Lyttelton gears up for a fight

By Chris Hutching

Friday 27th September 2002

Lyttelton Port Co is heading for a showdown with waterfront unions over labour flexibilities so that it can offer quicker turnaround times for the new breed of super containers plying trade around New Zealand ports.

But some sharebrokers believe the market has already factored the loss of container business into the sliding share price which hit $1.58 this week compared with its recent high in June of $1.90.

After two years of negotiating with port unions the company is taking advice from Mai Chen of Wellington-based law firm Chen Palmer & Associates and has placed newspaper advertisements seeking expressions of interest from corporate advisers for a report that will consider contracting out labour services.

"It's not a good look when you have to bring in an outsider like this. I think the massive dividends that Christchurch city has taken out in recent years has got a lot to do with the current problems. Otherwise, why did the company need to get Solid Energy to put in $13 million for its deal to put more coal through the port?" a broker queried yesterday.

An "independent" report would strengthen the port's case in any legal dispute if negotiations fail between the company advocate, Chris Connor, and union advocate Paul Goulter, secretary of the Council of Trade Unions.

According to Lyttelton Port managing director, David Viles, the matter has reached a critical point while the unions claim they are still willing to negotiate. The port already operates around the clock but Mr Viles wants to call on labour at shorter notice than current arrangements allow.

"We lost 10% of our business to Port of Timaru recently when it won the Mearsk container business. Now P&O Nedloyd has seven of the big TE4100 ships and Contship has three that will be coming to New Zealand. Tauranga, Auckland, Lyttelton, Port Chalmers, Wellington, and Timaru are all in the running but only three ports will be chosen. How serious does it have to get?" Mr Viles said.

The latest annual report contains more detailed information than usual about remuneration and reveals that 60 staff earned $50,000 to $60,000, 118 staff earned $60,000 to $70,000, and 40 staff earned $70,000 to $80,000 with smaller numbers earning more while the managing director's salary was $280,000.

But Christchurch mayor Garry Moore's call this week for a settlement to secure the financial future of the port was ironic given the amount of money the city council has stripped from the company in recent years. The city council is a 65% shareholder and the $6 million it took from a 10.2c-a-share dividend last year accounted for 4% of city rates.

In May 1998 the council stripped out a special dividend of 22.7c a share ($30 million) and in 2000 a special dividend of 10c a share on top of ordinary dividends of 6c and 10c a share for those years.

Mr Viles denies the special payments have weakened the balance sheet. He said the $13 million injection from Solid Energy is appropriate because the 15-year deal is not exclusive and the port would otherwise end up owning assets built for a special purpose.

In the year ending June 2002 the company made an after-tax profit of $16.3 million ($13.6 million last year) on turnover of $61,986 million ($58.2 million) maintaining a healthy earnings trend of the past five years.

The waterfront spat has become publicised in spite of an agreement under the good-faith bargaining provisions of the Employment Relations Act that such disagreements be negotiated behind closed doors. Emotions are running high at the port with many workers convinced that the death of a picketer last year was the result of industrial tension and fueling rumours that chairman Brent Layton's reappointment to the board was under threat.

* After winning the Maersk shipping line business from Lyttelton, Port of Timaru is being rebranded as PrimePort Timaru to reflect its geographically central position in Mid Canterbury and growing significance for businesses in the region.

PrimePort achieved a 10% increase in cargo volumes to June 30 with business up 28% thanks to the Maersk connection. To support the increasing container trade the port has committed $8 million to development spending in 2001/02 and a further $15 million this year.

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