transport

More than a thousand Auckland bus workers facing being locked out in a row over 10 cents an hour say they will report for work as usual on Wednesday morning.

Infratil-owned NZ Bus has told the workers, including 875 drivers, that they will be barred from 4am on Wednesday – a move likely to plunge Auckland’s public transport system into chaos.

The lock-out will affect staff at the Metrolink, Go West, Waka Pacific, North Star, Link and City Circuit bus services.

Transport firm Mainfreight says the rest of the year will be better after its earnings went backwards at speed in the first quarter.

Yesterday it reported a 51 per cent fall in profits to $4.02 million for the three months to June. The company indicated at its annual meeting that it had had a difficult first quarter and so it proved.

Managing director Don Braid said the first-quarter performance was not unexpected given the falls in freight volumes during the period. "During this time we have taken the opportunity to respond with better margin management, cost reductions and sales strategies all measures that will stand us in good stead for the future," he said. "Trading in July and August sees some improvement and it is our expectation that this will continue into the third and fourth quarters."

The latest profit was achieved on revenues of $261.67m, a 9.5 per cent fall on the same period a year ago. Operating earnings (ebitda) for the period, at $11.72m, were down 29.2 per cent. The company took abnormal costs (after tax) of $1.27m in relation to further restructuring. These abnormal items reduced overall profit to $2.75m, compared with a post-abnormals profit of $8.23m at the same time a year ago.

Mr Braid said that trading conditions were difficult in all the countries the company operated in during the first three months of the financial year.

The Mainfreight USA division, bought about 18 months ago, had a torrid time, with a $1.74m operating loss compared with a $2.2m operating profit at the same time a year ago. "Domestic freight volumes in Mainfreight USA continue to be depressed," Mr Braid said. When the Mainfreight USA business was taken over, the chief executive of that business, who was a shareholder, was retained along with other senior management, he said. However, in the past three or four months there had been several changes including the departure of the chief executive.

Mainfreight had brought in its own people to run the business, changed the structure, decentralised the operation and made it more sales and branch-management focused "as we run our business everywhere else in the world". "Basically we've got rid of bullshit corporate management in America," Mr Braid said.

He believed the Mainfreight USA business would be turned around. The key was achieving more sales in the American market. "We are aggressively hunting market share in that market right now. We've just got to do some hard work selling."

Mainfreight's other American business, Carotrans, had a solid quarterly performance, increasing operating earnings to $2.7m from $2.5m.

The New Zealand domestic operations produced operating earnings of $5.9m in the quarter, down from $8.2m in the same period last year. Volumes had improved during July and August, Mr Braid said. "Warehousing volumes continue to increase as customers begin to build stock inventories. "Domestic transport volumes are expected to increase as these inventories make their way to market."

Though the group performance during the June quarter had not matched last year's records, the group's New Zealand international, Australia international and Australia domestic operations had all performed better than in the same period in 2008.

Transport company Mainfreight's first-quarter results out next month will reflect the tougher trading conditions the company is facing in the new financial year, Mainfreight's managing director Don Braid said.

He told the annual meeting in Auckland today that while the company continued to make steady gains in reducing costs and improving margins, sales volumes had been impacted by slowing economies. "Conversely our market share continues to increase as our sales strategies for growth find success," he said.

Mainfreight is never short of a forthright view of New Zealand's transport and infrastructure and this was the case again at today's meeting. "We need a government that is prepared to listen and understand the need for better rail, road and port infrastructure," Braid said. "We are a trading nation dependent on an efficient logistics strategy. New Zealand ports competing with each other will never deliver the necessary competencies to provide our exporters, importers and shipping lines the opportunity to improve.

"Our port system needs to be capable of handling larger vessels, and require an effective inland transport network that will interface with a super-port strategy. Not to do so will see New Zealand reduced to a trans-shipment destination, eroding our nation's world competitiveness. Attempting to achieve the right transport infrastructure with boards of directors made up of political appointees with little or no transport or infrastructure experience is just plain stupid," Braid said.

Earlier chairman Bruce Plested, in a rallying speech, told shareholders that Mainfreight was actually enjoying the tough global conditions. "The buy-in from our teams all around the world is invigorating and humbling," he said.

While New Zealand had not been hit as hard as many other countries, particularly in terms of job losses, our standard of living in comparison to other countries continued to slide. Solutions and actions seem few and far between, Plested said.

