Tranz Rail shy on redundancies

By DANIEL RIORDAN

Tranz Rail has allocated $16.5 million to spend on "change management," as it prepares to move its head office to Auckland and contract out non-core operations.

But it is not saying how much of that will be spent on redundancies.

Change manager Jeff Heisler says the money will be spent on activities including research and studies to support the contracting-out programme, the costs of the head office move from Wellington to Takapuna and redundancy costs.

Mr Heisler says the idea behind the separate budget is to differentiate the costs associated with the change process from the company's day-to-day business costs.

He could not identify how much of the $16.5 million would be spent on redundancies.

The company will move its head office next month to the Clear Centre at Takapuna's Smales Farm Business Centre. About 100 corporate staff will shift north to a slimmer headquarters compared with today's head office of between 300 and 400 people.

The company will try to find positions in a new regional office for staff who choose not to leave Wellington, although many are expected to be made redundant.

Mr Heisler acknowledged that $16.5 million was a big chunk out of the bottom line for a company that last year made a net profit of $47 million.

"It's a significant amount of money in bad times or good times.

"But, as with a lot of the expenditure Tranz Rail makes, it's an investment in the future."

If all goes according to the plans managing director Michael Beard unveiled in October, Tranz Rail's total staff numbers will be slashed from 4000 to 600 over the next two years.

The company expects most of the displaced workers to move to outside businesses that take over such newly defined, non-core activities as rolling-stock maintenance and signalling and communications activities.

For sale are the company's nationwide and metropolitan passenger services and its refrigerated-trucking business.

Mr Heisler, an American and a former colleague of Mr Beard's at shipping line ANZDL, worked as a consultant to Tranz Rail last year before joining the management team after Christmas.