Arrow co-founder regrets tradie pain
Arrow International co-founder Bob Foster has expressed his regret about the difficulties faced by subcontractors and clients affected by the construction company’s voluntary administration.
‘‘This isn’t what we expected, but we had no choice and we’re working with the administrators to minimise fallout,’’ Foster said.
He and fellow director Ron Anderson chose voluntary administration – a first for the construction industry – as the best possible way to ensure work continued.
The tipping point for Arrow’s descent into voluntary administration was a $4.2 million adjudication in favour of Christchurch-based March Construction.
The dispute focused on the complex piling work on the steep gradient of the 21-level student accommodation tower being built at 122 Anzac Ave in Auckland.
Sources said Arrow had been confident of its case. However, Arrow’s balance sheet never fully recovered from an earlier leaky building dispute, and the latest award threatened insolvency.
Voluntary administration allows for resolutions that might otherwise be clawed back under a receivership or liquidation.
The BDO administrators will be meeting with the firms involved in Arrow’s 15 different construction projects. Most of the half-dozen sites in Auckland, Wellington and Christchurch were closed yesterday.
One of those waiting to find out whether they would be paid was Gary Fyfe of GK Fyfe Painters in Christchurch who is owed $100,000 on work.
‘‘Once again, this is about attribution of risk . . . It’s a real shame to see a well-respected player exit the market.’’ Civil Contractors Federation chief executive Peter Silcock
Unlike some previous collapses, rumours had been swirling for a few weeks that Arrow was in trouble.
One subcontractor, who asked to remain anonymous, said he was told two weeks ago by his boss to keep nothing on site because ‘‘we could be locked out’’.
In Wellington, where Arrow was building a 20-storey apartment tower, one of the project’s shareholders, Mike Cole of Vicinity, said he had been hearing of issues for some weeks and had been taking steps to protect the subcontractors.
All the apartments had been sold, and he was confident the project would be finished without Arrow in the middle of the year.
Hawke’s Bay Airport chief executive Stuart Ainslie said he’d also had an inkling something was afoot, and had also been making alternative plans.
Arrow has been carrying out the $20m upgrade of the airport in Napier, and Ainslie planned to meet with the project’s 50 or so subcontractors next week, in hopes he could convince them to stay on.
About 40 subcontractors were working until Thursday at Wellington Airport’s Rydges Hotel. However, the airport spokesperson said the hotel was fully occupied and it would handle the small amount of finishing work left to be done.
Civil Contractors Federation, chief executive Peter Silcock said Arrow had been a reputable company with a good track record, and he worried about the effects of losing another large player.
Silcock said Arrow’s collapse was yet another demonstration of what was wrong with the construction industry in New Zealand at present, and unless the root causes were dealt with, it would continue to be a major issue.
‘‘Once again, this is about attribution of risk. Arrow is one of New Zealand’s top vertical construction companies and it’s a real shame to see a well-respected player exit the market. We need to see a more equitable distribution of risk and a more collaborative approach.
‘‘We need a more mature relationship between clients and contractors.
‘‘Part of the issue is clients repeatedly going for lowest price but wanting a goldplated outcome. That’s fuelling incessant litigation when the budget just won’t stretch to cover costs.’’
Ivan Stanicich, president of the Registered Master Builders Federation, said the collapse of Corbel Construction in December and now Arrow’s administration was very sobering.
‘‘Probably if nothing else, it illustrates that the industry I belong to is bloody hard work,’’ he said.