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Priscilla II

Fletchers

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So there was a weenee one liner in Fletcher's press release on Wednesday.

 

'... Fletchers will no longer be tendering for vertical construction work.'

 

So what does our countries biggest sky scraper / appartment building builder do, if it doesn't do vertical construction anymore?

 

and,

What does it mean for the construction sector if New Zealand's biggest constructor would rather quit than do another building?

 

That little one liner in the press release has put in writing that Fletchers have no idea how to deliver their core business. It also sends a stark warning to the entire sector, from developers, investors, other constructors, and most of all sub-contractors.

 

Of course we could get distracted by the current non-male fashion, which is slightly amusing, but doesn't address the big questions with Fletchers (Don't know if they had any women on their board, kind of irrelevant now).

 

My bet is the company will collapse / become insolvent at the end of March when they need to re-negotiate their banking covenants...

 

https://www.interest.co.nz/property/92107/strife-torn-fletcher-building-says-it-will-lose-another-486-mln-its-building-and

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I wouldn't have thought a competent constructor would get $660 mil in the sh*t just by under-estimating sub-trade costs. And there is more than one way to manage that risk for a competent head contractor.

But given they have had to take three goes at working out how much money they are loosing (3, including with outside assistance from auditors) I rather suspect the problems are a wee bit more complex than just underestimating sub-trade costs.

 

Respectable industry commentators have raised the possibility of a massive fraud, in order to manage to loose that much without knowing you were loosing it.

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No what they were saying is osh rules have been so expensive to the cost of the sites. A

Scaffolding design changing all the time ,rule rules rules , easer to build on the ground or charge up higher , I worked with them for 15years good company , good people ,today there are kids running most the divisions who have no trade experience at all ,

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No what they were saying is osh rules have been so expensive to the cost of the sites. A

Scaffolding design changing all the time ,rule rules rules , easer to build on the ground or charge up higher , I worked with them for 15years good company , good people ,today there are kids running most the divisions who have no trade experience at all ,

I worked for them also in their mechanical division(hvac) 86 to 91,great company with old style foreman/managers that knew how to look after staff. 

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So what does our countries biggest sky scraper / appartment building builder do, if it doesn't do vertical construction anymore?

They get propped up by building the governments 100k cheap and nasty houses. Because between ACC and the NZ Super fund it is 50% owner by the taxpayer and the government (not just the current one) has been under pressure to invest locally which is why they shouldn’t.

 

Fletchers have always been a joke management wise and are only kept going by the immoral price gouging they and their building product cartel mates inflict on us.

 

25 years ago a client of mine set up a cool modular house business. After a couple of years they sold it to fletcher for 2.5m. Fletchers, with a largesse team of clipboard holding idiots ran it to the ground. My clients daughter bought it back 10 years ago for $750k. Built it back up and sold it last year for $4.5m.

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There is a lot of good in the company and don't forget it's only a few divisions that are incurring losses.  I too worked for them as a grad engineer for 1 year. I am a shareholder also.  

 

My business is involved in both of the loss making projects.  Have to say nothing surprises me, both projects are difficult complex deliveries and hard to achieve on time.  With complex H&S, labour shortage, poor sub contract management and constant personal change the outcome is not surprising.  

 

Personally I think the construction market has not changed and it's always been this way.  Companies like Mainzeal and numerous other late 90's companies that collapsed were run in the same manner, the building sector is f**cked and needs a full review.  

 

The outcome will be foreign companies coming to NZ to complete projects with little competition and complete package turn key using their own staff offshore suppliers and contractors.  It's happening a lot already in NZ in both construction and other infrastructure and mechanical projects.  What will the merry band that is running NZ right now do?  Probably smile and say something smart that means nothing.  

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