Why would DCC shaft its own company instead of investing in its change and development ?!

ODT 20.4.17 (page 28)

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11.3.17 How Safe Are We/Our Businesses with the Corporate Disaster that’s Aurora, owned by DCC ? #reliability

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Posted by Elizabeth Kerr

This post is offered in the public interest.

Waste Management NZ Ltd is Chinese owned

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16 Comments

Filed under Business, DCC, DCHL, Delta, Dunedin, Economics, Finance, Infrastructure, Media, Name, New Zealand, OAG, Ombudsman, People, Politics, Project management, Property, Public interest, Resource management, Site, Stadiums, What stadium

16 responses to “Why would DCC shaft its own company instead of investing in its change and development ?!

  1. Gurglars

    Sadly, ODT correspondent Sue Paehua is probably right which explains why there will be no inquiry into the tender process.

    Experience in closing down a landfill?

    Now that’s a rare skill.

    Thousands are closed worldwide, the problems and solutions will be common knowledge and if the hotshots being paid huge salaries at Delta do not know then either train them or reduce their salaries, or both.

  2. nick

    Sue Bidrose talks of the ‘tender evaluation process’.
    It’s tender all right . . . more like extremely painful.

    Just let us hear some more about what the DCC expects to happen to Delta.

    Gutting an already very vulnerable city-owned contracting business by denying it such a large contract is surely making the future chances of recovering Delta’s fortunes, or preparing it for sale, an even harder proposition.

    Or perhaps Delta is supposed to just keep floundering along, it seems without any seriously competent replacement CEO on the horizon.

    Maybe Mr Crombie can shed some light on his ‘vision’ for Delta from hereon, given that it finally will be separated from that lucrative revenue stream of Aurora lines charges, and will have to learn to stand on its own wobbly feet.

  3. Hilary Calvert

    There is no way of turning Delta into a functioning entity. The best way forward is for the work it does in Dunedin to be done by the same people through another company. Delta is not being gutted by the city: it gutted itself through its decisions in Jacks Point and Luggate. It is not making money for the city: it is wanting more capital to grow having lost money on the above and more recently in Christchurch.

    • Hype O'Thermia

      Yes Hilary, Delta isn’t going to turn into Microsoft II or even a well-run corner dairy any time soon, but at least we could stop sending even MORE Dunedin money overseas on a one-way ticket.

      • Hilary Calvert

        I understand that the replacement company will employ more people than Delta did for the landfill. Throwing money into the dump is no better than funding someone who is employing locals but making a profit.
        You denigrate corner dairies unnecessarily, and your “any time soon” comment suggests you believe, I guess as a result of hope over experience, that Delta is salvageable sometime somehow. It is not.

        • Hype O'Thermia

          Delta is on life support, I’ve no notions that it will spring from its sickbed miraculously restored to vibrant health. And no disrespect to corner dairies intended. If only Delta’s bloated & overpaids had begged successful dairy owners to mentor them – but it’s too late now. I should have written “any time ever.”
          I still oppose employing overseas owned companies because while they may hire local people, may even pay them well by NZ’s dismal standards for productive workers, the profits of the company go to the company, the “overseas owned” company….
          …whereas Delta’s, should they make a profit on anything, would go to overseas owned banks along with all the other interest on DCC borrowings.
          Glass half full of clean Green Dunedin air?

    • nick

      Delta does have a tangible value at present, but with the stripping of another major contract from it, the DCC is weakening Delta’s value.

      Having “its work in Dunedin done by the same people through another company” is surely what happens when you sell Delta.
      How else does that ‘other company’ manage the process? Indeed what other company would ever want such a tenuous arrangement without full ownership?

      Aurora needs to tender the asset replacement work – handing it on a silver plate to Delta is NOT smart. It does neither any favours to itself, Delta or the city who owns it. Delta are seriously incompetent, and are presently being rewarded again for it.

      As for Aurora, their Annual Report this year is going to be a huge book-cooking exercise to convince anyone that there is anything of value left after decades of accumulated deferred maintenance. The costs of this ‘exciting asset renewal program’ are staggering, and probably crippling.

      • Hilary Calvert

        The thing is that almost 50% of the work Delta does is without competitive tender for one of the other DCC entities. Anyone buying Delta would need to know it would move to a competitive tender for all of the work, so Delta is not selling its ongoing goodwill in the way another company would. Delta always needs to have 50% of its work not DCC related, so it is also under pressure to quote low for other work, to keep the sweet tender-free work with DCC. Local work done by local people in Dunedin will always be done by local people, whoever they work for.

  4. Simon

    Is this what all those trips to China by our Mayor and council economic development staff was all about. To arrange a quick fire sale of ratepayer assets ?

  5. Calvin Oaten

    Oh well, we are watching the demise in slow motion of the Delta/Aurora council owned trading company. By the time they are finished there will be nothing left to sell or even a trace of its being. Between the internal management and directors, plus the DCC bureaucracy and the elected council this company has been successfully exterminated. Long may this be remembered and the electors (the owners) ruminate on their decisions at the ballot box.

    • Peter

      Calvin
      For all we know that might be the plan. Extinguish the company to a point where it has to be wound up. In that way they can clear out the management, and the Board, who have been manifestly incompetent.
      No problem with that.
      In the end the donkey work still has to be done and those workers, who have worked at the coal face, must surely be in a good position to reapply and get back their old jobs……hopefully without being screwed again by the offer of poor pay and conditions by the new owners.(Not confident of that, mind you. We do live in compliant New Zealand.)

    • Calvin: you say: “Long may this be remembered and the electors (the owners) ruminate on their decisions at the ballot box.”
      It’s doubtful whether most voters anywhere do much ruminating before voting, let alone after. Scientific research is starting to bear this out: http://www.cracked.com/article_22172_5-psychological-reasons-humans-cant-handle-democracy.html

  6. Rob Hamlin

    From Dunedin’s economic (and social) point of view Wanaka/Queenstown is now another country. So, (hypothetically) if you have company ‘A’ that is foreign owned and exports 25% of its locally sourced revenue directly to Beijing as profit, versus company ‘B’ that is supposedly locally owned but exports, say, 40% of its locally sourced revenue to Wanaka/Queenstown via a wide variety of less directly reported routes – It makes unpalatable but perfect economic sense for Dunedin to go with the Beijing solution.

    • Hilary says this: Local work done by local people in Dunedin will always be done by local people, whoever they work for. (ends)
      Very likely mostly true but Rob’s comment above shows that where the profits of the company that employs them go is also something which needs to be taken into account. It seems a pity that we can’t have an economic system which retains both the work and the profits locally. But I suppose that would not be ‘globalisation’. Glocalisation?

      • Calvin Oaten

        Diane, if we had the local infrastructure that functioned correctly plus our own bank then all would stay in Dunedin, except that which is spent on materials from outside. It would be possible but highly unlikely due to the current management. ‘Glocalisation’? I like that.

  7. Calvin Oaten

    Peter, maybe it is the plan. But I somehow doubt it, rather a result of appallingly bad decisions and management. If one just looks at the performances of Delta’s recent past endeavours you could not come to any other conclusion. There is the property deals such as Jacks Point, Luggate and of course Yaldhurst, all resulting in vast losses. Why is this so? Just look at the management and direction of the company during this period, plus the lack of the DCC, both staff and elected. It is a right FUBAR and it is still happening. So in reply to your comment, “it might be the plan”, I don’t believe there ever was a plan, and that is the problem. Boys among men.

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