PORT of Tauranga has been forced to cut back Tauranga staff working for its subsidiary Quality Marshalling (QM) after losing out on major tenders.

However, chief executive Mark Cairns says its Northport business has grown, and he is positive about the subsidiary's long-term prospects.

He noted that the $34 million investment in QM had been funded out of the $38 million gain the port made in selling its share of stevedoring company C3.

The port tried in 2012 to buy out the 50 per cent share held by Australian transport firm Asciano because it was unhappy with C3's financial performance. It offered Asciano $70 million but instead, under a "shootout clause" of the shareholder agreement, Asciano exercised its right to acquire the port's shares at the same $70 million price.


QM has been operating since 1991 and is mostly focused on marshalling forestry products.

Forsyth Barr transport analyst Andy Bowley noted in his latest Port of Tauranga report that the QM subsidiary recently lost the tender for a large Tauranga log marshalling contract to incumbent C3.

"Given the loss of its existing Tauranga (and Murupara) contract to ISO Marshalling from 1 January 2014, we understand it has undertaken a redundancy programme for about 35 affected employees," said Mr Bowley.

"It retains operations at Northport, but revenues and profitability are significantly lower than when the business was acquired last year. We see scope for a partial write-down of the $34 million acquisition price."

Mr Cairns confirmed some Tauranga staff were made redundant last month, but he described that as reshaping the business in the short term.

"QM has had a success in Northport where it has secured some new business," he said. "There's been an increase of employment in Northport, but in Tauranga there has been a reduction. It did lose a major contract in Tauranga and it wasn't successful on a recent tender. But it's having some successes that aren't in the market yet."

That was the nature of the contracting business, said Mr Cairns.

"Don't right off QM - it's fundamentally a good business."