The Eye of the Fish

Maximus
February 8, 2013

Mainzeal

The big story of the day – the week – hell, even the year, is of course the sudden and catastrophic collapse of Mainzeal. From what we have heard so far, this is going to echo around the country and cause much misery for quite some time yet. Described as the third biggest construction company after Fletcher and Hawkins, Mainzeal has been around and survived the 80s crash, the 90s depression, the 00s boom and bust cycle, but has been brought down by the old chestnut of bad management. Having a no-hoper like Jenny Shipley on the board probably didn’t help (as one of New Zealand’s worst ever PMs, why would you ever bring her onto a construction company board?), but I think we will find that the real reason lies with the parent company Richina Pacific, and it’s overlord Richard Yan. The newspapers and magazines will uncover reasons on that over the coming weeks and months – but Richina always seemed like a bad choice of bedfellow for a construction company. Leather goods and Chinese tourism don’t sit comfortably with concrete and glass.

For now though, it will be a battle for many in the construction industry to see if they can survive. The other big boys are not immune either – Fletcher Construction has been really feeling the pinch over the last few years as well, with a slow but dramatic reduction in staff numbers, but they are heavily involved in the Christchurch rebuild and tied into government-backed projects in the millions. Fletchers basically built this country – they provided the first state houses, they built the dams that power us, they built much of the cities of Auckland and Wellington, and if they ever went bust I think we may as well just all go homeland not come back in the morning. Hawkins I’m not so familiar with – never had the pleasure of working with, although a colleague of mine said they were the worst, most incompetent contractor he had ever had the displeasure of working with. Still, obviously, more competent than Mainzeal, who just suddenly disappeared down the gurgler on Waitangi Day.

Still, you live by the sword, you die by the sword. Mainzeal is full of nice people now, who will be thrown into confusion and misery by the collapse, but back in the 80s Mainzeal used to treat others like dirt and grind their suppliers into the ground on a fairly regular basis. Still, as Dave O’Donovan, the former head of Mainzeal in Wellington said to me a while back, they wouldn’t survive in today’s market with an attitude like that any more – if you burn all your friends, you won’t have any friends any more. Those nasty, back-biting Chase Corp era people have moved on long ago, and Mainzeal has proved itself to be a worthy competitor to Fletcher Construction over the last decade or so. I’m hoping that the receivers will be able to pull it around, and resuscitate its corpse, as we need companies like this to succeed, not to fail. To have hung on as long as this, through the worst, most dull and boring recession and most stupid government, and then to collapse on the brink of the next earthquake-driven construction boom sounds like more than just bad luck and poor management to me.

Denny
8 - 02 - 13

Commiserations to all the great people that we have worked with at Mainzeal -… it is a real shame that great people in this industry get dragged down by their leaders. DO’D is a superb member of the former MZ team, but hardly alone. This is a huge shock and a big disaster for the country’s struggling construction industry.

Hawkins has great people too, BTW. No need to denigrate them. In my experience it is good people and attitudes that make for successful projects, not the companies they work for.

The fall out from this will reverberate for some time so also try to support the likes of subbies who have had to bear the brunt of financial stuff ups…

Maximus
9 - 02 - 13

I’m surprised that this post didn’t get more comments – seeing as how many people this Mainzeal collapse is going to have an effect on, but then again, we are dealing with Architects, who, apart from Denny and a couple of others, are noticeably reticent when it comes to commenting.

However – the DomPost has been good at reporting on this so far, as has Scoop, who have picked up that there is a large company willing to buy the entire Mainzeal company. Heard of that through your mainstream media source? No, I thought not. So, you might like to read it. References coming up.

Maximus
9 - 02 - 13

Ceres NZ is the name of the bidding company:
http://wellington.scoop.co.nz/?p=52618

DeepRed
12 - 02 - 13

Somehow there’s more to it than just a simple business failure. Financial analysts like Brian Gaynor already suspect the SFO could get involved.

Any way to get back on the mailing list? I’m in the midst of switching e-mail addresses and there seems no way of re-subscribing.

Maximus
12 - 02 - 13

DeepRed – mailing list? I dunno – how did you get on it in the first place? I was unaware that we had an emailing list…. Don’t you just click on follow, and it does it automatically? Philip is away, but if you send an email to contact @ eye etc, he might know what to do.

Philip
12 - 02 - 13

You should be able to get back on the mailing list over here: http://feedburner.google.com/fb/a/mailverify?uri=EyeOfTheFish&loc=en_US . Will make a note to integrate it back into the site!

ch
12 - 02 - 13

Correct me if I’m wrong but the collapse means that all the bad debts and leaky building claims against Mainzeal just end there. Leaving Mainzeal (2014) free to trade and take advantage of the new work without any of the hangover, Right?

Zealous
12 - 02 - 13

Except that Mainzeal (2014) would be starting from a position of zero capital and zero trust? Legally, its current directors probably couldn’t be involved, and I doubt any of its experienced employees will just hang around waiting for this rebirth.

ch
18 - 02 - 13

I take your point on zero trust but I don’t believe there would be zero capital. I read this at the weekend in the SST. It would appear that Mainzeal(2014)already exists. And that running your business into the ground is a valid way of abdictating responsibility… provided you have hidden as much money from the company before calling in the receivers.

“…last year, as Mainzeal’s financial difficulties mounted, Richina set up a parallel group of companies under the Mainzeal Group banner, including Mainzeal Ltd, Mainzeal Construction, Mainzeal Construction SI and MPC NZ Ltd.

These are separate to Mainzeal Property and Construction and are not included in its receivership, although they all have the same ultimate owner, a limited partnership managed by Richina.

Unlike Mainzeal Property and Construction, the new companies appear to have little, if any debt….”

Maybe this article should open with the line “the premediated and well orchestrated collapse” not “sudden and catastrophic collapse”.