1 Mar 2019

Arrow collapse to hit subcontractors hardest - industry

5:42 pm on 1 March 2019

It is subcontractors who will suffer again in the wake of Arrow International's collapse in New Zealand, says the building industry.

Arrow International site, Courtenay Place, Wellington

Photo: RNZ / Phil Pennington

The company went into voluntary administration yesterday, saying a recent adjudication had left the company no choice.

It's the latest in the line of construction companies going under, joining Orange H, Ebert, Corbel, and Mainzeal.

Subcontractors around the country yesterday took their tools and left Arrow sites in Auckland, Hawke's Bay, and Wellington.

The Specialist Trade Contractors Federation was trying to figure out what the liabilities were, deputy chairman Greg Wallace said.

"We know that we've got millions and millions of dollars of outsanding invoices, we know we've got subcontractors with large amount of dollar value in materials that sit on these sites."

He said it was another blow for the industry, and that such blows were causing subcontractors to become more cautious when it came to signing on to projects.

"These commercial projects in particular are becoming very high risk ... our issue is the risk is being pushed down, to the sub-trades, which just seems unfair."

Arrow office, Taranaki Street, Wellington

Photo: RNZ / Phil Pennington

Smith Crane and Construction managing director Tim Smith had four cranes on three different Arrow sites - one in Wellington, and two in Auckland - and agreed.

"Obviously all of us contractors we all become more suspicious and more risk averse - we've got a choice to make whether we insist on payment bonds and that sort of thing.

"In a competitive industry quite often if you seek those or demand those they say 'well, we don't want you, we'll go to the guy prepared to take a risk'."

Mr Smith lost about $5 million in the past 8-10 years, he said.

Locked up Arrow construction site, 89 Courtenay Place, Wellington

Locked up Arrow construction site, 89 Courtenay Place, Wellington Photo: RNZ / Phil Pennington

The legislation needed to change, to put in place protections for subcontractors to protect them in a high risk market.

Civil contractors New Zealand's chief executive Peter Silcock said the Arrow situation was a symptom of what was happening throughout the industry - with a lot of pressure being put on contractors by client groups transferring risk to contractors, and looking for the lowest price.

He said a lot of people in the industry knew what needed to happen, but it was a matter of making it happen.

Mr Silcock said there needed to be a more collaborative approach between clients and contractors.

Mr Silcock said a shortage of talent was also making things more difficult.