Prophets and profits

The Pilbara and the remaking of Australian industrial relations
Bradon Ellem

For all its physical isolation, the Pilbara has become central to the Australian economy and imagination. Even with the heat out of the mining boom, the Pilbara remains a media staple, with an obsessive focus on shifts in iron ore prices and company strategies. Everyone has their story about fly-in-fly-out workers or the wealth of new entrepreneurs.

Yet in how we see the Pilbara we still undersell the importance and the complexity of the place. The story of fifty years of export mining in the Pilbara is not simply about ‘entrepreneurs in and against nature’ or about how the massive open-cuts and ports have changed the land. The Pilbara, is in some ways much more interestingly, the site of a complete transformation of the politics of work and life. And most importantly it is also a story about how this one place reshaped the politics of industrial relations across the Australian landscape.

What we have is, at first, one puzzle: how did a place that once had higher—and more militant—levels of union membership than the rest of the country come to have a lower rate than even today’s historically low national levels of union membership? And then we have another: how did this place become central to that national trajectory?

The Pilbara presents us with any number of paradoxes as we begin to try to understand this place. It is a ‘resource periphery’ located in an isolated state in an isolated country but owing its current economic form wholly to global integration. Indeed, at one stage, about half of one per cent of the nation’s workforce was producing 20 per cent of all export income. One train load from Rio Tinto’s mines to port with 23,000 tonnes of ore was worth $4 million. And in the so-called slump today, more ore is being exported than ever—so low are production costs that the big companies just keep digging and shipping. It is place where some families’ personal wealth derives from a 2.5 per cent royalty deal with global firms in the 1960s, while other white entrepreneurs fight the original landowners over their 0.5 per cent claims today.

Australia itself remains shaped by its settler origins and by resource to a deeper extent than we often wish to think. It has a deeply uneven economy—highly urbanised with a large services sector, yet with massive export earnings from resources. Few people are employed or live in the Pilbara or other mining regions but massive profits are generated for (mostly) multi-national corporations, corporations which wield significant influence over national political-economy. This sparsely populated and physically isolated site has been central to the national politics of industrial relations.

Wages were high and growing

Its ore bodies were first assessed in the late 19th century, but the Pilbara iron ore industry did not begin until the mid-1960s. After at least 40,000 years of Indigenous life in the place, the pastoral industry had seized the land in often bloody confrontations and assumed control, locking the Pilbara into British trading networks. The first major strike in the Pilbara was that of the stockmen who walked off the job on May Day 1946. They never went back.

Until the 1960s, state and national policy-makers had accepted the conventional wisdom that the ore bodies were limited in scope and uneconomic because of isolation. BHP was reluctant to see the Pilbara’s ores mined, preferring them as a fallback for their domestic steelmaking operations. Exports were forbidden by the national government. But speculators, Japanese steel interests and investors, and at least one transnational company, Rio Tinto, put more and more pressure on governments. The embargo was lifted in 1960 and the state government made agreements with mining companies to develop mines, ports, railways and towns.

By the early 1970s, four companies were mining the Pilbara: Mount Goldsworthy, the first to export (from June 1966) and the first to cease; Hamersley Iron (Rio Tinto’s site) quickly became—and remains—the biggest producer; Mt Newman Mining (now BHP) followed; Robe River was the last of the four, mining from 1970.

Unions almost immediately made the place their own. The workforce was male, reflecting wider social practices constructing mining as men’s work and building a particular kind of masculinity around shared, hard work—union work. At first, the Pilbara’s industrial relations mirrored state and national regulation through compulsory conciliation and arbitration: unionism and awards were the defaults. The workers came from unionised backgrounds: collective action was more or less taken as given.

The Pilbara branches of these national unions (AWU, Metals, Electricians, TWU and Engine-Drivers), quickly developed local peculiarities; shaped in part by the Pilbara’s unusual geography. The Pilbara was as different from coalmine sites in ‘the east’ as could be imagined: the mines were as many as hundreds of kilometres apart; mines and ports within the same operation were separated by up to 400 kilometres.

