Mainzeal

February 7th, 2013 at 11:00 am by David Farrar

James Weir at Stuff reports:

The high cost of repairing leaky buildings is a big factor in commercial builder ’s receivership, an industry source says.

Mainzeal Property and Construction, begun more than 40 years ago, was put into the hands of receivers yesterday.

It employs more than 400 people.

The firm is the country’s third-largest construction company, behind Fletcher Building and Hawkins Construction. …

A source said Mainzeal had been effectively killed off by several leaky apartment buildings that it was repairing, some of them costing many millions each to fix.

Mainzeal had been involved in their construction, but ended up as the “last man standing” because others involved, such as architects and designers, had already folded, the source said.

Profit margins on other projects had been too small to cover those repair costs.

Another victim of leaky homes. Very sad both for the economy, and for those directly employed or sub-contractors.

Some of their existing projects may continue on in receivership, as they are presumably individually profitable. So the impact may be less than we expect. But still bad news, and somewhat surprising considering the construction boon. But one big job you make a loss on can wipe out lots of jobs with small profit margins.

Tags:

27 Responses to “Mainzeal”

  1. CJPhoto (214 comments) says:

    It will be interesting to see if the Phoenix the company and this is just a way to cease liability in relation to the leaky buildings and a few non profitable contracts.

    Also brings Jenny Shipley into a bad light which is not good timing should National want to sell Genesis – From memory, she is Chairman of the Board.

    Vote: Thumb up 14 Thumb down 0 You need to be logged in to vote
  2. Dave Stringer (183 comments) says:

    not good newsfor the people waiting to have their leaky homes repaired!

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  3. Manolo (13,357 comments) says:

    Shipley was out of her depth as MP, let alone PM. Now in the commercial world, she is out to prove her incompetence over and over.

    But wait, she’s a woman hence she’s entitled to be there (in today’s NZ.)

    Hot debate. What do you think? Thumb up 20 Thumb down 6 You need to be logged in to vote
  4. liarbors a joke (1,069 comments) says:

    Seems always an ex politician involved somewhere along the line.

    Vote: Thumb up 14 Thumb down 0 You need to be logged in to vote
  5. lazza (358 comments) says:

    A coupla questions.

    1. Will we get a credible believable statement (from the Receivers? Hah!) that this is not just another “skip out” to avoid Leaky Building contingent or actual liabilities? AND

    2. How come the subbies in this industry continue to operate without reasonable lien or other creditor protection of their certified invoiced work when the head contractor folds? This continues to defy both fairness and logic.

    Vote: Thumb up 17 Thumb down 0 You need to be logged in to vote
  6. wreck1080 (3,730 comments) says:

    I guess mainzeal are no longer the last man standing.

    Leaky building victims have one less target.

    I’m unsure shipley has anything to do with this – the leaky building problem is beyond a single persons fault and there is a lot more pain out there.

    Vote: Thumb up 7 Thumb down 1 You need to be logged in to vote
  7. gazzmaniac (2,317 comments) says:

    2. because they are businesses and that is how businesses operate – on credit. They could ask the directors of the building company for a personal guarantee if they are worried.

    Vote: Thumb up 2 Thumb down 2 You need to be logged in to vote
  8. Nookin (3,034 comments) says:

    How can a builder be a victim of leaky homes?

    The builder only bears the cost of a leaky home if it is negligent or in breach of contract. Sure, it is the “lastmanstanding” but that only means that there is no spread or rights of contribution. It doesn’t mean that the builder is the indemnifier for everyone else’s mistake.

    That being the case, why is a builder a victim?

    Vote: Thumb up 7 Thumb down 2 You need to be logged in to vote
  9. campit (462 comments) says:

    It amazes me that central Government seems to have evaded much liability for leaky homes. Is this wikipedia entry still valid?

    In November 2009, national government decided not to offer a more substantial sharing of costs, and it is now estimated that in most cases, around 64% would have to be borne by the owners, 26% by Councils, and only 10% by national government funds, while also forcing homeowners to sign away their rights to sue for more.
    Prime Minister John Key noted that while claimants did not have to accept the settlement, legal costs for bringing suit could eat up any further money awarded to them… The governments position was assailed by mayors of affected Councils and by pundits, who noted that paying only 10%, and then receiving 12.5% back in goods and services tax, the government was actually making money from the crisis.

    Vote: Thumb up 5 Thumb down 1 You need to be logged in to vote
  10. Lipo (229 comments) says:

    Mainzeal are one of the only companies that have attempted to fix their leaky commercial buildings and apartments.

    Check out all the other construction companies you can think off bar Fletcher Construction and Hawkins here http://www.business.govt.nz/companies

    All the other construction companies have shut their old companies down (pre leaky building era) and started new ones with very similar names

    Vote: Thumb up 6 Thumb down 0 You need to be logged in to vote
  11. slijmbal (1,211 comments) says:

    Reading various press releases and history it looks like the shareholder (Richina) decided to cut its losses and pulled the plug. Several of the independent directors (including Shipley) resigned from the construction subsidiary December and Mainzeal group very recently.

