Almost a fortnight after announcing his departure, Fairfax boss signalled
he wants up to 45 journos to beat him out the door. Why?
Sometimes you just have to wonder why companies and their senior
executives shoot themselves in the feet, head or whatever.
The latest example is John Fairfax where Fred Hilmer is flitting off
next year after the company finds a successor.

As Crikey has remarked in the past, this is extremely poor corporate
governance. Many good CEOs say that one of their tasks is to find and
indentify managerial talent, especially a successor. No such luck at Fairfax.

But while he searches for a ‘new Fred” the Fairfax CEO was to identify
up to 45 ‘lucky’ journalists to lead the way out the door before he goes.
They might be called ‘voluntary’ redundancies, but Fred wants them to
happen. So they will. But why?

Things must be going downhill quickly at Fairfax, otherwise why have
they just announced the plan which will see up to 45 journalists go from
the Sydney Snoring, sorry, Morning Herald and the Sun Herald, when only
six months ago management concluded a new three year Enterprise
Bargaining Agreement with journalists?

Fred’s of the swinging the axe was unexplained in a brief announcement
to the market after staff at the papers were told late Tuesday. Fairfax
announced that it would start talks with the Media and Arts Alliance on
proposals to cut up jobs at both papers but made no mention of any
similar proposals for the other major papers in the group, the
Australian Financial Review or the Melbourne Age and its Sunday
stablemate.

Fairfax said in a statement the downsizing would be voluntary to
start with, leaving open the prospect of forced redundancies later on.
Fairfax said the they were looking to lower staff numbers by 35 to 45
people, with a cost of $6 to $8 million, providing annual cost savings
of around $4 million.

So if they get rid of 45 people then the cost would be effectively two
years of savings before a pay off. Hmmm sounds like the sort of MBA
accounting Fred’s been famous for at Fairfax.

If 45 people are sacked, they will get an average of almost $178,000,
that sounds a lot, but insiders at Fairfax tell Crikey the redundancies
are aimed at graded journalists and sub-editors, editors,artists,
designers and photgraphers. Sources claim that some 57 per cent of
reporters and sub-editors at the SMH and Sun Herald are on $100,000 a
year or more. No wonder the sackings, sorry redundancies are described
as ‘targeted’.

You have to ask the question why weren’t the redudancies called for as
part of the EBA talks, or would that have made it all too hard?
Intriguingly Fairfax told staff that page volumes at the SMH and Sun
Herald ‘would be streamlined to bring them into line with 1999-2000
levels’.

Now that could mean Fred’s all nostalgic and wants to see paper sizes
for both titles at the levels he can remember back when he started as
CEO. He may be having trouble reading the larger papers, especially on
Saturdays.

Or it could be there’s a big bout of cost savings coming with paper
sizes being cut, paper and ink consumption trimmed and consequently no
need for a press upgrade at the Chullora printing plant in southwestern
Sydney.

There’s been no news from inside Fairfax about running into capacity
constraints at Chullora, which came on stream about five or six years ago.

But Fairfax is still trying to bed down the new Tullamarine plant
for
The Age in Melbourne which has generated some industrial angst.
Significantly there was no mention of any plans for redundancies among
printers at Chullora.

But trimming staff across the board fits with the idea that paper sizes
will fall. Fewer artists, photgraphers, designers and writers will be
needed to fill the smaller-sized papers.

More worryingly, will Fairfax cut back on boring news
stories in favour of all these advertiser-supported inserts and
supplements? Editorial space in most sections has been tightened in
recent years and the contrast with the content-rich Australian and
Sunday Telegraph is now quite noticeable.

But why look to lower costs by just $4 million a year. It would seem
some number cruncher has worked out a ratio between the ‘streamlining’
of page volumes at both papers and the number of people used to fill
them. More of Fred’s infamous MBA-inspired fine tuning, no doubt.
So why now, profits don’t seem to be a worry, do they?

Earnings in the half year to December recovered strongly and just topped
$100 million, a rise of 43%. Following the adoption of tax
consolidation, the company got a one off tax benefit of $62.3 million,
boosting earnings to $162.4 million. Tax consolidation will boost the
company’s cash flow by around $6 million a year through a gradual fall
in tax payments, the company reported earlier this year.
In the absence of any more information there’s a sense of, ‘oops got it
wrong with the EBA last November’ or ‘oops things have suddenly got
worse, classifieds are falling, cash flow is tightening, we need to
lower staff numbers’.

Besides the financial numerology of workers-to-pay volumes, there may
also be a slightly more sinister explanation. Fairfax could be trying to
also lower the age profile of its employees. Non-media subscribers might
not understand that although jounalism is for the young and ambitious,
its also an industry where pay levels tend to rise with length of
service. Not so much pay based on seniority, but pay linked to ability
and experience, plus what you can get.

On many papers pay levels tend to be higher among older staffers, so is
this the real reason behind Fairfax? That like the papers themselves,
the newsroom is really a bit old, a bit gray and just a little boring?

Insiders say staff numbers on the SMH have grown outside the daily book
in recent years with the addition of more inserts.
On the Sun Herald, the move is more a reaction to the continuing decline
in circulation in the face of aggressive competition from News Ltd’s
Sunday Telegraph, which is now the paper with the biggest circulation in
the country. (I know the Hun claims the highest daily circulation.)

The Sun Herald has gone for more glossy inserts, like the Sunday Tele,
but so far that hasn’t rubbed off on circulation. A break down in where the job losses are being sought will tell you were
the problems really lie.You’d have to wonder when more drastic surgery
will be done on the Sun Herald, such is its decline in the past couple
of years.

And a final point, it is illegal to target redundancies on the basis of
age, sex etc, and it is also thought a bit crass to try and get rid of
troublemakers and stirrers. So in this case are pay levels code for
age?. No, Fred Hilmer wouldn’t think of that nor his managers, such as
the mild mannered but ambitious metro editorial boss, Mark Scott.

CRIKEY: We see this as major recruitment opportunity to get these
experienced reporters and sub-editors out of the Sydney Heralds and
onto sweatshop contributor rates working for Crikey.

Therefore, we are going to try and be intimately involved in this
redudancy process. Who are these 100-plus journalists on more than
$100,000 a year, how big will each payout be, who is going to be tapped
on the shoulder and who will volunteer?

All thoughts and contributions to [email protected].

Peter Fray

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