Arena 'our worst job' in decade

The Vector Arena in Auckland is the single worst job builder Mainzeal has taken on in about a decade, its new boss says.

Richard Yan, chief executive of Mainzeal owner Richina Pacific, said yesterday the 12,200-seat, $80 million arena was running six months behind schedule and would not be completed before July.

Yan is moving his family from San Francisco to Auckland in an attempt to stem the flood of red ink at Mainzeal.

Mainzeal has made a provision of US$7.3 million ($12 million) for losses on the arena as well as an Auckland apartment block.

But Yan also wants to expand the business. He said the expertise and skills of Mainzeal's 500-strong team would be used to develop 46 separate parcels of Richina-owned land in Shanghai where more than 2 million square metres of office space could be built.

Richina's annual report, out last week, said Mainzeal would make a net profit next year, but Yan said he could say the arena "categorically" was the company's most difficult construction job.

The spectre of losses first arose last month when Richina reported its annual profit, but the exact amount written off was disclosed only in the annual report. The company also lost US$3.6 million on its Shanghai Richina Leather tannery.

Yan said he regretted that Mainzeal had entered into the contract to build the arena near Auckland's waterfront and blamed inadequate job specifications, incomplete working drawings, chronic labour and skill shortages, rising material prices - particularly steel - and the unusual nature of the job.

"This job is complicated and it's the first time something like this has been tried in New Zealand."

The arena is being developed by a public-private partnership between Auckland City Council and Sydney company Jacobsen Venue Management. Yan said Mainzeal's dealings were almost exclusively with Jacobsen, which had little experience or knowledge about developing entertainment venues such as the arena.

The other loss involving Mainzeal was the Scene apartment projects for the Redwood Group, also on the waterfront.

Yan said litigation was pending against the arena's architect, US-based Crawford, which has offices in Sydney.

$550m in work

* Vector Arena, Quay Park, Auckland.

* Precinct Apartments, Lorne St, Auckland.

* Fisher & Paykel Healthcare Properties, East Tamaki.

* Smales Farm, office block, Takapuna.