    The fact that all the independent directors are walking implies they were pushed or decided they did not want to be associated with the potential exposure (financial or reputational).

    At least Richina is private as it had a history of poor treatment of smaller investors until it was delisted.

    Vote: Thumb up 5 Thumb down 0 You need to be logged in to vote
  12. Jack5 (4,584 comments) says:

    Anyone know the current ownership background of Mainzeal Group?

    It was owned by Richina Pacific, on which Jenny Shipley was once a director. Richina Pacific delisted from the stock exchange, and Richard Yan, the driving force behind Richina, eventually bought out other shareholders.

    Yan’s family are said to have got him out of Maoist China to study in NZ then the US thanks to family links with Chou En-lai,who had a background in the Chinese aristocracy.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  13. RRM (9,445 comments) says:

    Sad to see…

    I haven’t done much on Mainzeal jobs, but the way they ran their sites seemed very good, almost as good as big Fletchers sites. You certainly never worried that you were going to get showered in welding sparks, or shot with a nail gun, or fall down a hole when you turned up at a Mainzeal site with your clipboard and squeaky-clean hi-viz from the office cupboard.

    As you say hopefully the current projects will be bought up by someone, and continue with as many of the same subbies as possible.

    Vote: Thumb up 7 Thumb down 1 You need to be logged in to vote
  14. Jim (398 comments) says:

    +1 for Nookin’s comment.

    How on earth are Mainzeal another victim of leaky homes?

    Presumably they cut corners with weatherproofing design and materials and ended up paying dearly for that. They made non-leaky buildings in the past.

    Why are people blaming the govt for this? Did they enforce crappy design by law? Did they ban good practice?

    Thought exercise: If the govt removes the speed limit on a safe stretch of road and someone dies driving at 200km/h in heavy rain then who is to blame? The govt, NIWA, the car manufacturer, or the nut behind the wheel?

    Vote: Thumb up 13 Thumb down 5 You need to be logged in to vote
  15. RRM (9,445 comments) says:

    On the front page of their website (which is still live BTW – http://www.mainzeal.com/AboutUs/Mainzeal.aspx) it says:

    Currently 70% of Mainzeal’s business comes from projects where we are engaged early to work collaboratively with the consultants to ensure delivery of the client’s objectives.

    So if a lot of their stuff is design & build, that would certainly offer one possible explanation for how they’re in the firing line for leaky buildings… perhaps they were the designer!

    Vote: Thumb up 7 Thumb down 1 You need to be logged in to vote
  16. barry (1,317 comments) says:

    The finance comments guy on TV3 news this am basically said that if you want to get into a company that will screw up – get one that has ex MP’s on the board.

    Shipley is living proof that someone who couldnt pass School Certificate should never be allowed near anything that involves the using of ones brain……

    As for leaky buildings. Yes anyone stupid enough to buy a leaky building deserves what they get (ie: anything with a flat roof, with balconies supported by wood that goes thru the walls and most importantly a roof without an overhang. But behind it all was The BSI who approved all these shonky methods and materials (and i have little doubt that some approvals were as a result of co-coercion in the form of money or goods in lieu of……..- ie: backhanders)

    Vote: Thumb up 7 Thumb down 8 You need to be logged in to vote
  17. bi ozymandis (3 comments) says:

    I dont really know what your talking about when you mention construction boom, probably you dont either.

    Tendering for commercial work has been very competitive for the last 5 years, with the major firms cutting their margins, sometimes buying the work. Mainzeal is just the victim of the recession, and could only hold out for so long.

    Vote: Thumb up 7 Thumb down 2 You need to be logged in to vote
  18. slijmbal (1,211 comments) says:

    “Anyone know the current ownership background of Mainzeal Group?”

    I am reasonably confident it is all still owned by Richina.

    As much as I’m not convinced about putting politicians on commercial boards (unless they’re from the commercial world originally and were successful), I don’t think Shipley or any of the independent directors would have had a lot of say in how the company is really ran when the key representative of the shareholder is on the board and pretty much runs the companies. As not a publicly listed company their powers are surprisingly small. They can end up with a chunk of exposure though thus their current running for cover …

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  19. campit (462 comments) says:

    Why are people blaming the govt for this? Did they enforce crappy design by law? Did they ban good practice?

    Yes, my understanding is that changes in Government standards were a contributing factor:

    There are many reasons that some buildings from the 1990s were leaky. One cause that resulted in more significant damage from the leaks, was the change to the New Zealand Standard for Timber Treatment, allowing the use of untreated Pinus Radiata timber for wall framing. As this timber has little natural resistance to rot when wet, damage occurs more quickly. Details that relied on a thin paint membrane over thin plaster to exclude moisture were common for many cladding systems, and fine cracks that appeared insignificant, and would have been relatively insignificant in solid structures, allowed continuous ingress of moisture into the framing. These causess, combined with the reduced air movement through the prevalence of sheet cladding or sheet insulating materials for the monolithic look cladding, resulted in very damp conditions which are ideal for rot.

