BusinessDesk: Ports of Auckland wanted out of labour contracts long before they expired, union says

 Ports of Auckland was planning to jettison its collective labour contracts long before they expired on Sept. 30 last year, according to port documents released by the Maritime Union.

The port workers are facing a challenge to their terms of employment because the company is determined to outsource their labour to contractors who would compete for work and drive down costs. That’s a model already used by more-profitable rival Port of Tauranga.

Productivity and labour flexibility were insufficient to generate returns required by the port’s owner while Auckland Council and company executives doubted their ability to reach accord with the union over plans to outsource labour to stevedore contractors, according to the undated port document titled ‘Labour Strategy.’ The port deemed the changes “too great” for MUNZ to agree and estimated redundancy costs $5 million during the shift to stevedoring contractors.

A port spokeswoman said the document “does not represent company policy and never did”.

The company had been committed to renewing a collective contract though when talks stalled and industrial action took over it had dusted off plans to contract out the work.

“The contracting out proposal was not pursued as a strategy until recently, as a result of the threat of ongoing industrial action, the increasing competitive pressure on the company, and the inability to conclude an agreement with the union,” she said in emailed answers to questions.

The emergence of the document highlights the bitter dispute between the port led by chief executive Tony Gibson and MUNZ that has been punctuated by strikes and lockouts. When shipping line Maersk and Fonterra Cooperative Group moved $47 million of custom to Tauranga they both blamed the labour dispute. Tauranga has a very good model,” Gibson said.

Ports of Auckland spends $55 on labour for every container while Tauranga is estimated to spend $10 less – which if Auckland could match would see them save $6 million each year, the ‘leaked’ document says.

Container volumes at Auckland rose by 3%, or 27,015, to 894,383 twenty-foot equivalent units, making it the country’s biggest container port ahead of Tauranga, which handled 590,506 TEUs in its latest year.

Ports of Auckland and MUNZ have been engaged in 11 months of talks without resolution.

Garry Parsloe, the Maritime Union president, says that the union bowed to the port’s demand for more flexible hours during six hours of talks yesterday but failed to clinch an agreement.

“We gave an undertaking to extend the shift as required,” Parsloe said. Gibson “said that’s great but it’s not enough”.

The introduction of flexible rosters would increase productivity, according to the port, while MUNZ says it would result in a loss of guaranteed hours and income for its members.

Putting stevedore services in the hands of competing contractors has contributed to Tauranga’s superior productivity, according to a recent Ministry of Transport report. Crane rates at Auckland averaged 25.1 containers an hour in 2010, while Tauranga exceeded that with 34.8, the report on container productivity said.

Shares of Port of Tauranga fell 0.5 percent to $10.15 on the NZX today and reached a record-high close of $10.20 on Jan. 5.