"It is our belief New Zealand must learn to act like the small country we are. We need to behave in the same way as do small schools, small businesses and small towns. We have to be lean, tough, generous of spirit, entrepreneurial, hard working and dedicated to seeing New Zealand improve its living standards and its place in the world. There is no better time than in a global recession to make some big changes. We must find our own destiny and forget about trying to follow the rules and ways of larger countries.

"Now is the time to fight poor laws, get rid of stultifying bureaucracy and the petty bureaucrats that suck us all dry, and certainly to become vocal when we see poor performance from our governments, both local and national," Plested said.
Ad Feedback

The country needed to find "an entrepreneurial spirit", particularly within those industries that if developed further would provide wealth and employment for future generations, like health, education, tourism and agriculture, he said.

Braid said that Mainfreight's trading during July had seen improvements in volumes, particularly in Australia. "We would expect our operations in the bigger economies of Australia, the United States and China to improve more quickly and robustly than that of our operations in New Zealand," he said. Mainfreight was very well positioned to take advantage of the upside, "and we remain committed to global expansion", he said.

While one company prospers from tenders, another has to sell buses, business editor Chris Gardner writes.
--------------------
Hamilton-based Go Bus will double its North Island depots in January when it puts 130 new buses into operation.

Managing director Calum Haslop, who joined Go Bus three months ago, told a business audience at PricewaterhouseCoopers' Clever Companies function in Hamilton this week that the secret to winning a sizeable Education Ministry contract was nearly five years of planning to match the ministry's tendering cycle, which comes in rounds of six to 12 years. The contract, being formalised this month, means the operator, formed from several small family-run businesses about four years ago, will double its depots from 12 to 24, with significant expansion in charter, school and urban operations in Hawke's Bay.

Construction is under way on 130 new buses, which will increase the fleet by between 30 and 40 per cent in January. The number of drivers will increase from about 200 to 300.

"There's a lot of work to do, but we are quite confident in our ability to deliver this," Mr Haslop said.

Go Bus, and Ritchies Transport Holdings in Christchurch, are two of the clear winners in the tendering process. Go Bus drivers are on the road for 60,000 man hours a year. They drive 10 million kilometres a year and burn 2.5 million litres of diesel. Mr Haslop said the company handled 3000 customer complaints a year, mostly related to buses not running on time.

Nationwide, more than 100 operators have lost their contracts for 2400 school bus routes servicing 65,000 pupils, which is reducing the number of operators from 205 to 92.

Waipawa Buses, which has operated in Central Hawke's Bay since 1970, is among the biggest losers, with all but four of its 70 routes going to Go Bus. It will sell 120 buses and lay off 100 staff.

Neil Dobson, who runs Dobson Motors in Te Kuiti, said his bus company was losing eight school routes but retained five. "I have already told eight of my 22 drivers that I will not be able to keep them on. While they don't like it, they understand it is not my doing," Mr Dobson said.

The company was told by the ministry that to have a chance of renewing its contract it would have to upgrade its fleet, so it ordered two new buses. The first, which cost $245,000, arrived two weeks ago.

"It is going to be hard to absorb the cost when we have effectively lost more than half of our business," Mr Dobson said.

"One guy, Clarrie Hanson, who does the Otewa School bus run, has been with us for 28 years. He was part of the community, he knew the kids, their parents and the community. It is the personal touch they are going to lose with these big companies."

Mr Dobson said his company gave donations to school galas and prize-givings every year, because it was rooted in the company, but couldn't imagine Go Bus doing the same.

Dobson Motors had not heard why it missed out from the ministry. "We were in the top two per cent back in April. We have done everything the ministry asked, and we still missed out."

Allan Turley, who runs Turley Motors in Te Aroha, said his business would lose two out of seven routes and two drivers. One would retire at the end of the school year, and the other had found work with a Morrinsville bus company. Karyn Coxhead, who operated Bus With Us, in Thames, with her husband Chris, said the business would not be affected by Go Bus's expansion.

Mr Haslop said during his presentation: "We knew this (process) was going to happen and we have been planning for that for four or five years." His favourite saying, quoted by Harrison Ford in the latest Indiana Jones movie earlier this year, was "you don't take a knife to a gunfight". "We don't do that," he said.

