The public is well accustomed to corporate calamities on big building projects. Frequently the names on the hoardings change after the original construction company gets into difficulty. But a company bearing the name Fletcher in this country is expected to be different.
It not only represents a proud heritage here, it dominates more than one sector of the construction industry in New Zealand.
How then has Fletcher Building been burned so badly by two major projects, the completed Christchurch justice precinct and the Auckland convention centre under construction, that it is in breach of its banking covenants and its chairman, Sir Ralph Norris, yesterday announced he will be standing down after declaring a loss of $660 million this year?
Obviously, the company has underbid on those projects, and not just them. All told, 14 of the 73 projects on its books are loss-making or on watch. How could a company of Fletcher's scale and resources underestimate the cost of so many projects so badly? Those 14 are by far the largest in the portfolio, with a total contract value of $2.3 billion against just $0.5b for the remaining 59.
"There are a number of issues that conspired," Norris told a press conference yesterday. "One of the issues is, the information flows through to the board were not as fulsome as they might have been."