Six-month agreement at port reached with eye to new law

By DANIEL RIORDAN

Ports of Auckland and the Waterfront Workers Union have kicked for touch on their wage negotiations, with the 3 per cent settlement reached last Friday due to expire in just six months.

By then the worker-friendly Employment Relations Bill now in its select committee stages is expected to be law and the union will be in a stronger position when it renews negotiations.

The 300-member Auckland branch of the union withdrew its notice of strike action after a dispute that started when contracts expired last December.

Although the terms of the agreement were supposed to be confidential, the Business Herald has learned it is for six months and at 3 per cent.

Although labour costs make up about 30 per cent of Ports of Auckland's total costs, the wage increase for the watersiders - who comprise about 70 per cent of the port company's 540 staff - has not significantly altered analysts' valuations of the port company.

Despite forecasting a 4 per cent wage increase over each of the next three years and a slowdown in productivity gains, Merrill Lynch analyst Jeanine Angell is keeping her valuation of the company's shares at around 450c.

UBS Warburg analyst David Fraser said UBS has assumptions of 3 per cent wage increases built into all its corporate forecasting models.

UBS has a target value on the shares of 562c. They closed yesterday up 5c at 440c.

The immediate impact of the wage increase on Auckland's fierce rival, Port of Tauranga, will be small.

Port of Tauranga corporate services manager Terry James said his company's union contracts run through into next year and beyond.

Union representatives could not be reached for comment yesterday while Ports of Auckland corporate affairs manager Karren Beanland said the company would not be commenting on an agreement whose details were confidential.

Despite losing container business to Tauranga, most of it through the loss of its contract with shipping line ANZDL, analysts expect Ports of Auckland to report a slight lift in total container volumes when it reports its June year result next month.

Tauranga has more than doubled its container traffic, largely through the ANZDL deal but also through higher dairy, meat and kiwifruit volumes.