Auckland construction company folds, 55 staff laid off, more failures predicted

The construction company was working on Auckland Airport's renovation and upgrade. Photo /File

An Auckland commercial construction business that has worked on some of the city's largest jobs has gone under and laid off 55 staff.

Its founder is blaming a highly over-stretched building sector as one prompt for its demise.

Bagley & Blake Construction, working on the expansion of Auckland Airport's international terminal for Fletcher Construction, is now in the hands of liquidators Chris McCullagh and Steve Lawrence of PKF Corporate Recovery, with a projected $1.5 million deficit owed to unsecured creditors.

Founder and managing director Nick Bagley said today 55 staff had to be laid off from the business he owned with wife, Liz. The business has worked on some of the city's larger projects, including the airport, Auckland Hospital, Middlemore Hospital and LynnMall. Bagley expressed sorrow about the situation and took responsibility but said his entire sector was stretched.

"It's an industry-wide thing," Bagley said this morning.
"We won't be the first ones to go under. There's a lot of nervousness about other players. Other subcontractors are going to take a hit because everyone is so stretched.

"It's more an industry-wide problem. It was purely a cash flow thing for us. We couldn't cash flow it any further."

The business had had annual turnover of around $7.5m, one of its biggest jobs was at the airport for Fletcher Construction but it had also worked with Hawkins Construction and NZ Strong, he said.

The liquidators' report showed $650,240 is owed to Bagley & Blake for accounts receivable and retentions - amounts withheld by its clients. Bagley acknowledged this was a big issue.

"We had hoped we would recover some of those retentions," he said.

"But the bigger story here is just the problem of trying to get skills and it's right through the sector," he said, telling how paperwork on one big job was severely deficient.

He cited commercial construction working drawings "with some very fundamental flaws in them. That slows the process down."

The ongoing airport job has been estimated to be worth more than $100m and is the phase three expansion, a multi-stage redevelopment of the existing international terminal building with new outbound passenger processing areas, more duty free shops, landside and airside works and mechanical services.

The liquidators' report said Bagley & Blake was founded in 2010, specialising in full contract carpentry work, civil and concrete works.

"According to the director the reasons for the company's failure are as follows: the company cash flow was insufficient to meet day to day operation and the company was under-capitalised for rapid growth experienced in recent years," the report said.