When a private equity consortium going by the name TPG makes a bid for a company called Asciano, the story is confined to the business pages with the only question being: what will the bid do to the share price? But give the entities their old names and the story is much more compelling. Ten years after the war on the wharves, Patrick Stevedores is facing another takeover by the group behind last year’s failed Qantas bid.
This is a story of far greater significance than share prices. One of Australia’s two stevedores is facing greater casualisation, likely job cuts and asset stripping by institutional vultures – and with no Qantas Sale Act to mediate the action. One can only wonder what the pressures to liquidate assets a highly leveraged private equity deal would be in the current high-interest environment.
If successful the takeover would have serious ramifications for Australia’s ports, already struggling due to poor port planning by State Governments, inconsistent regulation and a trade boom.
Sadly, this is precisely the scenario the Maritime Union of Australia has been warning of, as the ACCC has pursued its obsession with attacking Australia’s so called stevedoring duopoly (Patricks and P&O) over the last 10 years.
The ACCC was responsible for the break up of Toll, which is where this story began. The downward slide in the share price of both Toll and the spin-off company Asciano is evidence of the failure of the ACCC strategy. Competition-zealot driven break ups, combined with State Government uncertainty in port planning and regulatory conditions has created a weakened stevedoring sector, with potentially severe impacts on our capacity to build a strong ports infrastructure sector to meet future growth.
The Union has warned this approach would in time weaken the existing stevedores to the point where they would become takeover targets to a foreign infrastructure company likely to strip assets and fail to invest in the industry.
We have consistently argued that the volume through Australian ports does not warrant a third stevedore until volumes are sufficient to provide each stevedore with a viable cargo flow.
And we have argued that State Governments have failed to provide investment certainty to existing stevedores in just about every decision they have made.
They have failed to provide infrastructure investment, failed to renew and extend leases and failed to address land side transport, limiting the volumes and speed of exit of containers from the ports.
For stevedore operators it has been a case of if ACCC doesn’t get you, then State Government inaction will. With container trade projected to triple over the next 15 years, it is not in the national interest to retain this ad hoc governance.
Regardless of the TPG bid it is time for the Commonwealth to step up or leave companies like Asciano aka Patrick as low hanging fruit to be plucked, with the juicy bits gobbled and the pips spat out. The nation’s trade performance and the dedicated workers who operate the ports will be the big losers.