NZ's largest construction corporation sheds 1500 workers

This crisis goes far deeper than anyone is willing to admit. 

The government has created $50,000,000,000 out of thin air; 

our tourist industry has been decimated; God knows how 

many small businesses have disappeared and I can't think of 

the last time when the leader of John Key's “rockstar economy”,

Fonterra was so much as mentioned in the media.

Yet no one is talking honestly about this.

Coronavirus: 1500 jobs to go 

at Fletcher Building

More Fletcher Building job cuts could be on the cards and the business would not 
be applying for the second round of the government wage subsidy funding 
because it did not qualify, chief executive Ross Taylor says.

The country's biggest construction company has told the NZX it plans to get rid of 
1500 jobs across New Zealand and Australia.

Taylor called it was a "sombre day". He said Fletcher Building was not interested 
in financial support from the Government.

"It is really important for New Zealand to have strong independent companies and 
it's not sustainable for all the companies in New Zealand to be dependent on 
government subsidies for the long term. It just doesn't work. It is important we are 
independent and on our own two feet."

Fletcher Building has proposed to cull 1000 jobs in New Zealand and 500 in 
Australia, which equates to about 10 per cent of its workforce

Taylor said "no part of the business would be immune to the cuts".

The impact of the Covid-19 restrictions over the past two months was “significant”, 
he said, especially in New Zealand as a result of the level 4 lockdown.

“Our New Zealand businesses were closed throughout Level 4, except for small 
parts of the distribution and construction divisions which were asked to provide 
essential services. We shut down over 400 operating sites at the end of March,” 
Taylor said.

Fletcher had suffered a roughly $55 million loss in April in New Zealand and an 
approximately broke even in Australia.

Taylor said if the situation worsened more jobs could be lost.

He said work on Auckland Airport's domestic jet terminal and the SkyCity 
International Convention Centre (NZICC) would be affected.

The NZICC project, that burned for three days last year, was given a new 
completion date of January 2, 2025 earlier this month, but Taylor said there may 
be further delays.

Taylor did not give specifics on which other projects would be impacted.

"We're impacted on our pipe-line projects."

He said social distancing restrictions under level 2 had impacted productivity at its 
Commercial Bay building project.

"Before [level 4 lockdown] we could have about 1800 people now its more like 
800 now.

"You just cannot get as many people as your staff implement social distancing. 
On bigger projects people are generally working on big broad areas so less of 
an issue."

Fletcher Building received $67.68m for 9694 workers from the government wage 
subsidy scheme.

Through the lockdown, it implemented a 12-week pay plan, where staff who were 
not working, or working part-time would receive 65 per cent of their salaries for 
two weeks until April 22. Then salaries would drop 50 per cent for the next 
month, and by 70 per cent the following month.

Fletcher's proposal would have seen senior staff including chief executive Ross T
aylor take a 15 per cent cut, but that was increased to a 30 per cent cut after staff 
said they were bearing the brunt of the financial impacts of Covid-19.

“We are beginning consultation with some of our people and unions this week," 
Taylor said.

Fletchers Building lost a billion dollars in 2 years

Fletchers, NZ’s largest construction company has made a record $billion loss.

This will have downstream effects for contractors etc. and for the NZ economy - the real economy, I’m talking about

I would not expect any reports from Gyles Beckford and Radio NZ to reflect more than a shadow of the real situation

For example, how could a company that has lost a billion dollars in 2 years be seen as a "good risk"?!

“Fletcher shares last traded at $7.70 per share. Who knows how much of a hammering the share price may take when they are finally traded again, and while you may not be one of Fletcher’s long-time mum and dad shareholders (about 17,000 shareholders hold up to 1000 shares) you may well have a slice of this iconic Kiwi company through your KiwiSaver. In total the company has 38,100 shareholders including our Accident Compensation Corporation (ACC).”

Fletcher Building's own Valentines Day Massacre

RadioNZ,
14 February, 2018



Analysis: The profitability, economic value and reputation of New Zealand's biggest construction company have been gunned down today, writes Gyles Beckford.

