UPDATE 1-Australian court blocks Toyota worker vote on contract

Thursday, 12 Dec 2013 | 3:13 AM ET

* Toyota had been seeking vote on cost cutting measures

* Unprecedented pressure on Toyota Australian after GM exit

* Fears for supplier network if Toyota follows

SYDNEY, Dec 12 (Reuters) - An Australian court on Thursday blocked Toyota Motor Corp from holding an employee vote on proposed contract changes, dealing a blow to the company as it seeks to cut costs and decide its manufacturing future in the country.

The world's largest automaker has been seeking to make changes to its workplace agreement to improve productivity in Australia, where General Motors Co has just made the decision to stop production.

There have been widespread concerns that an exit by GM's Holden unit would be followed by Toyota, threatening around 150 parts and component suppliers and the entire domestic auto industry which directly employs more than 40,000 people.

Australian Prime Minister Tony Abbott, under fire for not doing enough to keep Holden going, said he had been talking to Toyota.

"I deeply regret for the last three months, which is as long as we have been in government, we haven't been able to hold Holden," Abbott told reporters in Canberra on Thursday. "The challenge now is to ensure, as far as we reasonably can, that Toyota stays and that is what we are working on."

The Federal Court of Australia upheld a complaint filed by four employees that Toyota could not change its work agreement until it expires in March 2015, Toyota said in a statement.

Toyota Australia president and CEO Max Yasuda said he was disappointed with the court decision.

"We believe that we are within our rights to vary our workplace agreement provided the majority of our employees support the changes through a formal vote," Yasuda said in a statement.

Yasuda said the proposed changes were meant to remove "outdated and uncompetitive" terms and conditions to make Toyota Australia competitive.

"GM Holden's planned closure in 2017 will put our manufacturing operations and the local supplier network under unprecedented pressure, so it is now more important than ever before that we make urgent changes," he said.

Representatives of Toyota workers disagreed.

"It's not the wages and conditions that are going to decide the future of Toyota, it's going to be the knock-on effect of what happens in the auto components sector and what kind of support the government is going to do," Dave Oliver, secretary of the Australian Council of Trade Unions, told the Australian Broadcasting Corp.

GM said on Wednesday it was pulling out of Australian car production as it was no longer viable due to the sustained strength of the Australian dollar, high cost of production, and a small, fragmented and highly competitive domestic market.

In May, Ford Motor Co said it would shut its two Australian auto plants in October 2016, blaming similar factors.

GM's Holden unit had been asking for additional support from the government, but had been rejected.

Toyota, which employs 4,000 people and produced almost 100,000 vehicles at its Altona plant in Australia last year, said it was now considering its options, including whether it would appeal the decision.

Australia has annual sales of around 1.1 million new vehicles, but sales of locally manufactured vehicles have fallen to less than a quarter of that, from almost 389,000 in 2005.

Toyota is the most successful automaker in Australia, with a market share around 20 percent and a healthy export business.

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