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Arrow International – currently in voluntary administration – was well respected in the vertical construction sector; its demise is symptomatic of the state of the industry at present

Editorial – April / May’19

The demise of Arrow International – yet another high-profile Kiwi company to fall victim of the current construction boom – is symptomatic of everything that’s wrong with the industry.

No sooner had our last edition of NZCN gone to print and been distributed to subscribers, Arrow International – the stars of our cover story – hit the skids. It was a shock to us and to the company’s PR team, who rang me very apologetically late in February.

“I’m not sure how to tell you this, but I’ve got some bad news for you about Arrow,” they told me. “The board of directors have appointed voluntary administrators. The official line is that an adjudication in favour of another contractor in a disputed Auckland project has left them with insufficient cashflow to meet their day-to-day operating costs, and they can no longer sustain trading.”

Malcolm Fleming, NZIOB chief executive, also writing in the last edition, summed it up perfectly: “It’s the best of times, the worst of times,” he said. “We are witnessing parallel themes: evidence that our companies lack financial resilience; and that our sector is struggling to get through the work we are engaged to produce. From a client perspective, these attributes create risk and uncertainty, both of which are expensive.”

Civil Contractors New Zealand chief executive Peter Silcock agreed. “The times when there is a lot of work on can be extremely difficult for construction companies, who manage complex networks of subcontractors and suppliers. 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.”

News then this month of the launch of the Construction Sector Accord – a high-level partnership agreement between the government and the construction industry – has been widely welcomed by the industry. Signed by members of a development group chaired by Peter Reidy, current CEO of Fletcher Construction Group and former CEO of KiwiRail, and numerous government ministers, the accord identifies priority areas for government and industry to address, including the way government agencies ‘buy’ construction work, the need to invest in upskilling the workforce, and the need for the industry to improve its financial resilience.

Back to Peter Silcock: “The challenges we are facing as an industry impact on contractors, their employees, our construction clients and our society. It’s great we have made the first step towards a united approach with government. This joint commitment between the construction industry and its clients is now coming into shape and focuses on the core problems rather than the symptoms,” he says.

“We need to rise to the challenge of doing things differently. We are looking forward to working with the government and industry partners on the detail of the commitments, as well as a clear and defined plan for the accord to be implemented.”

Until next time …

Lynne Richardson, editor

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