Today has turned out to be Fletcher Building's St Valentine's Day massacre.



It's the day the company's profitability, economic value, reputation and integrity as a public investment were gunned down.



Its shares today closed down 72 cents - or 9.2 percent - at $7.05.



The writing has been on the wall for some time as it drip-fed the bad news of cost overruns, writedown in asset values and restructuring costs as it battled the vagaries of the global construction and building products markets.



It's had to contend with cheap competition from the likes of China, the slowdown in housing markets around the world following the global financial crisis and the fluctuations in currencies on its multinational business.



But it often crowed about the benefits of its multi-billion dollar pipeline of big construction projects here and abroad, which were the backstop and defence against fickle markets and demand.



It is now clear that Fletcher Building chased almost any and every big job going. It was lead contractor in the Christchurch earthquake rebuild, the International Convention Centre in Auckland, airport developments in the three major cities, a new prison and a new apartment and commercial development on Auckland's waterfront.



But by its own admission the company has botched the basics of pricing, scheduling, and supply.



Sir Ralph Norris, the Fletcher chairman, has spoken of quantity surveyor estimates, which were as much as 100 percent wrong, rising building costs and the flow of communication from management to the board as some of the reasons for losses.



Those losses have hit $952 million in two years - $292 million in 2016 and $660 million in the current year.



Fletcher's stock has now fallen 35 percent in the past year, wiping roughly $2.5 billion off its value.



Friendly banks see Fletcher as a good risk

One of the most serious aspects of the current saga is Fletcher Building's breaching of its banking covenants.



These are the conditions that lenders attach to their loans. In Fletcher's case its lenders have stipulated the company must keep its operating earnings at certain ratios to its debt and as the earnings fall the covenants have been breached - four of them.



The group's debt levels are expected to peak at around $2.4 billion this year and it has total debt facilities of $3.1bn it can call on, but it's currently talking to the banks on new lending conditions. For the time being they are supportive and giving the company the benefit of the doubt.



The saving grace for Fletcher Building is that the rest of the business - which includes well-known names such as roading company Higgins, hardware chain Placemakers and laminates business Formica - are performing well. The earnings from these operations are expected to deliver operating earnings between $680m to $720m.



That cash flow and the scale of the bad news that has been disclosed will have persuaded the lenders that Fletcher Building remains a good risk, albeit with likely more stringent conditions and supervision than before.



The losers

In a headline sense, Sir Ralph has fallen on his sword and said he will step down. Some said he should have gone last year when then-chief executive Mark Adamson was abruptly shown the door in July, when the company had its second profit warning in a few months.



But long-suffering shareholders are losers because they will forego a part-dividend this year and may miss out on the full-year payment. And shareholders have also had the value of their investments savaged by the slump in the share price - it's fallen by a third in a year.



New chief executive Ross Taylor has said this should be as bad as it gets, but the suspicions and fears of more skeletons will linger.



And it may be that New Zealand's ability to get big projects done will get that little bit harder.



Mr Taylor has said Fletcher Building will not be chasing any more big project work other than being a participant or partner.



Thirty years ago the Fletcher Challenge conglomerate stood as a corporate colossus over much of New Zealand's economy - with vast forests, timber and paper mills, steel works, quarries, natural gas and synthetic petrol, house, and office and road building.



There was barely a sector it did not touch.



Today it's a severely wounded corporate set to remain in intensive care for a while to come.

Fletcher Building unit lost nearly a billion dollars in last two years

Ten numbers that tell the story of Fletcher Building’s astounding $660m loss

The Spinoff,
15 February, 2018



Fletcher. The name is synonymous with construction and building in New Zealand, and has been since, well, forever. But it’s been in the news for all the wrong reasons lately – here are ten numbers that sum up the company’s bad news streak.



