Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


New deal with union underpins NZ Steel's A$50M savings drive

New deal with union underpins NZ Steel's A$50M savings drive

By Pattrick Smellie

Oct. 5 (BusinessDesk) - New Zealand Steel's blue collar workforce has agreed to forego annual bonus payments during unprofitable years to allow the Auckland-based unit of ASX-listed Bluescope Steel a fighting chance as it seeks A$50 million in annual savings.

The two year deal also sees the workforce take just a 1 percent pay increase over two years and was "a very good outcome" from a collaborative process, NZ Steel chief executive Andrew Garey told BusinessDesk.

"It (the new contract) wasn't due till next May" and the early resolution reflected a recognition that "the business was facing a pretty dire scenario."

Bluescope announced in August that earnings before interest and tax from New Zealand operations sank a loss of A$30.3 million in the year to June 30 from a A$73.6 million profit the previous year, and that the company was seeking "game-changing" restructuring in both its Australian and New Zealand operations to combat the impact of low global steel prices.

The Engineering, Printing and Manufacturing Union announced last week that it had reached a new employment contract that would "allow the company to focus on becoming sustainable and resilient for the future, protecting jobs and the steel-making industry in New Zealand," said EPMU organiser for NZ Steel, Joe Gallagher.

The two year deal "gives the company certainty about its costs and ensures good job security for the workers," he said. “It also helps NZ Steel achieve its goal of $50 million in sustainable savings."

The company is still seeking to cut as many as 100 jobs in both its blue and white collar workforces, which operate the Glenbrook steel mill, the Pacific Steel operation, bought from Fletcher Building last year, and ironsands exports. It is also renegotiating arrangements with suppliers and making improvements to its industrial processes to achieve efficiencies.

The company was targeting between $20 million and $25 million in savings from workforce changes, with the new collective agreement delivering around half that and further restructuring anticipated to deliver the other half, said Garey.

"I'm cautious not to get too far ahead of myself," he said, but the process of finding savings was advancing positively.

Among suppliers, NZ Steel was renegotiating its coal supply contracts with troubled state-owned coal miner, Solid Energy, which has been placed into voluntary administration for break-up over the next two years.

Going against the flow of savings was the impact of charging changes by the Auckland monopoly electricity network owner, Vector, which were expected to add around $500,000 a year to costs.

It is understood these costs relate to Vector "smearing" Auckland industrial users with additional charges to reflect the loss of custom from Contact Energy and Mighty River Power, both of which are closing power stations in Auckland.

"There's not much we can do about that, the way the electricity sector is structured in New Zealand," said Garey. "We will continue to have a discussion with Vector. It's a bit annoying."


© Scoop Media

Business Headlines | Sci-Tech Headlines


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>


Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>


Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>