The Dim-Post

March 7, 2012

Destroying the village to make it more efficient

Filed under: economics — danylmc @ 6:13 pm

Vita the Herald:

Union officials are challenging Auckland Mayor Len Brown to intervene on behalf of 292 port workers who have been sacked.

But Mr Brown is refusing to take a side in the industrial dispute between the company and union members – saying he is working only for the “people of Auckland”.

Mayor Brown’s council instructed the ports to grow profits. Now, we’ve heard a lot about how the greedy wharfies have cushy job contracts that compromised the efficiency and profits of the port, but despite these lavish wages and inefficient workers the port still somehow managed to make a profit of $27 million dollars last year.

I’m no business analyst, but I’m guessing that months of stop-work meetings, losing hundreds of millions of dollars in customers, sacking the entire work-force, paying millions more in redundancy and being placed on a global black-list is also going to compromise the efficiency and profits of the port, and its ability to return a dividend to the people of Auckland, who Brown represents. You don’t have to be pro-union to see that the management’s decision to smash the union’s hold on POAL has been a financial disaster for the company they’re being paid to run.

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23 Comments »

  1. “I’m no business analyst, ……”. At last, something we can agree on.

    Comment by Tinakori — March 7, 2012 @ 6:16 pm

  2. I think it’s also pretty telling that Len Brown’s reason for not interfering is his claim that he is not legally allowed to under the SuperCity legislation. He’s obviously scared of a law suit. He’s probably right to be but it’s a bit wimpy really isn’t it? The Ports of Auckland management is being a lot braver in this respect – I’m too lazy to look up the legislation but surely they could be taken to court for not engaging in good faith bargaining? Or will the gummint pass legislation to retrospectively make their behaviour legal, ala, the police surveillance legislation?

    Comment by Amy — March 7, 2012 @ 6:19 pm

  3. Tinakori that’s an awesomely cutting cheap shot – so kudos, for sure – but how about sharing what you think is wrong with the analysis?

    Would you be giving the POAL directors their bonuses based on their handling of this issue and the damage it’s caused to the business?

    show us your analytic flex

    Comment by nommopilot — March 7, 2012 @ 6:26 pm

  4. They’re also going to be blacklisted by wharfies around the world. Expect a lot more Auckland freight to have to head to Tauranga in the next few months.

    Comment by George D — March 7, 2012 @ 6:32 pm

  5. Yeah, I know nommopilot, a cheap shot for sure. In my defence, Danyl did send a slow one right down the middle. Don’t have strong views on POAL dispute. Having covered more than a few industrial disputes and been in a couple of disputes as a union member I am all too aware that what appears on the surface may not reflect the underlying reality. My one observation is that old style unions are really, really hopeless at communicating to other workers and to the wider public. That may by symptomatic of crap arguments or incompetence (or both). I am not close enough to the dispute or have taken enough interest to tell. POAL sure seem to be winning though and its hard to see Len Brown as a captive of capital.

    Comment by Tinakori — March 7, 2012 @ 6:45 pm

  6. @ Amy #2: it’s probably a symptom of the Super City being formed under the assumption that Banksie would grab the mayoral chains. I can understand Mayor Len trying to stay neutral at the risk of being seen as a sellout, but an industrial dispute of this scale is highly polarising.

    @ George D #4: this. If Mayor Len’s hands really are tied on the matter, then the ITF’s proposed port-of-convenience declaration will probably force a settlement on the matter. Expect to hear self-appointed fiscal globalists go Tea Party about ‘foreign meddling in domestic affairs’.

    Comment by DeepRed — March 7, 2012 @ 7:00 pm

  7. I should also add that the recent spike in industrial disputes shouldn’t come as a surprise, given that recent welfare policy changes have likely ramped up fear of being out of work. Somehow Minister Bennett et al haven’t thought that aspect through.

    Comment by DeepRed — March 7, 2012 @ 7:05 pm

  8. Deep #7: No I think that Bennett el al have exactly thought that aspect through. Indeed that’s the point.

    Harsher Welfare => Fear of Being Out of Work => Opportunity to Cut Workers Conditions => Low Wage Economy.

    Comment by RJL — March 7, 2012 @ 7:19 pm

  9. My one observation is that old style unions are really, really hopeless at communicating to other workers and to the wider public.

    It’s a basic consequence of deciding not to sling a few hundred grand at a “Senior Communications Manager” and even more at a public relations firm, and instead letting some fellow proletarian do it. The reasons behind that choice lack all opacity if you stop to think about it.

    Comment by Psycho Milt — March 7, 2012 @ 7:32 pm

  10. Mayor Brown’s council instructed the ports to grow profits.

    I sincerely hope there’s a queue of journalists outside his door waiting to ask him to comment on a possible connection between that requirement and the company’s subsequent union-busting plans, but that’s probably too much to hope for in this day and age.

    Comment by Psycho Milt — March 7, 2012 @ 7:36 pm

  11. Dog. Whistle.

    Comment by stephen — March 7, 2012 @ 7:51 pm

  12. …and as Julie Fairey mentions on twitter, it would nice to hear the explanation for the council’s inability to get involved with *this* POAL decision when they were all over the POAL expansion issue just, umm, yesterday wasn’t it?

    Comment by Pascal's bookie — March 7, 2012 @ 7:54 pm

  13. Some poor bastards just don’t know when they’re beaten.

    Comment by Adolf Fiinkensein — March 7, 2012 @ 8:19 pm

  14. did the Council actively instruct Ports of Auckland to grow its profits? could they instruct it not to grow its profits? or is it somehow written into its guiding principles that its duty to the council is to grow its profits?