$660 million
This morning, Fletcher Building announced losses from its Building and Interiors (B+I) business would amount to $660 million for the 2018 financial year, and its chairman Sir Ralph Norris (ex Commonwealth Bank of Australia, ASB, Air New Zealand) would be stepping down, noting shareholders’ demands for accountability. This caps an ugly gush of losses from the company’s high profile construction unit, responsible for delivering many large scale projects in New Zealand including the new international convention centre in Auckland and the Justice Precinct in Christchurch. It has already haemorrhaged $292m in 2017 due to “underperformance in the management of two key contracts: one in Christchurch and one in Auckland”. It will also cease to bid on projects, and concentrate on finishing off those not completed.



$160 million
If only that had been the number! Fletcher had flagged in its 2018 earnings guidance announcement in October 2017 that losses for the building and interiors business would total about $160m in 2018 (after a previous trading halt to review “the financial performance of its Building + Interiors business unit”). Then, last week, it asked for another trading halt on shares due to expected losses in B+I, which it has extended twice since. It has also had to have a wee chat to its banks. Gulp.



2017
Is the year that Fletcher’s Treasury team scooped the award for Excellence in Treasury at the black-tie 2017 Institute of Financial Professionals Inc. New Zealand (IFINZ) Awards dinner – the “highlight of the financial calendar”. The treasury team, the company’s press release said, is responsible for financial risk management. “The team works with business units to identify and appropriately manage financial risks, to guide strong business decisions and to help Fletcher Building’s businesses to operate in all economic climates.” It is “also responsible for ensuring Fletcher Building’s funding requirements are met, there is a diversity of funding sources, and the group is funded cost effectively”. Mmmkay.



4
But it’s not all doom and gloom, Fletchers would like you to know. In a letter to shareholders last year, chairman Sir Ralph Norris pointed out four out of five of its divisions made a profit thank you very much! Sir Ralph: “The reality is that in FY17, excluding the losses incurred in B+I, the Group’s operating earnings increased by approximately 20%, and operating earnings from the New Zealand businesses increased by around 30% … On average, these other four divisions outside of Construction delivered over 90% of the Group’s annual operating earnings in the years from 2011 to 2016. In addition, three out of the four business units in the Construction division performed well in FY17, particularly our new acquisition Higgins, which posted operating earnings of $39 million for the year.”



$7.70
Fletcher shares last traded at $7.70 per share. Who knows how much of a hammering the share price may take when they are finally traded again, and while you may not be one of Fletcher’s long-time mum and dad shareholders (about 17,000 shareholders hold up to 1000 shares) you may well have a slice of this iconic Kiwi company through your KiwiSaver. In total the company has 38,100 shareholders including our Accident Compensation Corporation (ACC).



1
The number of people on the construction giant’s board that have building industry experience – and that’s Tony Carter – the former chairman of Mitre10, so not exactly a construction company but a building supplies retailer. Company critics say one of modern-day Fletcher’s weaknesses is a lack of building and construction industry people in its executive and governance team. Over time, the company has recruited heavily from banking/accounting/management firms (PWC, Deloitte, Boston Consulting Group to name a few). This lack of industry-specific experience has led to some of the issues with its large construction projects, and them going awry and making losses, critics say. That said, new CEO Ross Taylor (no, not that Ross Taylor) has a long background in the industry.



$2,024,375
This was former Fletcher boss Mark Adamson’s BASE salary before he abruptly left last year after a run of disappointing results. On top of the base, Adamson was paid about $2.2m more in short term incentives. He didn’t get the $8m he was owed in long term incentives! But he did get a further $2.9m as part of an exit package. Board remuneration for the financial year ended June 2017 totalled about $1.8m, with Sir Ralph receiving about $435,000 of that. As you can imagine, the company’s results have left shareholders not best pleased with the salaries, or performance, of its executives and board.



4,229
The number of people at Fletcher Building who earn $100,000 or more. But the number we really need to get amongst is the 146 people who are paid $300,000 or more per year, or hell, what about the 46 who earn more than $400,000 annually. Critics have pointed to high salaries and an out-of-touch culture as contributing to the company’s poor performance for shareholders.



