The Eye of the Fish

Leviathan
March 2, 2019

Arrow

It is sad, but not entirely unpredictable that Arrow has gone into receivership. Voluntary administration. The death rattle from a mortally wounded corporation, the sounds at the end of the week of this construction company being shot down were, apparently, not news to anyone actually working in the company, and it was more a question of not if, but when.
Sebastian-GerritvanHonthorst
Officially the reason is that “an adjudication was unexpected” and that must mean that they suddenly had to pay someone else more money than they had. Unofficially the reason is the large Anzac Ave project in Auckland, where an enormous amount of complex earthworks needed to be constructed to retain the hillside before building a student hostel on top of it. Foundations, eh? They get away on you, every time.
throneofblood-mifunedeath
I’m a little mystified, however, by their continued description in the media as a “large player in the industry” and a “major construction firm”. And part of that may be one of the reasons that their demise has happened. Arrow are not, at heart, a construction company. They are, instead, many different things, taking on a bit of construction here, but more commonly acting as Project Managers, and sometimes Construction Managers. Their roles are widely spread and as a result, perhaps a bit confused.
Leonidas_Death
Like many of you, I’m also a little aghast at reports that the founders of Arrow are “worth $130 million” and yet the company has gone into closedown over a sum far less than that. The immediate suspicion is that someone has been pulling more money out of the company than they should have. No one needs $130 million to live on, Bob, so put some of that dosh back into the pot…
st-sebastian-1506

m-d
2 - 03 - 19

Dear old Seb survived the arrows and was later clubbed to death.
Any parallels here?

Levi
2 - 03 - 19

Probably! The receivers generally do a good job of dismemberment and disposal of the remains. Like Jeffrey Dahmer, but in a suit.

60 MPa
3 - 03 - 19

I worked for Arrow on a temp contract about three years back and swore never again. Disorganised and unwilling to accept responsibility for much at all
Seeing them at the end of the St George job and talking to guys on that job it sounded like utter pandemonium
Not as bad as Watts and Hughes but not many outfits are

On a cheerier note I welcome this wariness on the part of subs – a healthy level of caution on their part is good for their long term prosperity

Alan
4 - 03 - 19

For your interest, there is an article on how / why Arrow collapsed in the Dom today:
https://www.stuff.co.nz/business/better-business/110955832/how-arrow-fell-from-grace-after-30-good-years

“Arrow’s balance sheet was severely hit in 2010 with a $14 million leaky building claim over the Luxford Villas, an apartment complex in Berhampore, Wellington, taking several years to resolve.”
“The final straw was a recent $4.2m judgment in favour of March Construction over complicated foundations built for an accommodation tower in Auckland.”
“The aim was to return to the modus operandi of the early years, negotiating agreements directly with clients and acting as developers, rather than competing in the cut throat world of contracting. A $70m apartment building in Dixon St, Wellington was an example of Arrow’s new business strategy of partnering in developments – it was the development manager, construction contractor and equity partner.”

Levi
5 - 03 - 19

Thanks 60 and thanks Alan. Yes, to the outside world, Arrow has always been a bit confusing – was it a Contractor, was it a Project Manager, etc, so I imagine that the same confusion must have been a lot more intense actually inside the company.

levi
5 - 03 - 19

Possibly the thing that concerns me the most, is that the notorious Chow brothers are interested in buying the remains of Arrow. http://wellington.scoop.co.nz/?p=116662

“We have a project team in place already commencing our Vivian Street hotel project in Wellington and our Courtenay Place Hotel is 70% complete so we can reposition staff within a day and carry on unaffected.” said Michael Chow.
“Arrow was the lead contractor on the project to turn the Chow-owned CMC Building into a four star Oaks-branded hotel.”

However – a Vivian St hotel? First I’ve heard of that. Whereabouts in Vivian St would that be? And why would anyone want to stay in a hotel right on State Highway 1 ?

Seamonkey Madness
5 - 03 - 19

The was a fantastic article from an industry insider that expands upon the Stuff article. A really interesting read (and comments) about how they ran a model that essentially borked contractors by risk-shifting; one that is adopted by more players now.

greenwelly
5 - 03 - 19

@Levi,

The Chow’s own the old Whiteria building just up from Wellington Photographic,
This article said they were selling it last year,
https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=12090666

But it is still listed as being owned by them, so perhaps they have decided to keep it and convert it….

Coincidentally the building backs on to the big box site (NLemming, Warehouse, Exodus) that they also own at the Top of Tory street.

Levi
6 - 03 - 19

Aaaah, interesting, thank you. Yes, that sounds like the “hotel” in Vivian St that they are talking about – impossible access, virtually no parking, noisy location – all perfect attributes for a boutique hotel. But cunningly offset by the Chows, in that if they own the Top of Tory development, there is lots of built-in parking and access from the other side. It might just work…

Dominic
6 - 03 - 19

Asking for a friend (not really). If Arrow were meant to lead a really difficult construction project this year, on a difficult site in say, lower Taranaki St, and all the plans had their name on it etc.. and no ground has been broken. What are the chances of someone sweeping in and taking their place at short notice?

Leviathan
6 - 03 - 19

Dominic – pretty slim, verging to zero, i would have thought. The receivers are there to finish off unfinished business, not start anything new. So that particular project is doomed, unless, as you say, some new “white knight” sweeps in, buys the plans and the permissions, and the land, and makes no changes, but takes all the chances. And I think you know Dom, that white knights appear in fairy tales, but not in real life…

Is this your project? Or is that the site out the back of a certain bar, that has been in a state of disrepair for many a year?

Dominic
6 - 03 - 19

Leviathan,

the latter – this is the project to put an apartment block in the carpark behind us and cantilevered over the building that Hashigo Zake is in. So yeah, I’m daring to believe that this is the best news we’ve had since before the Xero build started.

But I guess it’s up to the developer – one Peter Kennedy. He should at least realise that if he finds a replacement for Arrow, I’m going to hounding the council and OIA-ing every plan and approval.

And I assume you’re implying the carpark is in a state of disrepair, not my bar. Either way you might be right.

Leviathan
7 - 03 - 19

Dominic – your bar is lovelyyyyyyy. Seriously great place to spend an evening drinking. I think it is the patrons, and the carpark, that are in a serious state of disarray, not the bar…!