KiwiRail cost cutting set to cost jobs and services across the North Island
Wednesday, 9 October 2024
KiwiRail is the midst of a major cost cutting exercise that will soon impact the rail services running across the North Island.
Stuff understands the state-owned rail company will soon release plans that could see jobs go from depots in Hamilton, Tauranga, and Kawerau. This follows confirmed restructure plans in Hawke’s Bay, Palmerston North and for staff serving the Interislander.
A spokesperson for KiwiRail confirmed that cost cutting was under way.
“We need to lower our own costs and ensure our services are configured to meet the changing demands of the freight markets we serve,” they said.
The Rail, Maritime and Transport Union said jobs were cut as KiwiRail started serving less and less of New Zealand.
Under a proposal sent to Napier-based railway staff, seven locomotive engineers, two trainees, and a number of terminal staff were set to lose their jobs, said the union’s general secretary, Todd Valster.
Those cuts were the result of three issues, he said: the closure of Winstone’s pulp and timber mills, Cyclone Gabrielle, and the nationwide cost-cutting plan.
When Cyclone Gabrielle hit at the start of 2023, it destroyed the railway between Napier and the East Coast. While the highways were rebuilt, there was no investment to re-open the railway.
“They had staff to run up to five times per week between Napier and Wairoa,” Valster said. “But Cyclone Gabrielle dealt to it and there appears to be no appetite to fix it.”
The closure of Winstone’s central North Island mills would also cost jobs in Palmerston North, he said.
These rolling cuts to on-the-ground rail workers and train drivers were the result of “American consultants” offering their thoughts, Valster said.
Numerous KiwiRail staff have told Stuff that McKinsey & Company consultants arrived early this year, and had advised that the company could continue operating with far fewer staff.
KiwiRail confirmed the first of its recommendations, to trim back on headquarters, had been actioned.
“KiwiRail made some changes in corporate areas that saw a reduction of about net 40 full time-equivalent roles across finance, people & communications (HR) and Zero Harm,” the company said.
It added, “We are currently talking to our staff about changes within our corporate services, our rail depots, including Napier and Palmerston North, and proposing changes at Interislander. We will comment on the number of roles affected only after we have completed any formal consultation processes.”
The Interislander changes would see up to a ship’s worth of staff leave KiwiRail, as the Interislander fleet had fallen from four to three ferries.
“We sold our fourth ship a year ago and are now proposing aligning our workforce with the current fleet size. Unfortunately, this means disestablishing some roles,” KiwiRail said in a statement.
The KiwiRail executive team, including Peter Reidy, would be meeting with teams across the North Island as the cost cutting continued.
Valster said the cuts were the result of the Government saying it wanted to stop subsidising railways from 2025. That meant KiwiRail had to focus only on services that were easily profitable.
However, as a result, he said there had already been a massive spike in logging trucks driving to Napier given fewer trains from Palmerston North and no trains from Gisborne.
“There are potentially 35 trucks per day going across substandard, potentially unsafe road. We were hoping the log train would still exist, but there are indications it may not,” Valster said.
Reidy said about $120 million per year had been needed to keep existing services running and pay for “basic renewal”.
In March, when Transport Minister Simeon Brown announced funding cuts for freight railways, regional mayors voiced their concerns about the impact of more heavy trucks.