Picking up the pieces
Construction company Ebert had been in business for almost 20 years when it unexpectedly failed in August. Catherine Harris unpicks its demise.
Julian Oxborough is losing $70,000 a month as one of his cranes stands idle because of the collapse of Ebert Construction.
Oxborough, who runs Tower Cranes, has a crane on Auckland’s Union Green apartment site, where work has ground to a standstill since Ebert’s receivership in August.
In total, he’s owed $300,000. ‘‘It’s not easy,’’ he says. ‘‘I’ve got 135 staff I’ve got to pay . . . it’s two weeks’ salary almost.’’
Hardly anyone saw Ebert’s collapse coming. Despite warnings that more construction companies are due to fall over, it was one of the country’s larger building companies and had every appearance of being solid.
It had been trading for nearly 20 years and its projected turnover for 2019 was $171 million.
But on August 1, an all-too-familiar scene unfolded. Construction sites were locked, subcontractors were scrambling to get their equipment back and bewildered staff stood outside their offices.
The first receivers’ report by PwC indicates that the company owes about $45m, of which $33.8m is to unsecured creditors.
Hundreds of creditors, 12 pages’ worth, are listed in the liquidator’s report, and PwC says it is unlikely even secured creditors will all get their money back.
About 100 staff lost their jobs and 15 construction projects were left in the lurch.
Two weeks ago, the directors appointed a liquidator, David Ruscoe, of Grant Thornton. He says the directors felt it was appropriate ‘‘to allow a review of the affairs of the company to take place’’.
What happened?
By all accounts, Ebert excelled at dairy processing plants but at the time of its receivership, it was no lightweight in other areas of construction either.
It had built a string of facilities for Fonterra and other dairy companies, several apartment buildings, the Cider Building in Auckland and a Bunnings superstore in Great North Road, also in Auckland. It was also a partner in the award-winning student hub at Auckland’s Unitec this year.
One former subcontractor, who asked not to be identified, says he never had a problem with payment from Ebert.
But towards the end, he suspected something was up. Ebert stopped telling him about the projects that were coming up.
He made sure he got paid and got his retention money just before things went sour.
Like others, he believes Ebert only faltered when it went into the piping-hot Auckland multi-unit residential market.
PwC’s report says the company’s directors were concerned about the mixed performance of some of its nondairy projects.
Three were of concern, one in particular, although PwC does not name them.
Of the 15 projects Ebert had on the go at the time of its collapse, its two big Auckland residential projects were the 153-unit Union Green apartment building, and the first stage of the 245-unit Library Lane apartments in Albany.
It also had a mental health unit at Middlemore Hospital, two dairy plants for Synlait, the Indian high commission and a fire station, both in Wellington, and several smaller projects under way.
Was it bad luck, bad management or just bad timing that pulled Ebert down? Neither the receiver, nor the liquidator, has yet determined the full cause.
But a source inside the company says Ebert’s story is not that different to other construction industry failures.
It seemed to be a combination of pricing projects too low, and not building up a sufficient buffer to allow for unexpected risks, such as late design changes or lack of staff.
Attitudes of ‘‘she’ll be right’’ and ‘‘get the job, get it on the books’’ prevailed among some of the managers, the source says.
Similar issues are raising alarm elsewhere among construction companies. Fletcher Building’s construction mistakes racked up huge losses for the conglomerate earlier in the year.
And no-one has forgotten the collapse of Mainzeal Property in 2013, the reasons for which are now being examined in the courts.
The source says all three of