This geography threatened workers’ solidarity but it also gave them room to move free from state officials ‘down south’. It also meant problems for employers: there were no harbour facilities, railways, or proper roads; scarcely any towns. They had to be made—and then the companies had to control the labour process from extraction through crushing, blending, loading, railing, unloading, reclaiming and shipping. All this in a remote, hot, arid place.

Geography was not everything but it nearly was. The isolated labour market was tight in the construction phase, laying the basis for the unions’ locally distinct power. Wages quickly rose from below to well above national averages. The towns allowed for local social networks, reinforcing the workplace power of the unions. They were company towns only in name only.

Increasingly militant local unions became as problematical for union leaderships 1,500 kilometres away in the State capital, Perth, as for local managers. The local unions aimed to deliver not only high wages but control over the sites in which they worked and the towns in which they and their families lived. Employers became resigned to the high level of strikes.

By the early 1980s, wages were high and growing. Workplace ‘convenors’ and shop stewards enforced local custom and practice. They had high levels of control over rosters, overtime, work organisation, facilities, staffing levels. However, all this, the Pilbara way of doing things, was to come under challenge from local, national and global pressures.

Militant capital

From the mid-1980s, all the structures which had shaped union power in the Pilbara changed. The place was not so remote after all. Shifts against collective bargaining began in Britain and the USA. Strong unions were attacked and beaten. Nationally, unions and the ALP shifted strategy, the ‘Prices and Incomes Accord’ being the headline act in a move to ‘social wage’ politics and a union role in workplace change.

In the state, an Iron Ore Industry Consultative Council set up in 1984 was the local take on this consensus politics but neither local militants nor, increasingly, their employers much cared for it. After two days of Council briefings about the global iron ore industry, all designed to get workers to moderate their demands, a Robe River union convenor demanded attention to more immediate matters: ‘When are you bastards going to fix the fridge in our lunchroom?’

For some employers beyond the Pilbara and one in it, Labor’s reworking of capitalism was still too union friendly. The militant lobby group, the HR Nicholls Society, launched in 1986, urged employers to take on militant unions. The Business Council began to push for a break from national wage-setting. Few, if any sites, would match the Pilbara’s on-the-ground struggles to remake industrial relations.

Between 1986 and 1999, all the remaining Pilbara mining companies, Robe River, Rio Tinto and BHP, took on unionism. Robe River’s de-unionisation became public on 31 July 1986 when the new owners, Peko Wallsend, sacked ‘union-friendly’ managers in Perth and issued directives to the unions that, in short, ‘management would manage’ from now on. There was one of the most publicised and contentious of lock-outs and strikes in 1986-7 and a long war of attrition at Robe’s sites thereafter. Militants were isolated; union-based work practices removed; harassment was unbending—the ‘Grot Squad’ saw high profile unionists sent to sweep street outside their kids’ school.

This dispute redefined Robe River, laid the basis for change elsewhere in the Pilbara and across the country. Other employers watched with interest. Robe River was an employer cause celebre, as the HR Nicholls Society and then mainstream employer groups began to lobby companies to copy this and urge governments to develop anti-union laws. By the early 1990s, New South Wales, Victoria and Western Australia itself had introduced legislation to allow non-union agreements or even individual contracts and to cut back on arbitration.

Back at Robe River, the dispute continued without much national attention—or union support—until 1993. The new State laws then allowed Robe to ‘offer’ individual contracts to its workforce. After years under siege, the unions collapsed as their remaining members walked away. Prefiguring the Howard laws of 1996, these contracts were template contracts: the so-called individualisation lay in shifting processes to company policies and individualising grievance procedures and assessments, delivering managerial control over changes to conditions of employment. In fact if not in law, union recognition was removed.

At Hamersley Iron, Rio Tinto had been planning an attack on unions for years. Having trialled de-unionisation in other parts of Rio Tinto’s operations, Hamersley Iron moved against its unions in 1992. This began when the unions took strike action, as they so often had, over the employment of a non-unionist. This time, Hamersley Iron was all too happy to fight this fight. The unions were divided among themselves and between local, state and national leaders. The employer ramped up the pressure: threatening individual workers with damages under tort law. This conflict was decided in a matter of weeks with almost all the workforce signing the new Western Australian individual agreements that Robe had wheeled out.