21,000
The number of employees Fletcher has across “hundreds of sites” across the globe. We like to think of Fletchers as being our national builder of everything, but it is a huge company with a presence in manufacturing (it owns Formica, you remember Formica?), building products, distribution and infrastructure to name a few. Its international division has more than 5000 staff, the building division almost 4000, and more than 6000 work in its distribution businesses, with a further 4500 or so in construction. It’s a huge business, and huge businesses come with huge risks.



1915

But it all started a long, long time ago. The company was founded in 1915 by James Fletcher and his brothers, after James Fletcher (and Albert Morris) won a contract to build a villa near Dunedin. From that humble start, “the company built many of New Zealand’s public and private buildings ­railway stations, universities, hospitals, banks and office blocks. The company expanded and bought businesses that supplied building materials, such as timber, marble, brick and concrete works, and employed hundreds of people in associated trades,” the Fletcher Trust archives say.



In the 80s Fletcher Challenge (as it was then called after mergers) really hit its straps, taking in forestry, paper, pulp, meat processing, gas distribution and fisheries businesses and led to the conglomerate we see today. In 2001 Fletcher Challenge was dismantled and Fletcher Building was created so it could get back to basics. Now, some people expect the company may sell off its construction arm – could Fletcher’s dominant position atop our building industry be coming to an end?

Another building company to go under?

In the midst of a building boom!

NZ Building company in financial strife - reports

The Hamilton city council says it is aware of concerns about the financial status of building company, Starplus Homes, but has had no official notification.

TV3,

12 April, 2013

There are unconfirmed reports the company has ceased trading and owes as much as $20 million to creditors.

Phone calls to the cut-price building company are going unanswered, and there are fears unfinished building projects in Auckland and Hamilton may now be under threat.

The company had been offering guarantees, but Registered Master Builders' Federation chief executive Warwick Quinn, says it's unclear whether Starplus will be able to honour them.

"At the moment there could only potentially be a written guarantee or words that the company will come back [and finish the projects] and that is only any good as long as the company is in existence," he says.

Mr Quinn says Starplus is not a federation member, which means there isn't clarity over what type of financial redress those potentially left out-of-pocket will have.

The (very) dark side of Dubai

The Slaves of Dubai

Most people know Dubai for its massive skyscrapers and luxurious hotels, but few know that the city was built by modern-day slaves.

For months, the BBC's Ben Anderson hung out around the glittering, insane towers springing up in Dubai trying to infiltrate the community of expatriate workers who are putting them up. What he found when he finally got in was that the jewel of the Arab world is almost entirely built upon imported slave labor.

John Key, Fletchers and the Christchurch rebuild

Christchurch, Fletcher and Zombie banks…? Are John Key’s masters making a mint out of the Christchurch Quake?

Aotearoa; a Wider Perspective

7 December, 2012

Last week Christchurch Rapper Trillion drew my attention to a list of shareholders of Fletcher and with the news media writing about the old boys network finding cushy jobs for their offspring I thought it was time I brought out the information I was able to put together which shows exactly how incestuous the upper echelons of the international elite is and how connected John Key is to all this  and why we should not be surprised to see Nepotism rear it’s ugly head in Christchurch.

Trillion asked on his facebook page who owns Fletcher building and wondered intoning my facebook page (which I thought was very flattering) in which of those shareholders, the majority of which were banks, John Key would have shares causing John Key to make money indirectly of the Chch quake and having a possible conflict of interest in appointing Fletcher building as the company rebuilding Christchurch.

Here is what I found:

The shareholders of Fletcher building are according to the list:

NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED
 with 296215920 shares

JP MORGAN NOMINEES AUSTRALIA LTD
with 43521538 shares

 NATIONAL NOMINEES LIMITED

with 38404045

RBC DEXIA INVESTOR SERVICES AUSTRALIA
with 38263529 shares

HSBC CUSTODY NOMINEES AUSTRALIA LIMITED
with 20757955 shares

COGENT NOMINEES PTY LTD
with 11165996 shares

CITICORP NOMINEES PTY LIMITED
with 10882102 shares

UBS Nominees Pty Ltd
with 5391125 shares

CITICORP NOMINEES PTY LIMITED
with 4866790 shares

RBC DEXIA INVESTOR SERVICES AUSTRALIA (PIIC A/C)
with 4839937 shares

Bear in mind this is only the 10 biggest share holders and it might be interesting to ask for Fletcher buildings entire list of share holders but for the purpose of this post the list above is enough.

