Hutchison’s Aussie chief gives gloomy assessment of union talks

Hutchison’s Aussie chief gives gloomy assessment of union talks

HPA's Sydney International Container Terminal.

HONG KONG — Hutchison Ports Australia and the Maritime Union of Australia today agreed to extend conciliation talks until November as both sides try to find a way out of a bitter dispute that exploded after 97 workers were fired in early August.

The parties signed a new agreement to continue negotiations until Nov. 16 under the auspices of deputy Fair Work Commission president Anna Booth.

But in a statement issued today, HPA acting CEO Mark Jack said critical terms remained at issue and a mutually agreeable outcome on the company’s future employment needs at Sydney and Brisbane port operations may not be achievable.

While he pledged to continue “a helpful process under the auspices of FWC aimed at ensuring the company’s future viability,” Jack said that without what he called creative thinking from all sides, the economic reality of a third port operator on Australia’s eastern seaboard could be challenging.

“HPA is a committed commercial ports operator, but we are also realists. All options for our future will have to be considered,” Jack said.

The Hong Kong-based global port operator received a pasting in the Australian media that reported 97 workers were fired on Aug. 6 in midnight e-mails and mobile phone text messages between a shift change. HPA clarified later that text and email were agreed methods of communicating with its workers. A court ruling prevented the workers from being dismissed and the negotiations have been ongoing.

HPA has struggled to find a viable market share in Sydney and Brisbane since being encouraged by the Australian government to gain a foothold in 2012 and break the duopoly of Asciano and DP World. In a further blow to its market share, Hutchison lost a 26-year tender it was expected to win at Melbourne last year.

DP World holds the lion's share of the Sydney market with 53 percent followed by Asciano’s 44 percent, leaving Hutchison with only 3 percent.

HPA has been incurring substantial losses in Australia, finding it extremely difficult to break into the current duopoly in the Australian market. It has invested $700 million in the Australian operations since June 2013 and made an $87 million loss for the 2014 calendar year.

Under the terms agreed today, a new enterprise bargaining agreement will be negotiated and made by Nov. 16, although the date can be extended by mutual consent. Both parties agreed that a voluntary redundancy program would be opened for workers in Brisbane and Sydney, and that the Federal Court action brought by the MUA against HPA would be abandoned with each party bearing its own costs.

Jack said the company had kept on all workers earmarked for redundancy nine weeks ago at full pay. “This is not an easy time for our workers and the company. We have been working on solutions to keep the company viable and to demonstrate to the union how creating a sustainable long-term workforce is the only way forward for both the company and HPA’s workers,” he said.

According to Australia’s Financial Review, HPA’s move into Sydney and Brisbane has been an expensive debacle. While racking up its losses in 2014, the port operator only managed to capture a  few percent of the shipping market in Sydney and Brisbane. This was even after accepting shipping contracts worth less than their costs to try to gain market share from the two existing players, DP World and Asciano's Patrick Ports, the Review wrote.

The publication revealed some of the terms negotiated in a generous enterprise agreement the company negotiated with the MUA. Among other terms, it allowed for a 30-hour week, every eighth week off in additional to five weeks annual leave, 12 percent super, and senior managers effectively operating under union rules. It also included salaries averaging around A$160,000 a year ($115,000) and in some cases up to A$250,000 ($180,000).

Contact Greg Knowler at greg.knowler@ihs.com and follow him on Twitter: @greg_knowler.