So, two of the three Pilbara companies had arrived at the same regulatory juncture at the same time. Perhaps the most striking aspect of this change was its politics: Robe River’s managers had, the Australian Financial Review reported, ‘moved … to set up workplace agreements in line with legislation which [had] yet to pass through State parliament’. Press coverage also emphasised that: ‘[T]his dispute may be geographically remote, but the issues at stake reverberate across the continent’. And so they would.

BHP was now the only unionised operator in what had been, just a decade before, a thoroughly unionised place. Late in 1999, BHP announced it was offering its workforce individual contracts. Someone in the management team had an odd sense of humour, or history: the contract offer began on 11 November (Ned Kelly’s hanging, World War I’s armistice, the sacking of the Whitlam government) and ended 3 December (the fall of the Eureka stockade).

For five years, BHP’s towns and worksites saw an ACTU-backed campaign to hold onto the unions’ last bastion in the Pilbara. Women’s groups and community groups were reinvigorated and global union alliances and new legal strategies were developed. However, the Federal Court delivered a defeat to the unions, ruling that while workers were free to join unions, companies were free to ignore them. In other words, freedom of association was robbed of meaning. Employers could ignore the wishes of workers to engage in collective bargaining. In 2005, WorkChoices enshrined this line of thinking.

The seeds which had been planted in the Pilbara and the West had now borne fruit nationally. Managerial freedom to determine contractual arrangements and to limit unions’ rights to bargain collectively was significantly enhanced.

Harder to organise, harder to defend

As the Pilbara moved into what was to be the biggest boom in its history on the back of the Chinese steel industry, the employers had already remade Pilbara in their own image. Adding Robe River to its Hamersley Iron operations in 2000, Rio Tinto controlled the majority of the Pilbara and a set of non-union sites. For its part, BHP, now BHP-Billiton, was the world’s biggest mining company. Both companies had record profits, with iron ore vital to those revenues. Even with the arrival of a company based in Western Australia, Fortescue Metals, the two long-established companies continued to export unparalleled tonnages. Iron ore was easily the country’s largest export income earner.

This boom made clear just how much had changed after the companies had won back control of the workplace. The local geography of work was transformed. Fly-in-fly-out labour and twelve hour shifts became the norm. As new mines came on-stream, not one mining town was built. The workforce was fragmented by time and place and it was divided from the local community. The local sources of union power had been cut off.

The companies leveraged their local control into political influence—even when facing legislative threats. The first change came in Western Australia itself in 2002 when a Labor government abolished individual contacts. Rio Tinto’s solution to this threat was simple: to take labour regulation out of Western Australia and use national laws to retain control (through a non-union collective agreement).

When the company put a non-union agreement to a ballot of its workers, the Robe River workforce agreed but the Hamersley Iron workforce did not. To the amazement of all (including union officials), this triggered a chance for the unions to re-unionise Rio Tinto. Focus groups revealed that local workers wanted an explicitly geographic, local resolution: a local shop-front for all the mining unions. The result was the Pilbara Mineworkers’ Union (PMU). However, this local agenda faced several dilemmas. Hamersley Iron’s managers delayed negotiations, a standard Rio Tinto ploy. The unions’ focus on ‘community’ concerns in an increasingly fly-in-fly-out industry was now problematical because of the logistics of organising such workers, and more importantly, because local concerns (housing and services) were not as important to them as to resident workers. Most of all, though, local unionists could not isolate themselves from national union politics. In 2003, the major union involved in the joint campaign pulled out. It negotiated its own deal with the company to the exclusion of others. The PMU was dead, and with it died the organising drive in Hamersley Iron. In the end, most of the workforce remained under various forms of individual contracts, with union die-hards isolated and demoralised—yet again. BHP-Billiton also used these individual contracts, continuing to exclude unions.

