Council firm redundancies despite successes

Ruapehu Bulletin, Volume 11, Issue 493, 6 July 1993, Page 5

Council firm redundancies despite successes

Ruapehu mayor Garrick Workman said yesterday that if Ruapehu Construction Limited was not effective and did not win road works contracts, there would eventually be a lot more than the 16 worker redundancies announced last week. Mr Workman said the changes in government policy meant the council' s trading enterprise, Ruapehu Construction Limited, had to be competitive on the open market. Part of the plan to fully corporatise the council' s company in-

cludes making 16 staff, which includes six from Raetihi, redundant. "Over the past few months Council has been reviewing its position regarding the method of delivery of services in the road maintbnance area," he stated in a press release last Wednesday. "This review included calling of tenders for dis-trict-wide road maintenance and subsequent discussions and negotiations with some of the tenderers involved. He said initially no tenders received by the Council were affordable in terms of the budget

available for this activity. "Various options, including joint ventures with, or takeovers by, other companies have been considered but the Council finally came to the conclusion due to the remote location of the Ruapehu District, that it was important to retain an operational capacity of its own either directly or through a company over which it exercised substantial control." He said the Council was also aware of the potential limitations placed

on the operation of its works department (Business Unit) and Ruapehu Construction Limited in which there had not been a full transfer of resources needed to undertake the work in question. "These potential limitations come about as a consequence of an on-go-ing threat to amend the legislation permitting business units and companies that had not been fully corporatised, to operate, as other contractors consider them to be an unfair source of competition."

"We have successfully operated Ruapehu Construction Limited for the last two years and it has returned good profits to the Council, being a dividend of $100,000 in 1992 and a proposed dividend of $150,000 in 1993." "We now consider it appropriate that Ruapehu Construction Limited should be fully corporatised and be a stand-alone contractor which can compete on an equal basis with other players in the field. Accordingly an Establishment Unit has been constituted to investigate corporatisation issues and we anticipate that this process can be completed and the Company up and running in its new form by 1 October 1993." He said the decision was influenced by the success of Ruapehu Construction Limited in gaining the State Highway Maintenance Contract for another three year term commencing 1 July 1993, despite intense competition. 'The Council is also successfully negotiating a contract with the com-

pany for district roads maintenance for a threeyear term with right of renewal at a price which is easily affordable within the existing roads maintenance budget." To make the Company suffxciently competitive to survive into the future it has regrettably been necessary to review works staff numbers and work practices to ensure that maximum efficiencies are obtained. One of the results of this review is that the Council can adequately perform its tasks with lower staffing levels and as a conse-

quence a total of 16 redundancies will occur at the end of July 1993." "Of the 16 positions to be made redundant two are located in Ohura, eight in Taumarunui and six in Raetihi. The need for these redundancies is sincerely regretted but if the Company is to have a successful long term future then these changes must be put in place now." He said he saw no further need to review operations staff levels at least until the expiry of the State Highways Contract in 1996.