Building firm calls in the receivers

One of Auckland's largest builders, Avoca, has gone under, putting security fences around unfinished buildings and locking angry subcontractors off sites.

The business blamed crippling labour costs, punitive material price increases and problems with its biggest job - a four-level amenities block with a hospital at a retirement village at Albany.

The directors called in the receivers for four Avoca companies yesterday - Twilight Residential Construction, Twilight Construction, Avoca Commercial Construction and Avoca Residential. No debt estimate was available.

The Avoca group was one of the biggest of the second tier of builders that sit behind industry giants Fletcher Construction, Hawkins, Mainzeal and Multiplex.

Quantity surveyor and arbitrator Geoff Bayley estimated Avoca's turnover was $50 million to $100 million a year.

Avoca director Michael McKeown described the group's biggest job, at the Fairview Lifestyle Village alongside the Northern Motorway at Oteha Valley, Albany, as "extremely acrimonious" and problematic.

However, he also cited labour costs which had risen from $23 an hour two years ago to $35 to $38 an hour. Rising steel and oil prices had pushed up material costs so jobs priced years ago were uneconomic to build.

McKeown predicted many other building companies could also go under.

A senior building industry figure - who did not want to be named - said demand was strong in the sector but under-capitalised firms with fixed price contracts and rising costs could be struggling. The risk of receiverships was a feature of this part of the building cycle.

Bayley disagreed, saying most building firms were enjoying booming demand. He also questioned how the Avoca collapse could have happened, when the Construction Contracts Act was supposed to provide an increased level of protection for builders.

Angry subcontractors allowed onto an Avondale site yesterday to collect their equipment had called Bayley, worried about not being paid for work completed. McKeown said Avoca had been running for 15 years and employed 30 staff.

He and Fairview Lifestyle Management traded barbs on the difficulties with the retirement village project.

McKeown criticised documentation for the job, which was "not up to scratch".

Fairview director Scott Vernon agreed that the retirement village job had been difficult, but said it was not Fairview's fault. His company had an issue with workmanship, he said.

He said the amenities block was only two to three weeks from completion and the Avoca collapse would not affect the village.

Avoca was building the four-level 44-unit Alto on St Jude apartment block in Avondale's St Jude St - locked up when a Herald photographer visited yesterday.

Receiver Lloyd Hayward of Meltzer Mason Heath said Avoca was also building on Apollo Drive in Albany.