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8 December 2011 By hand Garry Parsloe President Maritime Union of New Zealand - Local 13 P O Box Auckland Dear Garry

NOTICE TO UNION OF STAFFING AND BUSINESS MODEL REVIEWS While Ports of Auckland (POAL) is currently engaged in collective bargaining with the Maritime Union of New Zealand (MUNZ), I need to raise with you a separate matter which is likely to have significant implications for the employees your union represents. As you will be aware, Maersk Line announced on Tuesday 6 December that it intends to permanently shift its Southern Star container service from Auckland to Tauranga. The Southern Star was one of Auckland's largest shipping services. As a result of this permanent shift, POAL will lose annually 52 ship calls, 82,500 containers (123,600 TEU) and nearly $20 million in revenue. In this context, and in the current economic climate, POAL must explore how it will face this and absorb such a loss including the possibility of corresponding adjustments to its capital programme, operational resources and labour cost structures. In the wake of the Maersk announcement, I must therefore formally give notice to MUNZ that POAL intends to review its staffing needs in light of the loss to POAL of the Southern Star service. For your members' information, I need to foreshadow that, depending on the nature and scope of any proposal, this review could result in redundancies from the container terminal operations and associated areas. In addition, POAL also intends to review the desirability of contracting out some or all of its container terminal operations and support services to third-party contractors. Again, this could result in redundancies from the container terminal workforce. In the event the above reviews result in proposals that may affect the ongoing employment of its employees, POAL will consult with such employees (and MUNZ as authorised union representative) as required. Yours sincerely

A M (Tony) Gibson Chief Executive

8 December 2011 Firstname Lastname Address 1 Address 2 Address 3 By email: lastnameinitial@poal.co.nz Dear FirstName, REVISED COLLECTIVE AGREEMENT PROPOSAL & REVIEW LETTER Today, Ports of Auckland met with your union in mediation to attempt to settle our collective bargaining and put an end to the ongoing industrial action. In an effort to find a solution, we tabled a revised collective agreement proposal and provided information requested by the union on the rates and flexible working conditions agreed with non-union employees on individual employment agreements (IEAs). This proposal is attached for your information. On Tuesday we learned that Maersk had taken its Southern Star service away from Auckland to Tauranga, representing a substantial loss of volume to Ports of Auckland. Today, we therefore also presented a letter giving the union notice of: a staffing review and possible redundancies; and a business model review to consider whether to contract out some or all of our operations to third-parties, which could also result in redundancies. This letter is also attached. The good news following discussions was the unions decision to withdraw its strike notice for this Friday to allow talks to continue. We also asked for a withdrawal of the strike notice for this Saturday. Our request was deferred by the union to see if the parties continue to make progress in mediation. Our urgent task in these talks is to find a mutually agreeable collective agreement that delivers a reliable, flexible service and significant up-front productivity gains. Yours sincerely

A M (Tony) Gibson Chief Executive

9 December 2011 Firstname Lastname Address 1 Address 2 Address 3 Dear FirstName, BUILDING A FLEXIBLE AND PRODUCTIVE WORKFORCE In mediation today, Ports of Auckland tabled a comprehensive summary of the highly flexible and productive work practices we would like to introduce to our container terminals and support services. This summary is attached for your information. It contains a detailed version of the work practices POAL non-union employees on individual employment agreements (IEAs) have committed to in return for increased pay rates and bonuses. Although we are making progress in our talks with MUNZ officials, we are disappointed we were not able to have tomorrows second strike day called off in time to enable us to arrange work for union members. I remain concerned MUNZs third strike notice is also yet to be withdrawn. Ceasing all industrial action is critical if we are to continue to make progress by Christmas. Let me repeat - our urgent task in these talks is to settle a mutually agreeable collective agreement that delivers a reliable, flexible service and significant up-front productivity gains. Yours sincerely

A M (Tony) Gibson Chief Executive

15 December 2011 Firstname Lastname Address 1 Address 2 Address 3 Dear FirstName, NEW CA OFFER (INCLUDING 10% PAY RATE INCREASE) AND 4TH STRIKE NOTICE Ports of Auckland tabled its ninth collective agreement (CA) proposal today in mediation with your MUNZ negotiation team. The proposal includes an up-front 10% pay increase on virtually all rates in return for a flexible new CA that would apply for 2 years. Our proposal and draft of the proposed new flexible CA are enclosed. The big up-front increases plus the straddle performance bonus programme we have offered reflect my determination to incentivise and reward increased flexibility and productivity, both of which are essential to Ports of Auckland having a viable future. The proposal also contained our responses to the initial questions raised by MUNZ at last weeks mediation concerning IEA rates, shifts, rosters, task allocations and drug testing. Of course, the latest offer is generating further questions from your MUNZ delegates, which is why Ports of Auckland has agreed to provide a detailed paper on how all these issues can be addressed at mediation planned for next week. A copy will be mailed to you following our next meeting with MUNZ officials. With such good progress in mediation, I was surprised and disappointed to receive a fourth strike notice just as our talks concluded. This is not only hugely disruptive for all concerned, it will also have the effect of disqualifying those who strike on Christmas Day and New Years Day from receiving statutory holiday payments. I therefore urge you to persuade your officials to withdraw the remaining two sets of 2-day strikes and focus instead on settling a new flexible CA. Yours sincerely

