Council takes $23m hit as port gets thumbs-down

By Chris Hutching

Friday 4th October 2002

Lyttelton Port's loss of container business has sent the port company's share price tumbling and cost Christchurch City Council at least $23 million in unrealised losses.

Lyttelton Port Co's shares fell from $1.90 a few weeks ago to $1.53 yesterday, wiping $35 million off its market capitalisation and reducing the value of Christchurch city's 65% shareholding in the company by $23 million.

The blow came as P&O Nedlloyd confirmed this week it had chosen Auckland, Nelson and Port Chalmers as its exclusive ports for a new breed of super refrigerated container ships.

It follows rancorous industrial relations at Lyttelton, including rows over substa ndard work practices, angry picketing and a picket-line death in 1999.

P&O Nedlloyd's decision has all but destroyed Lyttelton Port Co managing director David Viles' strategy of developing Lyttelton as the key hubbing port in the south.

P&O Nedlloyd looked at regions with the strongest growth in dairying and meat production, as well as port-worker productivity.

Lyttelton waterside workers now face redundancies. The loss of the P&O Nedlloyd business comes on top of a loss of Maersk container business to PrimePort Timaru which will cost Lyttelton 26 vessel visits a year a small decline in overall ship visits but sufficient to interrupt a strong earnings growth in recent years.

Twice during the past two-and-a-half years, management and union officials at Lyttelton have clinched agreements for compensation payments in return for more flexible rostering arrangements only to have them rejected by watersiders confident their political affiliations to Christchurch's Labour councillors would win the day.

A 1999 attempt to contract out the coal operations ended in tragedy when a woman picketer died during an altercation.

The contracting proposal was abandoned in the ensuing controversy and negotiations have continued without resolution.

Lyttelton Port has been torn between paying large special dividends to its Christchurch city shareholder and using capital to develop new jetties and facilities.

To page 4

Cruise-ship operators are also threatening to bypass Lyttelton because they cannot be certain of obtaining a berth at short notice.

Last week, the port company closed two jetties after an engineer declared them unsound, forcing harbour ferry services to relocate to a more distant location in the harbour.

Lyttelton Port Co chairman Brent Layton denied yesterday there was a governance crisis.

"We've upgraded numerous facilities and invested in machinery like cranes but we require an appropriate return on investment. The closure of two jetties came after an engineering report found faster deterioration than first identified," he said.

Mr Layton said some workers might perceive the political nature of the shareholding by Christchurch city would support their aims. But the big dividends paid to the council were the result of independent decisions by directors. The balance sheet remained strong with a conservative debt to equity ratio, he said.

"The real question for us now is how much trade we can retain and shift it to other lines. That's something that will require good marketing and service delivery," he said.

Comments from our readers

No comments yet