The Project Auckland series looks at the challenges facing Auckland as it seeks to become a world-class city.
Fletcher Construction managing director Mark Binns is upbeat about his company's long-term prospects in Auckland infrastructure. It is the "hole" in between that has him worried.
"We are facing a hole in construction over the next 12 or 18 months that is largely a result of a lot of large projects coming to an end and a bit of a hiatus between new projects starting," he says. "The issue is that these projects take a lot of time and resources to bed down and we will not be moving dirt until 2012."
Binns said the "anaemic" private sector was of little help and the future rested largely with publicly funded infrastructure projects.
"The Government needs to keep spending to ensure the workload is there in the interim period.
"We are pursuing the Wiri prison project but again the lead times are quite long."
"My message is that there is a lot of work in the pipeline but the work is sometime away."
Binns says the one sector that could save the day is housing.
"It can turn quickly and it does and we are always interested when it picks up again."
He described the housing market as "difficult" but said the company's upmarket Stonefields St Johns housing project in the former Mt Wellington quarry was "going very, very well for us in difficult times".
"We made a commitment to $300m of land. The supply of land in Auckland is constrained so we have always been bullish on good potential land development over the Auckland area.
"We will have built out of Stonefields St Johns by 2014 and we have not had price pressure.
"If you believe in Auckland, you have got to believe in good housing and the long-term value it offers."
Binns said the company was looking to the Government for opportunities to build houses by way of public/private partnerships.
"We have already had discussions and it's something we are keen to pursue. It is more likely to happen in the current political environment as opposed to that under a Labour Government."
Binns said in the meantime Fletcher Construction had no choice but to keep its teams together because it could not bid for high-risk jobs without high capability.
"You have to look to redeploying people and focus on some area of work maybe in more buoyant times you might not have looked at."
Not that all the prime private-sector work has dried up - Fletcher Construction was named last month as the main contractor for ASB Bank's new head office in Wynyard Quarter on Auckland's waterfront - but big ticket private work is rare in the current market.
"This is not doom and gloom," Binns said. "I think the 2012/2013 construction market is going to look strong."
He said talk of a central Auckland underground rail loop and another harbour crossing interested Fletcher Construction, but the issues were political and the lead times were long.
"It is obviously going to be a few years in the future before something like the underground railway loop would become a reality. People underestimate the time and effort involved."
He said the Super City would result in better decision-making processes but it was unlikely there would be any reduction in rates. There was also a question of how long the transition to the new Super City would take.
"The issue for us because [the construction sector is] very lumpy in trying to average the volatility between boom and bust."
Binns said Fletcher Construction was active in Christchurch, undertaking remedial work, and had presented Christchurch City Council and the Government with a capability statement.
"Clearly there is a significant amount of work over the long haul and we are just reviewing what we think the long-term requirements will be for construction down there so that we can get resources there if required.
"One of the niggling concerns is that if the Government is going to spend a lot of money in Christchurch, does that mean other projects in other parts of the country will get canned or delayed because of the fiscal pressure [the Government is] under? I hope not."
Binns said in the present economic climate the Government was getting excellent value for money from construction companies.
