OPINION: Wounded and bleeding, its carcass lays prostrate on the ground. It will live to fight another day but it will never be the same. A vulture swoops down and tears off five percent. Sharks circle - is it better alive, or better dead?
Fletcher built New Zealand. It is the only New Zealand contractor able to take on the really big jobs. Its executives, once an alumni of the country's corporate leaders, include former CEOs of Hellaby John Williamson and Meridian, Mark Binns. Both would have made great leaders of Fletcher but instead, they turned to the aggressive Australian Mark Adamson.
He fired people left, right and centre, destroying the collegiality amongst the highly trained executive team that had been a hallmark of Fletcher's management. He embarked on cost-cutting that cut the guts and brains out of the organisation. His predessor, Jonathon Ling, tried to expand by buying useless acquisitions like Formica for $700 million. A business on the other side of the world outside of Fletcher's core operation.
Make no mistake, the failure of Fletcher counts as one of New Zealand's greatest ever management fails.
It started with the announcement that the company would not make a profit on building either the Downtown Convention Centre in Auckland or the Christchurch Justice Precinct. Then the projected losses on the two projects began to grow until it reached $1 billion.
Fletcher's shares were put on a trading halt. When it was lifted, the share price tanked as expected and the vultures began to swoop.
They are eyeing up the rivers of gold. Their Placemakers building supplies and distribution business seems to have operated almost as a monopoly. Wesfarmers, Bunnings Australian owner, was one of the first of the vultures to start tearing at the carcass. And now Bunnings has announced an ambitious expansion and growth plan for its New Zealand operation.
And it just gets worse. The Government has announced that it may sue Fletcher for its part in supervising the faulty fixing of earthquake affected homes in Christchurch. Then the news came out that there may be no profit for Fletcher in the construction of the Puhoi to Wellsford motorway. And to add insult to injury Sky City has just announced it may sue Fletcher for failing to complete the Downtown Convention Centre on time.
What else is there to come?
Meanwhile, instead of resigning en masse, the directors seem intent on holding on for grim life. Professor Jilnaught Wong from Auckland University's department of accounting and finance estimates that mismanagement at Fletcher may have destroyed up to $2.7 billion in wealth over the past nine years.
Perhaps there will be a silver lining in this debacle for the rest of New Zealand. Why is it that in a country with a wall of wood we have the most expensive building supplies almost anywhere in the world?
Perhaps it is time to review why we have developed our own building code instead of subscribing to international regulations. Was it to help domestic suppliers like Placemakers?
If Fletcher is to become Australian-owned, let us open up our building supplies to international competition. It may not make any sense on the face of it to start importing Douglas fir, but it would be nice to get our house-building prices down to what the Aussies pay. About half of what it costs in New Zealand.
Mitch Harris is the host of RadioLIVE's Night Talk, airing 8pm - midnight, Monday to Thursday
