And to that end, we should not be setting arbitrary dates to get out of war zones. Apart from anything else, when we enter a war, we have an obligation to the people we are trying to protect to not leave the place in a worse or more volatile state than when we entered, or to leave it in a state where there is a real and present danger of volatility.

Unfortunately, we appear to be set to do just that. In an exclusive in The Australian today, Amanda Hodge writes about the very real concerns of Oruzgan Governor Haji Omar Shirzad.

THE governor of Oruzgan has urged Australia to stay the course in the troubled Afghan province and consider extending its troops’ presence beyond the NATO-agreed December 2014 withdrawal date if security does not improve.

In an interview with The Australian in his compound in the provincial capital of Tarin Kowt, Governor Haji Omar Shirzad said he feared the impact of a premature troop withdrawal on the fragile security gains that have been made within the region.

“If there’s an early withdrawal of troops it will have a negative impact on the security situation,” said the self-styled anti-corruption crusader.

“I don’t want them (Australia) to set a certain time for the withdrawal of troops. It should depend on the security situation.

“If it improves within a year then maybe they can reduce the force here, but if security doesn’t improve after one, two, three years they should think about staying here for a longer period.”

(h/t The Australian. The rest of the article can be read on The Australian’s website)

While he is completely right that if we go ahead with this preposterous plan of leaving at a preset date, we will be leaving Afghanistan with a real and present danger of the people we are fighting against regaining power and making the lives of Afghanis highly dangerous and destabilising the country, which would be a serious neglect of our duty, I think we have another very important reason for staying…one of self interest, and this applies to our allies who are also seemingly willing to leave as well.

We (Australia and our allies) went in to Afghanistan to fight the forces which were responsible for the 9/11 terror attacks and various other atrocities. We went in there to protect our security and our interests, and the in the process ended up helping the innocent Afghan people. If we leave before the job is done, then we will be leaving Afghanistan in a position where the terrorists can regain power and regroup, and then launch more attacks on us with a renewed vigour and aggression.

Right now we have the terrorists on the run for the most part. We should be proud of this and should use this to our advantage to finish the job. Unfortunately it seems that our elected leaders in parliament are more afraid of some bad press than of the long-term consequences of not finishing the job, and are willing to leave the job unfinished because, in a war zone, people have died. Rather than giving our fallen soldiers the dignity they deserve by having the courage to finish the job they started, our politicans are suffering from media-induced cowardice, and the worst part of this is that they are suffering from this at a time when we are gaining the upper hand, and having to enter some more dangerous situations to eliminate the harder to reach elements.

The point of going to war is to win, and you don’t win by telling the other side when you are going to leave. You also don’t win by quitting when the job is not finished…and when you effectively give up as our politicians seem to be willing to do, you create a dangerous situation for the people in the area, and set your own country up for great problems and damage down the track.

We must stay, for our sake, and that of our allies and the Afghan people.

Samuel

July 28th, 2011 at 09:32am