Defending Australia: 30pc union wage claim at Osborne endangers naval projects, BAE boss Craig Lockhart warns

Craig Lockhart, the chief of Adelaide’s $45bn naval frigates program, warns the current union pay claim would make the project “uncompetitive” and trigger a crippling wage spiral.

BAE Systems Australia Craig Lockhart says union wage claims would add nearly half a billion dollars to the Hunter class frigates program. Picture: James Elsby

The chief of Adelaide’s $45bn naval frigate project is warning a 30 per cent union pay claim would add hundreds of millions in costs and trigger a debilitating wage spiral across other industries.

In an interview with The Advertiser, BAE Systems Australia chief executive Craig Lockhart argued the wage claim would add $477m cost to the Hunter class frigate program, almost $200m to Hobart class air warfare destroyer upgrades and an unknown amount to AUKUS submarine construction.

More than 400 BAE Systems Australia workers demanding a 30 per cent pay rise over three years escalated industrial action on May 22 after a March strike, walking off the job to march through Adelaide to BAE’s Flinders St headquarters.

Union leaders said they disputed Mr Lockhart’s cost claim and produced comparisons arguing the highly skilled BAE workers were underpaid when compared to other industries in South Australia.

In particular, they have argued they are underpaid by 20 per cent compared to workers at Osborne Naval Shipyard neighbour ASC, which struck a pay deal last November.

But Mr Lockhart argued BAE was offering a fair 15 per cent over three years, plus super, and continuing to hire between 60 and 100 people monthly to add to the Osborne workforce of 2700. This included packages of $150,000 and beyond.

“I think what we have to do is we have to make sure that those programs are affordable and do not give governments cause to take decisions, reviews, on the basis of affordability. Hunter has been the subject of that question for the last 24 months,” he said.

“The message I have is an industry lead is we have got to be competitive as a nation, in terms of export and, indeed, defence export.

“If we’re seen to add 30 per cent to a labour cost, which is the opportunistic view taken by the trade unions at the moment, that would make us wholly uncompetitive in every sector. And it wouldn’t just stop at shipbuilding. It would go on to many other industrial sectors.”

Asked if he was warning of a wage spiral across other industries, Mr Lockhart said: “I think that’s a natural conclusion to make.”

Asked about the industrial action, Premier Peter Malinauskas said the workers deserved a real wage increase and their skills were in growing demand, so they were understandably trying to maximise their value.

“But it would be terrible, of course, if we ended up in a circumstance where that occurred at the expense of projects themselves. Good industrial relations always seeks to achieve a balance. I hope that is arrived at sooner rather than later,” he said.

CEPU electrical energy and services division SA branch secretary John Adley said Mr Lockhart was “obviously out of touch regarding what his fellow BAE employees are paid”.

Mr Adley cited comparisons to a BAE Systems Australia certificate III base trade electrical worker at Osborne earning $44.82 per hour with other SA industries, saying someone with identical qualifications and experience elsewhere earning $50.59 per hour – plus allowances and other payments.

“Once the South Road tunnel project and Women’s and Children’s Hospital project are fully underway, BAE will be competing for skilled labour in a very tight market against these pay rates and conditions,” Mr Adley said.

AMWU state secretary Stuart Gordon said Mr Lockhart’s project cost claims were “complete nonsense” and “deliberately sensationalised”, arguing BAE trade salaries were between $86,000 to $98,000 a year – not $150,000.

“ That is significantly less than those at ASC. It’s pretty deflating for highly skilled workers to be told by their CEO that they are less valued than a worker at ASC at the same site doing the exact same work. It is entirely fair to ask for pay parity. Just for clarity, our claim is for parity,” Mr Gordon said.

Originally published as Defending Australia: 30pc union wage claim at Osborne endangers naval projects, BAE boss Craig Lockhart warns