Relentless government scrutiny blamed for Cootes halving is fuel-haulage fleet

Matt O’Sullivan
February 19, 2014
The Age
About 540 jobs will be axed from Cootes Transport after its parent, McAleese, decided to half the size of the beleaguered fuel-haulage business after what it described as unprecedented government scrutiny.
With the Cootes fleet under relentless surveillance, McAleese chairman Mark Rowsthorn said most executives in the transport industry were ”absolutely crapping themselves” that the same would apply to them. ”It is unprecedented,” he said after warning the fallout from Cootes’ woes will cost it $47 million this financial year.
He conceded that the company had not been ”squeaky clean”.
McAleese will sell about half of the trucks and trailers in the Cootes fleet after losing contracts with Shell and BP, and withdrawing from supplying 7-Eleven in several states. The vehicles to be put up for sale include 190 prime movers and 286 tankers.
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McAleese said the 540 jobs – the majority of which will be in Victoria and NSW – would be axed over the next six months as contracts ended. The company has set aside about $13 million for redundancies.
Shares in McAleese slumped almost 35per cent to 72¢ on Tuesday – almost half the price at which it floated in late November – after the company emerged from a trading suspension and revealed the magnitude of Cootes’ woes.
About 1250 of McAleese’s 2000-strong workforce is employed at Cootes, which the company bought about two years ago from private equity company CHAMP.
The job losses will primarily include truck drivers but also workshop and clerical staff. McAleese emphasised that many truck drivers would transfer onto fuel supply contracts with other companies.
Two people were killed and five injured when a Cootes fuel tanker lost control on a bend in the Sydney suburb of Mona Vale and burst into flames on October 1. Since then, NSW and Victorian transport authorities have issued Cootes with hundreds of defect notices.
Mr Rowsthorn said the repercussions from the Mona Vale accident, including the scrutiny of its fleet, had caused reputational damage that it had not had an opportunity to defend.
”It is a business that unfortunately, due to this tragedy at Mona Vale, has forced the government’s hand into inspecting our vehicles relentlessly, and it has had a negative impact on us,” he said.
”It’s pretty tough with negative press, which the government officials react to and feed. Quite frankly, we have done everything we can.”
It leaves the slimmed-down Cootes to haul fuel for Caltex and LPG for Origin Energy.
McAleese has told investors that the restructure will be subject to Cootes holding on to the Caltex contract, which is due to expire in March next year, and the Origin deal, which is under tender.
Mr Rowsthorn said all of its customers were concerned about the ”knock-on reputational damage that has come with being associated with Cootes during this difficult time”.
McAleese also revealed the head of its bulk and liquid transport division, Chris Keast, had resigned.
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