Hartner director proposes new system for building industry

By ANNE GIBSON Property editor

Last Saturday's headline, "Wayne's world is crumbling," should have read "Hartner victim of the system."

So says founder, director and shareholder Wayne Hartner.

He blames the way the construction industry works for his company going into receivership and says Hartner Construction is not the bad guy.

The system is to blame.

He particularly blames last Saturday's Weekend Herald article, which detailed the rise and fall of Hartner Construction: "You made me look like a fool. I read that and thought, is that who I am? That person is not me."

Out immediately went the white suit, into the local Salvation Army bin.

"I threw the bloody thing out on Sunday. Anyway, I only wore it five times," he says in defence to last week's assertion that it was his trademark outfit.

The real man is the one who has to sell his $US2.95 million ($6.7 million) launch, the Risk and Reward, to pay some of his debts. It is also the man who will sell his Epsom home on its $1.3 million section. The real man has already sold a number of Auckland houses, cashing up on the rentals to repay outstanding debts.

The real Wayne Hartner is a man sickened to the core by the collapse of a business he built up over 30 years, a man who says he is honourable, has integrity and thinks the best of people.

As he takes yet another cellphone call from a subbie pledging to stand by him, Hartner can hardly believe that anyone would think ill of him.

The trucks and semi-trailers rumble past the Neilson St mirror glass offices of Hartner Group. Inside, Hartner himself is performing a corporate autopsy.

But concluding it is not his fault, he actively declines to name those he believes are to blame for the company's collapse.

"I don't want to point the finger at any particular individual. I don't want to destroy anyone," he says, noting enough hurt has already been done without him jumping in to the boxing ring.

He points the finger well away from himself and his general manger, Peter Kay. He points towards the building industry at large and the way it works in New Zealand. It is an industry which, he says, operates in an "insane" manner.

Hartner wants developers to be bonded in a system not unlike in America, where, before a developer lets a contract to a builder, the developer has to prove the money is there. A bank or insurance company is called upon to underwrite the guarantee that money exists and is available.

Should things turn sour, at least the funds can be called on and the money passed by the builder to the subbies.

Hartner's right-hand man, Kay, chips in that the Government's proposed quickfire disputes resolution proposals in the Construction Contractors Protection Bill will go a long way to helping.

Had any of this been in place before now, Hartner Construction might not have collapsed. It's just a little too late for Hartner and Kay.

They are not alone in their calls for the bonding system. Richard Michael, economic adviser to Associate Commerce Minister Laila Harre, agrees that the idea has its merits, although on balance he believes the new bill will fix the broken industry.

Some industry reps agree with Hartner and Kay too. Contractors Federation president John Pfahlert is hot on the issue and raised this when he was on the bill's working party last year. He was downcried by those who say it would make the building industry even more beholden to banks and insurance companies.

Fletcher Construction executive chairman Mark Binns is reservedly keen: "I like the theory, but the devil would be in the detail."

Fletcher, by far the largest construction firm, gets bonds of between 10 per cent and 20 per cent from some of its clients in some cases. In others, it wants to know where the developer is getting money, see letters of credit from banks, or physically take money in advance as security on a job. But the point, Binns notes, is that builders should not be working for people whose financial security they doubt in the first place.

Asked what put Hartner Construction under, Wayne Hartner details a list of problems, but he particularly targets problems on two Auckland jobs: building stage one of Princes Wharf, for which Hartner claims David Henderson's Kitchener owes it $3.6 million; and the Watermark apartments (now the Sebel Suites of Auckland) in the Viaduct Basin, where Hartner lost $3.6 million. The apartments were developed by Nigel McKenna and Greg Wilkinson of Axis, with financial backing from Eric Watson.

"The fault was a combination of not getting paid for stage one and taking a loss on Watermark - we spent significant sums of money trying to recover that money and the subcontractors' money, at the same time paying interest to the bank, coupled with a downturn in the industry mid-2000.

"Money went to lawyers fighting for the outstanding money and paying salaries to our own executives, who spent significant amounts of time looking at our options. Then the arbitration was taking months.

"Eventually, the National Bank could no longer support us. They couldn't extend our overdraft facility, so the directors of Hartner Construction requested that the bank appoint a receiver."

Although hopeful the company can trade its way out of receivership, Hartner remains upset about the state of the building industry: "Novated contracts, guaranteed maximum price contracts which means the contractor takes all the risks - none of it is done properly."

Hartner and Kay are proud of a letter written at the end of January from David Henderson, congratulating them on their work on the Hilton which they say never ran behind construction schedule.