"We have taken a systematic approach. We don't pick our growth targets by throwing a dart at them." Another secret, Mr Haslop said, was hiring "high octane" staff with "fire in the belly".

He could have been talking about himself, captivating the audience with joke after joke at the presentation, explaining that he had left his pin-striped suit at home because the last time he had worn it was at a funeral. "I'm hoping for a better outcome tonight," he joked.

"There's a lot of irony in having a bus operator talk at a seminar on clever companies. I am not sure that people relate to bus companies as being clever, and I am not sure that we would see ourselves as being clever. The main driver is on the need to lift the game in passenger transport. "Passengers are needing more in quality and service and the Ministry of Education has demanded a higher quality of vehicle."

Mr Haslop said Go Bus would not have been able to attract equity partners, as it did last year, had it not had a guaranteed cash flow from contracts or a strong, clear, definitive business plan.

"We do put a lot of stock in the detail of our planning. Without that plan there would not be Go Bus."

Mr Haslop would not be drawn on the split between ministry and regional council contracts across the North Island, nor would he say how many services Go Bus would operate from January. He said the company had won the contracts because it was competitive and capable.

But Garry Hetherington, regional transport organiser for the National Distribution Union, said the company was paying drivers between the $12 an hour minimum wage and $13.51, and the union was about to start negotiations seeking more than $17. "We are talking about drivers who have been with the company a long time and who are expert drivers," Mr Hetherington said. "You are not going to keep them if you are paying them a minimum wage."

Mr Hetherington, who represents about 70 per cent of about 200 Go Bus drivers, said the coverage clause in the collective agreement would need to be updated to include depots outside of Hamilton.

"What it means for our drivers is more opportunity," he said.
--------------------
CAPTION: GOING PLACES: Go Bus drivers are on the road for 60,000 man hours a year. They drive 10 million kilometres a year.
Picture: Iain McGregor

A Rotorua bus company says it will go under when out-of-town contractors take over some of the district's school bus services.

Contracts for school bus routes in Rotorua, Reporoa and Rerewhakaaitu have been given to bigger firms from Auckland and Hamilton. These firms will take over these runs next year.

Rotorua's Reesby Buslines, Reporoa's Nirvana Coachlines and Rerewhakaaitu's Cave Coachlines have confirmed their contracts with the Ministry of Education have not been renewed. Reesby and Nirvana spokespeople would not comment but Cave Coachlines owner Ian Cave said he would be out of business when his contract runs out at the year's end.

The 46-year-old man owns six buses and employs two staff, in addition to himself and his wife.

About 60 bus companies throughout the country face severe cuts to their operations after the Ministry of Education changed its school contracts for next year and awarded them to different providers following a tendering process.

"The main thing is finding new jobs for my employees. Then I've got to sell my buses,'' he said. ``I also need to find a new job for myself. I'm still going to have bills to pay."

Mr Cave said most of the contracts were awarded to two big providers, Auckland-based Ritchies Transport and Hamilton- based Go Bus.

Co-owner of Ritchies Transport, Glen Ritchie, confirmed the company had acquired ``some contracts'' for Rotorua although he wouldn't say which services his company would be running. "We will be bringing some new buses to Rotorua and there will also be the opportunity for locals to apply for jobs."

He said the company would take over the contract next year and new buses would operate out of the existing Ritchies depot in Rotorua.

Mr Cave said his bus company had been operating for 20 years but he was not surprised bigger companies got the school contracts. "The big companies just keep getting bigger, they can afford to do things a bit cheaper than we can. It is disappointing after all this time. We have been a part of the community for so long."

Contracts for school bus services with the Ministry of Education come up for tender every six years.

Anne Jackson, deputy secretary for the ministry, said the tender process was in line with Government guidelines. "The ministry consulted with the transport sector on the rules for the tender and ran workshops open to all providers at the qualification phase and the pricing phase of the tender rounds."

She said the workshops were designed to ensure all providers had access to impartial advice about submitting a tender to the ministry. "To ensure impartiality, representatives from Land Transport New Zealand and the School Trustees Association sat on the qualification tender evaluation committee, and an independent observer was a member of the committee throughout the process. The ministry updates transport provider contracts quarterly to take account of increases in labour, fuel, other transport and road user charges. Providers are aware that this quarterly price adjustment will continue on with the new contracts."