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changing economies and the Labour Movement in Wollongong

Hagan J & Wells A. (eds) 'A History of Wollongong, University of Wollongong Press, Wollongong NSW, 1997 (excerpts)

excerpt one

AIS had hardly begun production when the Great Depression struck the Australian economy. In its first year, 1929, AIS produced 130 000 tons of pig iron and 59 000 tons of ingot steel. By 1931 steel output had slumped to 18 000 tons, and by 1932 iron production had crashed to 37 000 tons. Similar catastrophic falls were recorded by the district's other industries. Between 1929 and 1931, coal output fell from 2.3 million tons to 981 964 tons, its lowest level since the 1890s depression, and coke production dropped from 277 936 tons to 89 733. In 1931 and again in 1932 Metal Manufactures managed a total output of a mere 1700 tons.

For ERS declining production had begun with the Armistice in 1918. Peace caused demand for copper for the instruments of war to plummet and took prices with it. Between 1918 and 1921 Australia's copper ore output fell by over 70 per cent, bringing the closure across the country of mines, smelters and towns. ERS's location next to Metal Manufactures allowed it to retain its position as the largest copper smelter and refiner in the British Empire but production would never again equal the levels to which it had been raised by the mechanised slaughter of 1914-18. In the last year of the War ERS's copper output peaked at 36 480 tons. In 1919 it dived to 1130 tons. The production of gold and silver, largely by products of the smelting of the copper ores, fell away just as dramatically.

The human cost of capitalism's third great collapse in less than 100 years was immense. In 1929 the Wollongong mines employed 5 093 men; by 1933 this had declined to 2 822, the lowest figure since the 1890s. In the same period the coke companies reduced their workforce from 289 to 153. Employment at Port Kembla had been falling steadily since the mid 1920s and the Depression only aggravated an already dire situation. ERS's workforce peaked at 450 in 1926; by 1929 it had fallen to 100, and the onset of the Depression led to more sackings. By 1932 the number of employees at Metal Manufactures had dropped to 211. In 1929 AIS had 1 500 men at work; by 1932 1 000 of those had been dismissed.

AIS was particularly badly hit by the Depression. The transfer from Lithgow had not been completed and was retarded by rapidly falling profits. In 1929 AIS's net profit was £215,040; in 1932 £2 203. Between 1929 and 1935 no dividends were paid on the shares held by Hoskins and its three partners and other shareholders received no dividends in 1931, 1932 or 1933. Until November 1931, with the long delayed commissioning of the open hearth furnace at Port Kembla, the company was forced to retain its Lithgow steel furnace. In 1932, 1933 and 1934 AIS made further calls on its shareholders, to complete the plant and improve efficiency; the depressed conditions, however, prevented the raising of sufficient capital. The result was a 'make do' construction program using old and recycled plant, components and tools from Lithgow and a workforce pared to the bone. In addition, technical problems, particularly with the Port Kembla sheet mill, were draining AIS's reserves .

The giant Broken Hill Proprietary (BHP) Limited, which had operated Australia's largest iron and steelworks at Newcastle since 1915, exploited these difficulties. BHP had been squeezing its Port Kembla rival out of Australian markets in a price war that AIS could not win. In any case, BHP controlled one of AIS's vital arteries. In 1927 Hoskins, lacking the capital to open its West Australian iron ore field, had entered into a ten-year agreement with BHP to supply ore to Port Kembla from its South Australian field. This agreement was inherited by AIS which, hit by the Depression, had no option but to continue with it. BHP refused to renegotiate the contract in 1932. Its refusal to reduce the price of the ore was bad enough but the real problem was the fact that AIS had no chance of raising the capital with which to develop its own ore deposit before 1938. In that year the agreement with BHP would end and there was no option for renewal.

As the economy recovered iron and steel, basic elements in industry and construction, were among the first to respond. By 1934 AIS's iron and steel outputs, 141 000 and 104 000 tons, respectively, exceeded those of 1929 and were about one third those of BHP's Newcastle works. The fact remained, however, that AIS was undercapitalised and in the long run would fall victim to its much larger competitor. In 1935 AIS approached BHP with an offer to merge the Port Kembla and Newcastle operations. The settlement was a triumph for BHP, which acquired the whole of AIS as a subsidiary in return for the latter accepting a 20 per cent shareholding in BHP. This takeover was but one element in the dramatic expansion in the 1930s of BHP's control of Australian metal and chemical manufacturing and iron ore and coal production, as it established or acquired subsidiaries in each of these areas. The takeover of AIS, though, was especially significant because it gave BHP a monopoly of iron and steel production in Australia.

excerpt two

Even with the expansion of industry at Port Kembla, then, coal was barely holding its own. Without it the economy would have contracted as the Wollongong mines felt the impact of global forces that were diminishing the importance of coal as a source of energy. In 1913 over 70 per cent of world energy requirements were met by coal; by 1935 this had fallen below 60 per cent, as coal was displaced by cheaper fuels, especially oil. Shipping, for instance, a major consumer of coal, was shifting rapidly to oil. In 1914 coal powered vessels accounted for 89 per cent of the world's total gross shipping tonnage; by 1939 the proportion was 45 per cent.