No sooner had Rio Tinto seen off this local threat than a national one appeared. By the middle of 2007, it was clear that the ALP was likely to win national office. The companies secured significant concessions from the ALP before the new laws were debated in Parliament, including a vital one prolonging the term of existing agreements. The companies prepared non-union agreements in the shadow of the new system. Rio Tinto led the way, with an agreement signed initially by just a dozen employees that would then come to cover all new hires, and continue to exclude unions. In a series of cases, the union seeking to unionise the rail section of Rio Tinto, the CFMEU, successfully challenged the validity of these agreements in the Federal Court. After four years of campaigning, it also secured a collective agreement for the rail section. This was the first break in Rio Tinto’s non-unionism for twenty years. The company fought back once more, announcing an automation of the mainline rail system, aiming to shift control of the trains out of the locomotive’s cabin in the Pilbara to the company’s Remote Operations Centre in Perth.

This particular spatial change was one of many: fly-in-fly-out means that new employees are far more likely to live in urban centres than in the Pilbara; maintenance has been contracted out to metropolitan-based workers; cleaning and accommodation needs have long been met by non-mine companies; even the management of some mines had been outsourced. With union power reduced, the employers were free to decide the very shape and extent of the geography of the mining industry. And time and again, the workforce was divided and fragmented—harder to organise, harder to defend.

Beyond the Pilbara: the global economy and national politics

In some respects, the proponents of de-unionisation over-reached themselves. Amendments to national labour law in 2005, the WorkChoices policies, were the highpoint of a trend that had begun, in the Australian states in the early 1990s. The stripping away of minimum standards was most marked not in export sectors but in the female-dominated, low-paid service and care sectors. Partly for this reason, the Your Rights at Work campaign succeeded in unseating the government in 2007. Thereafter, the ALP’s legislation allowed the potential for local union intervention—but only the potential. The unionisation of the Rio Tinto train drivers was a prime example of how unionism could resurface. However, workers in so many other sites in and beyond the Pilbara remained prone to the discourse around ‘global competition’ and non-union work arrangements that the mining companies had driven for a generation.

Despite the 2007 result of election, the influence of Rio Tinto and mining generally over other employers remained. When the ALP’s Fair Work Act was reviewed in 2012, BHP-Billiton’s submission was very similar to Rio Tinto’s. The Business Council’s increasingly repeated Rio Tinto’s ‘direct engagement’ phraseology to call for restrictions on unions. In 2009, the mining companies had seen off a government attempt to tax the industry in new ways and, in so doing, helped unseat a prime minister. They persuaded locals and many of those workers that taxing this industry was a threat to their jobs. It is unthinkable that they would have managed this back in the 1970s with a unionised workforce to argue against.

The Pilbara has perhaps been more important—more influential—than it should. That is because of the unevenness and peculiarities of a resource economy such as Australia’s. Global mining capital has exercised a disproportionate influence from the periphery to national centres of policy-making and across other labour markets. When the companies set out to ‘re-fix’ the Pilbara less as a community and more as a globally-determined resource site, they not only achieved that but they also reshaped industrial relations beyond the Pilbara. They had all but made the industry’s workplaces their own and generated, reproduced and profited from the uneven nature of Australia’s political-economy.

The supposedly old-fashioned world of strikes and unions was critical to the daily activities of managers and workers in the Pilbara for over a generation. The result of those conflicts was a reshaping of the Pilbara and national politics. Beneath that political power—indeed essential to it—was the industrial power that the companies had won in their long battle with the unions. The assault on the Pilbara’s particular kind of unionism has been matched by an assault on the memory and knowledge of it. Rethinking that past and seeing the present differently are vital tasks.


Bradon Ellem is Professor of Employment Relations at the University of Sydney. This paper is drawn from his new book on the history of the iron ore industry, The Pilbara: From the Deserts Profits Comeavailable now from UWA Publishing.(255 pp; $39.95).


Suggested citation
Ellem, Bradon, 'Prophets and profits', Evatt Journal, Vol. 16, No. 4, September 2017.<http://evatt.org.au/papers/prophets-and-profits.html>