    Comment by kahikatea — March 7, 2012 @ 8:25 pm

  15. Len Browns role in all this makes me sick. First, vacillation and silence. Then, when presented with three hundred working class families he has had a heavy hand in rendering destitute, what sight are we subjected to? An aggression in defense of himself that was singularly lacking in his defense of his support base. Worse, we are apparently meant to be persuaded to believe the main victim here is not the workers of the MUNZ, but is in fact the mayor. His bleeting display tonight of the most self indulgent of sins – self pity – made my skin creep. What a traitor. Ramsay MacDonald himself would have hastened to cross the street to avoid shaking hands with Len Brown today.

    Comment by Sanctuary — March 7, 2012 @ 8:58 pm

  16. “they’re also going to get blacklisted by wharfies around the world”.

    Meh, how long are wharfies around the world going to burn through goodwill with their local port companies (every time they refuse to unload a blacklisted ship will be industrial action) for somebody else’s problem? Do worldwide wharfies refuse to unload ships from all the other ports that contract out stevedoring or have non-union labour? Do they blacklist ships that come from countries with rubbish employment conditions and no unions at all?

    Comment by Rick Rowling — March 7, 2012 @ 9:08 pm

  17. and Labour are right behind the union, well actually a bit more than right behind, so far behind they can’t be seen. But they can be heard though, telling Len Brown what he should be doing.

    Perhaps Curran and co could stop telling others what they should be dong and say what Labour wiil do. Not might but will. As in a promise/commitment.

    Comment by NeilM — March 7, 2012 @ 10:47 pm

  18. If the Aussie waterfront dispute in 1998 – the nearest precedent to what’s happening on Auckland’s wharves – was anything to go by, it went all the way to the federal courts, who ruled in favour of the watersiders. In NZ’s case, unless there’s a loophole, I believe it’s illegal to dis-establish a job and then immediately re-advertise the very same position. Graeme could enlighten us here.

    Comment by DeepRed — March 7, 2012 @ 10:58 pm

  19. @kahikatea Len Brown needs cash and alot of it.

    First off my rates will rise 10% this year and then 5% a year for the next ten years , all up my very dodgey maths makes that about an 80% rise from around $1500 to $2800 approx. He’s raising debt “net debt as a percentage of total revenue limit to 275% from 175%, to prevent a breach of the existing limit, with its debt forecast to almost treble to NZ$12.5 billion over the next decade” http://www.interest.co.nz/bonds/58080/auckland-council-plans-increase-its-net-debt-percentage-total-revenue-limit-275-175 and is prepared to drop its credit rating a couple of notches, which means larger interest payments.

    I’ve noticed alot of little things as well. rises in parking costs , fines have gone up I’m told but havn’t had one so cant confirm. More council operated road camera’s around. My guess for the next couple of years will see the introduction of fornightly bin collections and pay by weight refuse. The only reason water has not gone through the roof is because the supercity legislation explicitly excluded metrowater from paying a dividend. T.Y. Mr Hide.

    Speaking of which , if we had elected Banks as Mayor , would any of this have come to pass and would ACT still exist ???

    Comment by Andy C — March 7, 2012 @ 11:19 pm

  20. your heading should be “breaking a few eggs to make a better omelette”. The union bottom line was no flexibility in shifts. Len picked efficiency (diffuse benefits shared across whole Auckland region of exporters/importers and related businesses) and ratepayer investment performance. see page 4 here: http://www.transport.govt.nz/ourwork/Sea/Documents/Container_Port_Productivity_report_final.pdf

    Seems a better horse to back in the longer term steeplechase…

    Comment by Ben — March 8, 2012 @ 11:48 am

  21. This 2010 review of the ports gives a sense of what’s been going over the past 10 years or so

    http://www.businessnz.co.nz/file/1947/100813%20Port%20Performance%20and%20Ownership.pdf

    A month after the two ports [2007, Auckland and Tauranga] publicly announced they were investigating the possibility of a merger, Maersk, the major provider of container shipping services to New Zealand, announced it would, in future, use Auckland rather than Tauranga as its main North Island port. A spokesperson for the political body controlling the owner of Ports of Auckland, greeted the news by commenting that it meant the Auckland company should have a majority stake in any merger.

    Tauranga quickly found a large shipping line, Hamburg Sud, willing to shift from using Auckland to using Tauranga to service the cargo formerly catered for by Maersk. A short time later, another major container shipping line shifted its focus of port calls from Auckland to Tauranga. Thus, the decision of Maersk had less effect on the allocation of cargo between Tauranga and Auckland than if there had been no response from other shipping lines.

    On the other hand, Maersk undoubtedly extracted significant discounts from Auckland to secure its business. Its standard business practice is to play off competing ports aggressively against one another in terms of price and the facilities they provide, such as fixed berth slots and equipment for loading and unloading.

    One doesn’t have to agree with the vews of the report to get a sense of this crisis having been brewing for some time and that it’s not possible to solve by looking at Auckland in isolation.

    Comment by NeilM — March 8, 2012 @ 12:47 pm

  22. $27M on $400M Shareholder equity? 7%, not bad, not great. But what’s the trend, I ask.

    Comment by Clunking Fist — March 8, 2012 @ 6:16 pm

  23. The guy running the Port of Auckland, Richard Pearson, doesn’t seem to be a very smart man.

    Comment by Steve (@nza1) — March 12, 2012 @ 9:10 am


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