At the same time an intensification of domestic and global competition in the coal trade put the NSW coalfields between the jaws of a vice. By the Great War all Australian States had coal industries of their own and, although the quality and the production did not match those of New South Wales, they cut into markets that had been the preserve of the NSW mines. This squeeze on interstate markets was complemented by a decline and then collapse in overseas exports of NSW coal from the mid 1920s, as industrial and industrialising countries stepped up their own production and new suppliers entered the world market. Increasingly, the NSW mining companies were compelled to find buyers in their own State.

Had there been no industrial expansion in New South Wales in the 1920s and 1930s, the Depression notwithstanding, coal mining would have collapsed. Outside of manufacturing the biggest single user of coal was the NSW government railways but the introduction of more efficient locomotives saw the volume and share of consumption accounted for by the railways barely shift between 1925 and 1949. On the other hand, the output of electricity in New South Wales for industrial and household use jumped from 272 803 million units in 1920 to 2 145 447 million units in 1940. Only the growth of manufacturing, including electricity generation, kept the State's coalfields viable. In the 1925-1929 quinquennium, electricity generation in New South Wales consumed seven per cent of the State's coal; by 1945-1949 it consumed 18 per cent. Total manufacturing in New South Wales absorbed 35 per cent of the State's coal output in the mid- to late-1920s, rising to 55 per cent by the late 1940s.

Unfortunately, the poor quality of official figures do not allow an analysis of the final disposal of coal and coke produced in Wollongong. Large quantities of both were railed to Sydney for industrial and household use and for re-export to interstate and overseas ports but in what proportions it is impossible to say. What is certain is that despite the construction of Port Kembla Harbour the shipment of coal and coke to interstate and particularly overseas destinations direct from the District was of no great consequence. In the 1926-1929 quinquennium–relatively good years for the Australian economy–only seven per cent of the district's coal was shipped direct to interstate ports and only 2.1 per cent to overseas ports. The figures for coke were 13.5 and 7.8 per cent, respectively.

Nonetheless, Wollongong's mines were subject to the same national and global forces as those on the Newcastle and Lithgow coalfields. Without the expansion of manufacturing in New South Wales generally and at Port Kembla in particular, the District’s economy, still largely dependent on mining, would have experienced a steep decline. In 1935 iron and steel making at AIS alone consumed 336 000 tons of coal, over a fifth of the district s output. In 1946, under BHP, the tonnage was 467 520, which represented over a quarter of all coal won.

The increasing probability in the late 1930s of another World War was a spur to metal manufacturing, and the Port Kembla industrial complex became an important factor in preparing the nation for a war against German and/or Japanese fascism. In 1937 the Federal government created a five member Advisory Panel on Industrial Organisation to plan for industry's transition to war production. Its chairman was Essington Lewis, managing director of BHP, who also served during the War as national Director General of Munitions and of Aircraft Production. Two other members, Sir Colin Fraser and Alexander Stewart, had been directors of Metal Manufactures since 1928, Fraser as company chairman. Throughout the War of 1939-45 directors of this company occupied various important posts connected with defence production.

excerpt three

The Depression wrought havoc on the lives of many Wollongong workers and their families. Industrial relations became confrontational, bitter and one-sided. A wave of strikes in the late 1920s represented not so much the signal for a new wave of worker control, as the beginning of industrial defensiveness. The coalminers in the Illawarra were severely affected by the lock-outs, violence and strikes that characterised the New South Wales's coal fields between 1929 and 1930. Job losses were dramatic and they massively weakened unions. The Federal Labor government capitulated to conservative financial pressures to reduce wages and the NSW Lang Labor government was dismissed from office at the depth of the Depression. The Australian Council of Trade Unions proved powerless to protect workers.

The Arbitration system survived the Depression, protecting a minority of skilled workers largely belonging to traditional craft unions. Some workers actually improved their lot during the Depression. But for Wollongong workers, things were bleak. In these circumstances the industrial labour movement started to divide. Some supported the Arbitration system and they hoped for a revived political labour movement, but the militant, unemployed, the young and the disillusioned were attracted to the Communist Party (CPA), the Free Speech Campaign the Militant Minority Movement (MMM) and the Unemployed Workers' Movement (UWM).

Communists and 'fellow travellers', many outside the formal union movement, filled the political and organisational vacuum as the Depression paralysed the traditional labour movement. The Free Speech campaign mobilised to protect the threatened rights of workers to assemble and protest. The Militant Minority Movement, a Communist organised 'united front' designed to radicalise unions and unionists, became the training ground for a new generation of militant unionists. From 1932 Communists made inroads into the FIA. They had to contend with the rise of the New (Guard and other semi-fascist groupings. The New Guard was a significant force in Wollongong: 'At Port Kembla ironworkers were beaten by police and attacked by New Guard members, who included AIS management and operative staff… '.

