RELATED COVERAGE: No hope for entitlements
A chapter in one of Latrobe Valley’s more controversial engineering businesses came to a shock close last week, with 15 employees laid off 10 minutes before knock off and the company sent into liquidation.
In a move which has left affected workers reeling, Yallourn-based workshop Mechanical Engineering Corporation notified its staff Wednesday afternoon it would cease trading that day, after incurring ongoing and unsustainable financial losses.
However in a business manoeuvre which sacked workers are struggling to understand, it was revealed the company has been bought out by an entity owned by MEC managing director Anthony Eliott, Australian Mechanical Engineering, allowing the business to continue trading under a new name the very next day.
Insolvency administration firm Worrels has been appointed as liquidator to the MEC account, into which the remaining funds from the company’s sale have been placed.
Until Wednesday, MEC had employed more than 40 boilermakers, fitters, turners and administration staff, providing componentry maintenance and servicing primarily for the Valley’s power stations.
In a conference call with AEM executive director Anthony Turner, who will oversee the new business entity alongside Mr Eliott, The Express was told MEC had suffered “multi-million dollar losses” over recent years, exacerbated by a significant loss of business in the past three months.
Keen to put a positive spin on the takeover, Mr Eliott and Mr Turner said the fact that 75 per cent of the workforce’s jobs could be saved was “great news” for the Valley.
“Essentially we have tried to save as many jobs as possible here; assets from the company and number of liabilities have changed hands in the sale contract, essentially what we have left is a new business which has taken on the number of the liabilities,” Mr Turner said.
“To try and restructure without liquidation would have crippled the business and only created further job losses; our main focus is to keep that business running and to put whatever assistance we can into keeping those jobs.”
Mr Turner said employees not sacked through the sale had been re-employed by AEM under similar working conditions experienced at MEC.
Still grappling with the news, sacked workers, while told they would receive their final week’s pay, said they held grave fears for thousands of dollars in owed entitlements, which was now at the mercy of the liquidation process.
However Mr Turner and Mr Eliott would not be drawn on questions regarding monies owed to laid off employees, shrugging off suggestions liquidation was an avenue to avoid paying out owed entitlements.
“The business was on a knife edge; the options were to go into liquidation and everyone lose their jobs without a buyout, or the current option which makes it possible to save as many jobs as possible – that’s the essence of it,” Mr Turner said.
“Nothing here is personal… I don’t think we need to comment any more on what those workers are saying that because it becomes a tit-for-tat scenario.”
While Mr Elliot and Mr Turner said they were unsure what assets could be recovered from MEC’s liquidation, they acknowledged the level of funds which became available could be insufficient for remuneration.
Gippsland Trades and Labour Council secretary John Parker said based on managing director’s track record, sacked workers could not trust anything the company said.
“This bloke has been caught out trying to shift money around before – I’ll be calling on the liquidator to look as deep and as far back as it can on this,” Mr Parker said.
In 2007 MEC was ordered by the Federal Court to pay $400,000 in redundancy payments to sacked workers, after more than 30 workers were sacked during a prolonged industrial dispute in which Australian Manufacturing Workers Union employees staged a 277-day picket line.
