Fran O'Sullivan: Weigh anchor and let them get on with it

The Maritime Union should have paid attention to the MOT report on container productivity at New Zealand ports. Photo / Dean Purcell.

No good can come out of local body political involvement in a labour dispute

Len Brown should have stayed put holidaying out at Waiheke Island and resisted journalistic efforts to entice him into opening his mouth on the Ports of Auckland dispute.

It seems pretty obvious that the ports company has been determined to ensure productivity at its downtown Waitemata Harbour operations is markedly increased. Particularly in the vital area of crane productivity, where rival Port of Tauranga sub-contracts its container stevedoring work and boasts a superior performance to its Auckland competitor.

If the Maritime Union didn't see this one coming, then they haven't been paying much attention to the Ministry of Transport report on container productivity at New Zealand ports. Nor has the union been paying attention to the Productivity Commission which estimates exporters and importers spend upwards of $5 billion a year on freight and has forecasted annual trade could be boosted by $1.25 billion if transport costs were shaved by 10 per cent. There is a national interest issue at stake here.

But what seemed to spark Brown's decision to change course and involve himself in the Ports of Auckland stoush by supporting calls for greater union flexibility, is the risible suggestion, first spread in the blogosphere, that he was effectively in the pocket of the Maritime Union because it had chucked $2000 into his 2010 election campaign. Let's face it, the union's donation was completely out in the open; unlike the $499,000 which was folded into a single trust to hide the identity of others contributing to Brown's campaign war chest. The insinuation should simply have been treated with the contempt it deserves.

But then Brown muddied the waters by later saying he supported both parties. He should have simply stayed schtum and left the Ports of Auckland board and management get on with the job of making the necessary changes to ensure the port's longer-term viability.

The October 2011 MOT report on container productivity at New Zealand ports makes for interesting reading. Six ports were studied. Auckland had high ship and vessel rates. But Tauranga had the highest overall productivity levels. The MOT report said Tauranga's higher crane rate performance may to some extent be attributed to its competitive sub-contracting of container stevedoring work.

"This means in practice that Tauranga is better able to match its services to the peaks and troughs of shipping arrivals and departures. The larger size of its container yard also helps the container terminal to operate more effectively".

So, it's surely no surprise that Ports of Auckland wants to contract out its stevedoring operations to companies that are used to working on performance-based measures. This is a no-brainer for a company that is under pressure to lift its productivity and obviously a measure that it has been considering for sometime.

The company has other drivers to consider.

The Auckland Council doesn't directly drive Ports of Auckland.

Its 100 per cent shareholding is held through Auckland Council Investments Limited (ACIL) which in turn appoints the ports company directors.

This governance structure was carefully thought through and set-up so the ports company could operate in a commercial fashion without political interference by either the mayor or councillors at operational level.

ACIL is chaired by well-known businessman Simon Allen. Allen is a smooth operator. The former investment banker chairs the Financial Markets Authority and Crown Fibre Holdings.

Allen and his board reviewed the makeup of the Ports of Auckland board in late 2010. Rob Campbell, Liz Coutts, Richard Pearson and Wayne Walden were appointed as directors joining existing board members Graeme Hawkins and Andrew Bonner.

Pearson was subsequently elected as chairman. Pearson has extensive experience in port operations and investment around the world, returning to New Zealand following a long career with Hutchison Port Holdings Group, most recently as managing director, Hong Kong International Terminals Ltd (1996-1998) and managing director, Europe division, president ECT Rotterdam (1998-2007).

The Pearson appointment should have signalled to all but the deliberately obtuse Allen's intention that Ports of Auckland should mean business.

The ports company has been making strides. It reported all-time best crane rates (the measure of port productivity, the number of containers loaded per hour) in June quarter 2011; and record dwell times (the average time a ship is in port) of less than 1.7 days which the company said underpinned the attractiveness of the Auckland port's location for importers.

Ports of Auckland contributed a total dividend of $10.4 million to ACIL in the eight-month period to June 30, 2011 (from when ACIL was launched).

Progress was being made.

That's why is is hard to understand why the Auckland Council even took a vote last year on whether to support the Ports of Auckland board on the industrial issue. The vote was carried by 12-7. But as a trucking firm executive noted in an email which has done the rounds: "Imagine what would have happened if the motion had been lost, and the council was then in direct conflict with the board and the company executive.

"It is simply not appropriate for the council or the company to be put into that situation. The Tauranga model (which we used to have) is a far better in that it avoids potential conflict like this. In no way should the council have any influence on the operational aspects of such a critical operation."

Clearly, the mixed ownership model is an option for the future. Particularly if it comes about through a merger of Ports of Auckland and Port of Tauranga. But Auckland City councillor Christine Fletcher didn't help things by suggesting Ports of Auckland move to a mixed ownership model when the dispute is still in progress.

It's understood Ports of Auckland has told the Government that it doesn't wish it to get involved with the stoush at this stage. It wants to sort it out itself.

That is highly appropriate.

Ports of Auckland has been subject to far too much political meddling. It has arguably suffered from under-investment.

Former chairman Gary Judd was given the bum's rush by the former Auckland Regional Holdings board (which was dominated by politicians) when he took issue with their dividend stripped policies.

A new governance structure is in place and it should be left to get on with the job.