The Unemployed Workers' Movement, another Communist 'front' organisation, proved remarkably successful in assisting the unemployed with food and housing. Their combined impact on Wollongong was very significant; they created a 'new ethos of mutuality' end a 'stronger sense of community and revitalised ideas about their communal dignity and rights'. A new form of industrial politics started to take strong roots.

By the mid-1930s the FIA started to recover. The radical industrial perspective of the MMM and the Communist Party made strong inroads into the Union. Ernie Thornton became its General Secretary in 1936. Aged twenty-nine, Thornton had already been a Communist for five years, an active member of both the MMM and the UWM, an activist in Melbourne unionism and by 1935 Victorian district Secretary of the CPA. In the late 1930s, the industrial economy, re-organised during the Depression with minimal worker resistance, started to recover. The Arbitration Court granted rises that effectively restored wages to their pre-Depression levels. Membership of the iron and steelworkers' unions surpassed that of the Miners' Federation. The FIA became the largest single union in the Illawarra by the late 1930s.

The growth of the FIA in Wollongong depended on the fortunes of the steel industry. The under-capitalisation of AIS and its inability to compete with BHP ended in 1935 when BHP acquired the steelworks through a favourable share deal. BHP, already well versed in the latest technologies (from Germany and the United states) and management techniques (adapted from the latter), directed its capital and energy into making its Port Kembla operations efficient and profitable. It bought coal mines, expanded its shipping interests and gained strong NSW government support for its development of large integrated and modern industrial system. By 1936 its Port Kembla operations employed 3 700 workers.

Thornton, the Port Kembla militants Pat McHenry, Bill Frame, Ted Arrowsmith, Jim Mackie and others in Newcastle, Sydney and Melbourne transformed the FIA. They increased Communist influence and control through union elections and head office support. These leaders were active in the Labour Council, Labor politics and in community activity. The Left gave the union a more professional organisation. Recruitment was dramatic. Between 1936-37 national membership increased 50 per cent; in Port Kembla membership tripled from 750 to 2 212. Together with the Miners' Federation, the FIA led the Wollongong union movement, their work of unification made easier as, in the mid-1930s, the Comintern shifted away from its divisive 'class-against-class' towards a 'united front' against fascism and reaction. The links formed in the MMM and UWM helped move the industrial labour movement towards adopting Communist policies.

The other union of significance at the steelworks and metal processing plants was the Amalgamated Engineering Union (AEU). A Wollongong branch of the Amalgamated Society of Engineers was formed in 1912, and it became the AEU in 1920. It established other branches in Thirroul, Port Kembla, and Corrimal. In 1938 these branches became part of the Union s South Coast and District Committee, extending from Helensburgh to the Victorian border. The AEU covered skilled workers at Port Kembla and in the mines as well. Other skilled workers belonged to the Boilermakers', Engineers' or Bricklayers' unions, but in these unions recruitment was spasmodic and organisation rudimentary.

In the period of recovery after 1933, the Miners Federation began to re-organise. Two of the leaders on the MMM amongst the miners, Bill Orr and Charles Nelson. won leadership ballots. CPA industrial strategy dominated the union executive. Locally the leadership also moved leftwards. This meant that the Labour Council could better coordinate its programs for the formation of industry grouping, membership recruitment, defending the rights of the unemployed, extending union coverage, improving wages and conditions, demanding better housing and sustaining a strong political campaign against national and international political reaction.

The Australian Workers' Union (AWU) had enrolled workers during the construction of the steelworks as well as ironworkers in competition with the FIA. The AWU was, however, unable to press its award preference to advantage. It was by tradition and character conservative and its policies and practice often ran counter to that of the FIA. Conflict between the AWU and the FIA was resolved in 1942 when the FIA was granted equal preference in the Port Kembla industries, and soon after the AWU lost industrial significance in the steel industry. The railway and maritime unions were strategically important, because the Illawarra was dependent on sea and rail transport for the import and movement of bulk raw materials and the subsequent export of its industrial and mineral output. The Australian Railways Union, the Australian Federated Union of Locomotive Enginemen, the Waterside Workers' Federation and the Seamen's Union of Australia all moved significantly to the left in the late 1930s.

All of the industries in which these unions organised were traditional strongholds of unionism in Australia. As the 1930s came to a close, the fortunes of the Illawarra unions and their members brightened considerably. Membership grew strongly, wages and conditions began to improve markedly, and new radical leaders made their socialist commitments apparent. The Labour Council began to coordinate this industrial and political radicalism. As communists and labour radicals across the spectrum of Illawarra unions secured their leadership positions, the Illawarra TLC began to promote an integrated union strategy, plan strike activity and create a political, industrial and community force of considerable potency. While it was not quite a 'little Moscow', Wollongong became a recognised centre of industrial militancy and political progressiveness. The CPA could look at its impact on the Illawarra with consider able satisfaction.

Reproduced with permission of the University of Wollongong Press.

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