Next I want to give you another list. The list of the biggest shareholders of Bank of America in which John Key holds a large chunk in shares according to the government site pertaining to personal interests of Politicians.

As you see the lists share some of the names. Don’t let the Australia extension fool you because technically that might mean they are a different financial entity but in reality it just means it’s the same company with branches in Australia.

So let’s go over the first list one by one shall we?

NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED
with 296215920 shares

This company is none other than a branch of the NZ reserve bank and while most people still think that this is just a benign separate entity invented to help the incompetent NZ government to manage our funds this is of course a branch of the Rothschild banking empire which incidentally also controls Bank of America and the bank of England

JP MORGAN NOMINEES AUSTRALIA LTD
with 43521538 shares

In August 2007 a small news paper article appeared in the Waikato times if I remember correctly announcing that JP Morgan Chase had opened a branch in New Zealand. They announced at the same time that they would not be open to the wider public but would only be handling larger industrial projects.

JP Morgan is notorious for financing mountain top removal and is also a major share holder in Bank of America.

NATIONAL NOMINEES LIMITED
with 38404045

National Nominees ltd is what is commonly referred to as an Agent Bank which means it operates on behalf of other banks making this shareholder a bit of a mysterious grey horse as it is not clear who really holds the shares and what made it even more intriguing was the fact that their website was not accessible.

RBC DEXIA INVESTOR SERVICES AUSTRALIA
with 38263529 shares and

RBC DEXIA INVESTOR SERVICES AUSTRALIA (PIIC A/C)
with 4839937 shares

Dexia is a Franco Belgian bank whose biggest trading partners are Goldman Sachs and Morgan chase. The bank received $6 billion in the 2008 crisis and was recently the first European bank called “too big to fail” and was bailed out a la A.I.G and the US banks.

HSBC CUSTODY NOMINEES AUSTRALIA LIMITED
with 20757955 shares

HSBC is another fine example of banking rectitude. It is the biggest issuer of credit cards in the US were they charge loan shark interests and they have just been convicted of scamming thousands of vulnerable old age pensioners out of their savings on products which would mature well after their deaths.

Together with Goldman Sachs, JP Morgan Chase and Societe General they were also the biggest bank to Mohammar Gaddafi.

COGENT NOMINEES PTY LTD
with 11165996 shares

I a group which also holds huge shares in Rio Tinto and Sirtex medical (about which more later)

CITICORP NOMINEES PTY LIMITED
with 10882102 shares and

CITICORP NOMINEES PTY LIMITED
with 4866790 shares

Citicorp is the old name of what is after a merger now called Citigroup and the bank like Morgan chase is also one of the biggest shareholders in Bank of America.

When John Key was part of the Foreign Exchange committee he shared that honour with James Kemp from Citigroup.

UBS Nominees Pty Ltd
with 5391125 shares

Is a Branch of the Swiss bank UBS AG. This bank is also heavily exposed to the international derivatives trade. No personel has been recorded and no profile for clients has been given. I could serve as a front for other banks and also shows up on other corporation shareholders list indicating it could be involved in the privatisation of ACC (more on that later)

The fact that two banks hold more than 1 lot of shares could indicate that these are divided into to investor groups.

In fact it could be that all these banks just service large groups of investors with these shares as investment funds. In fact it is more than likely.

However it must be remembered that while these investors themselves are not the bad guys as all they want is just the biggest return on their money as they can get but that the corporations servicing these funds are bound by law to give their investors the biggest return on their money as they can and they do so in a psychopathic manner. If you doubt this I suggest you watch the film the Corporation 

But what has John Key has to do with this you ask?