    Two government-funded agencies (including the Building Research Association of New Zealand) also approved the use of cheap monolithic claddings over this time.

    Vote: Thumb up 5 Thumb down 3 You need to be logged in to vote
  20. Jim (398 comments) says:

    “Why are people blaming the govt for this? Did they enforce crappy design by law? Did they ban good practice?”

    Yes, my understanding is that changes in Government standards were a contributing factor:

    They *relaxed* the rules. They did not force people to build leaky and to use untreated framing.

    I built during the time the rules were relaxed, and so did friends and family. We had lengthy discussions on materials and costs and “Minimum required by regulation” was never the principal design requirement. Our builder had a very solid understanding of how to build a home – and I’m sure he could have built just as well in the absence of any regulation.

    And there lies the problem: a lack of professionals in the building industry, and instead a bunch of cowboys trying to defraud their customers and do the minimum to get past council inspectors. If Mainzeal were a part of that then good riddance to them.

    Even if you take the view that “more government regulation” is the solution – the fault for poor quality lies squarely with the builders.

    I’d be ashamed to be a builder if I relied on council inspectors to set the minimum standard for my work.

    Vote: Thumb up 11 Thumb down 2 You need to be logged in to vote
  21. UpandComer (506 comments) says:

    the thing I remember most about Shipley was her ability to say two things that completely contradicted each other in the same sentence, with impervious charisma and sincerity. Shipley/Bolger really are actually two individuals from the National party who give the party a bad name. Bolger sold out the people who supported him the most, and Shipley seems to be the touch of death to anything she touches. She was a terrible leader, and apparently is a terrible director. Mainzeal were a very dodgy operation, and this is sad.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  22. slijmbal (1,211 comments) says:

    I am still impressed that many see this as a Shipley failure. She like the other independent directors had a purely advisory role – the shareholder makes all major decisions as votes can always be made based on shareholding and Richina is the owner.

    This is almost certainly a Richina screw up.

    Richina was propping up the subsidiary it is becoming clear – they decided it was not recoverable financially and pulled the plug – I would not be surprised if they did the usual tricks around preferential debt to screw over other debtors but they do also appear to have stuck a chunk of money in to the subsidiary so at first glance appear to have behaved decently by construction company standards.

    I have no time for Shipley, by the way, but prefer to let facts rather than personal dislike colour my opinions.

    Vote: Thumb up 4 Thumb down 1 You need to be logged in to vote
  23. wreck1080 (3,730 comments) says:

    I’ll be quite agitated if the govt now gives a bailout to any of the mainzeal suppliers / employees.

    It was mentioned on One News .

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  24. Viking2 (11,128 comments) says:

    Here is a question for you.

    According to the news Shipley, Collins and Tilby bailed from their Directorship of Mainzeal Construction (the building subsiduary), back in December. Their statement says they were asked to leave.

    I read the business news in at least 3 places most days and I cannot recall anywhere seeing that news.

    One would think thathad an incling of that news made the reports anywhere the danger signs would have been apparent.
    reading the creditors comments says that’s about when payments stopped. So they bailed knowing that there was every likely hood that this was going to happen.
    Next question. Who knew about this state of affairs?

    Next Question, Seems Mr Jan must be close to recklessly trading. Is the FMA going to look at the actions of the company?
    Next Question. Have they remove his passport? If not why Not.

    Some big dosh owed around the place.

    Another interesting Question.
    How did Smith know about this that he was able to retreive his gear from the ChCH sites on Waitangi Day? The same day that the receivership was announced and before the receivers had time to control the sites?

    (Don’t blame him for being quick, but seems no one was quick enough, so one is left wondering and pondering what came across the grapevine.)
    Lots of National Party connections.Chinese walls and all that.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  25. Mark (1,360 comments) says:

    Hopefully the receivers look at issues such as governance although this is unlikely. With all due respect to Shipley as an ex school teacher she is not qualified to be a director of a construction company. Construction is a high turnover, low margin game where errors of judgement can be catastrophic and having an understanding of the industry is essential. I an not pointing the finger at Shipley here but at the concept of appointing ex politicians into roles they are not equipped to handle. Completely nuts.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  26. big bruv (13,279 comments) says:

    “With all due respect to Shipley as an ex school teacher she is not qualified to be a director of a construction company”

    Lol…wish we used that logic before Cullen and English were appointed.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  27. scrubone (3,048 comments) says:

    I’ll be quite agitated if the govt now gives a bailout to any of the mainzeal suppliers / employees.

    It was mentioned on One News .

    Some of the comments on one news last night were nothing short of reprehensible. Rodger Sutton for one should not have been quoted as saying that Vero needed another partner, when they do not (it’s a completely seperate company).

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.