A M (Tony) Gibson Chief Executive

Revised CA Proposal 9
15 December 2011

POAL Collective Agreement Bargaining Position


New CA Offer from POAL to MUNZ Members
Amended CA offer based on current CA (Revised CA Proposal 7) is withdrawn New offer is based on new flexible CA first tabled with MUNZ on 6 September 2011 New flexible CA offer contains the minimum pay rates agreed with non-union employees on individual employment agreements (IEAs): o $30.00 per hour flat rate when straddle driving (10% above current CA) o $15.50 per hour ordinary rate (8.77% above current CA) o $6.00 per hour for skill tasks e.g. crane driving (5% above current CA) o $45.00 night shift allowance (6% above current CA) In addition, new flexible CA offer provides a 10% increase on all other applicable rates & allowances including Engineering carried over from the current CA, except: o Container lashing (which will become a new permanent role at $20.00 per hour) o Meal allowance (which will remain fixed at $8.53 as per IEAs) Under this offer, stevedores will also have access to the IEAs monthly straddle Performance Bonus Programme (in place of Productivity Bonus) which provides: o An extra $1.00 per hour if in top 50% of Sattel performance data o An extra $2.00 per hour if in top 20% of Sattel performance data o An extra $3.00 per hour if in top 10% of Sattel performance data (The IEA-based pay rates + incentive bonus means a top-performing straddle driver could increase hourly earnings by 20% under this new offer) Other terms and conditions applicable to IEAs and carried over from the current CA to the new flexible offer include: o Superannuation and health insurance (no change) o Extra week's shift leave and long service leave (no change) o Sick leave and public holidays (updated to comply with legislation) o Restructuring and Employee Protection (updated to comply with legislation) o Redundancy (no 'last on/first off', max.26 wks compensation for new hires) o Grandfathered benefits (as per IEAs including current redundancy entitlements) New CA will apply for a 30-month term from 1st January 2012 to 30 June 2014. As per the IEAs, the big pay increases and bonus opportunity have been 'front-loaded' (rather than spread across the CA term) in return for MUNZ members giving POAL full operational flexibility and increased productivity right from commencement, for: o Setting staffing levels, employment ratios and training programmes o Arranging shifts, rosters and task allocations in consultation with employees o Introducing new terms and conditions such as Drug and Alcohol Testing (see attached new flexible CA for other provisions additional to current CA) o Reinforcing Ports of Auckland's Code of Ethics and its values and standards

POAL response to questions from MUNZ regards IEA rates & conditions What are they signing up to?
A copy of the standard format IEA containing the rates and conditions referred to in Revised CA Proposal 7 dated 8 December has already been provided to officials.

What are the actual IEA rates versus the standard minimum?
While confidentiality and privacy requirements means POAL is not able to disclose the specific rates or persons involved, we can confirm the current IEA hourly rates span a range from $30.00 to $33.00 flat rate for straddle driving. There is one employee doing CA-covered work in Axis Engineering who has been on an IEA for a long time due to their being a member of another union. For the same reasons as referred to above, we are not able to disclose their rate.

What about proposed changes to shifts and rosters?


A summary of POAL's proposed approach to shifts and rosters are included in Revised CA Proposal 8 dated 9 December, which has also been provided to officials. In it we said "Permanent employees will be invited to express their preferences for specific shifts and rostered days off, which will be distributed fairly and reasonably according to such preferences and POAL's operational requirements including skill development and training."

How are tasks allocated?


Again, a summary of POAL's proposed approach to task allocation is included in Revised CA Proposal 8 dated 9 December. In it we said "Allocations will be made on a shift-by-shift basis according to POAL's operational requirements for a specific mix of skill capabilities and performance outputs per shift." For example, this will mean in practice that stevedores with a particular aptitude and skill-set for crane-driving are more likely in future to be allocated this work subject to their ongoing performance. This doesn't mean that other stevedores won't get a go - POAL will still need to rotate this work to ensure an upcoming pool of skilled crane drivers are developed and get regular practice to retain those skills - but the focus first and foremost will be on allocating the right person to the right job according to their performance. The same principles will apply to leading hands, twin lift and tutor work. Of course, stevedores not allocated to a skill task will still have a great opportunity to excel in their straddle driving duties and earn a performance bonus of up to another $3.00 per hour.

Would POAL consider the "Not At Work Mate" Drug & Alcohol Policy?
Yes. Although POAL is committed as a safety-critical workplace to implementing random drug and alcohol testing, we have an open mind as to what policies we should be considering in the process. POAL has undertaken to consult with all its employees on the adoption and implementation of an appropriate drug and alcohol testing regime.

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