Apart from the fact that John Key has two trusts one of which is blind which both could be holding shares in said investment funds which would be a conflict of interest he also has a shares and quite a substantial number of them in Bank of America.

Bank of America is one of the five banks which are to big to fail and heavily exposed to the Derivatives trades currently destroying the global economy.

If Bank of America collapses John Key loses a lot of money and these banks are investing heavily in real world assets with their soon to be worthless US $. In order for John Key to protect his wealth he has to keep on supporting the system in which these banks operate. Having shares in the company which does most of it’s restoration and rebuilding work in Christchurch and being given the money by the NZ government to do so is one such operation.

In giving Fletcher building the job the National government helped John Key do just that.

In researching the names of the shareholders I also uncovered a series of PDF’s and links to other companies about which I will write at length in the coming days connecting these same shareholders to Rio Tinto and several Medical corporations indicating the same conflict of interest with the coming privatisation of ACC and the mining tsunami coming our way.

Sunday reflections

When climate change denial becomes extreme weather denial
Seemorerocks

There were at least two things that caught my attention yesterday.

Yesterday, Media Watch on Radio New Zealand carried an item about reporting the weather in New Zealand.

The essence of the item featuring Radio NZ's weather ambassador was that media is prone to exagerrating reports of extreme weather and following information from tweeters, people 'on the street', the conclusion being 'wait for the advice from the experts'

I have no criticism for the Met Service, but this is verging on being 'climate chaos denial'.

Those of us who follow this can see that if there is a pattern then it is that ther e is no pattern, and we are seeing extreme weather constantly around the world.

Whatever the truth of media sensationalising the weather, we kinow that the dots are never linked. These are portrayed as distinct, individual events that have no link.

I am well aware that some of the biggest climate change deniers are meteorologists – the dreadful Augie Auer, for those that remember him, comes to mind.

The arguments here will be very to educated liberals who are doubtful and have to have things proved to them (hopefully in a reasonable, BBC accent), but don't themselves take the trouble to scan the world media to enable them to see for themselves the extent of climate chaos (and yes, I am aware of the difference between 'climate' and 'weather')

Listen from 20'30"

Government owed $80 million to Mainzeal

The second, and more significant was a discussion with a friend who has been down in Christchurch doing some construction work on the rebuild.

He had some very pertinent remarks about the failure of Mainzeal, the country's third largest construction company.

What we are being fed was that it failed because of a downturn in construction.  But there is a little more to it than that.

Apparently Mainzeal, which has been involved in contracts related to leaky buildings, but also in reconstruction of (I think) the parliamentary library was owed $80 million by the government.

Mainzeal had taken legal action to get paid, but when the Chinese owner realised that this wasn''t going to happen he  wound up the company and the rest is history, with the downstream effects on the construction industry and subcontractors.

There is more than a whiff of corruption and something very dark going on.  We will probably never know the truth  of this, but where is Fletchers (apparently the government's preferred partner in the 'rebuild') and where is the prime minister? There seems little doubt that John Key has benefitted from all of this through his blind trusts.

As in the Alan Hubbard case, the government is deliberately stripping the country of private and public wealth for his masters on Wall Street.

As another friend said in response to this: 

"This country is not only rotten to the core, it is in the process of being systematically raped, while the people carry on sleep walking"

Attacks on natural medicine

On the front page of the Sunday Star Times there was a report that following complaints from senior doctors the Whanganui Health Board closed a program of natural health over concerns over 'witchcraft'.

And today, NZ First leader Winston Peters has complained about the expenditure of $1.9 million on traditional Maori medicine.

The Wanganui program was to deliver a service to staff (and not patients) - one would presume that they are qualified to distinguish between something that it is benefitting them and 'waitchcraft'

Again we are seeing the growth of intolerance and fascist methods to stop people from exercising their own freedom of choice.

My bet is that the nurses at Wanganui hospital would benefit from the 'witchcraft'.  It might make them feel better and assist them to help the doctors practice the real witchcraft that they dispense.