The rebuild of Christchurch has hit its straps and is now unsentimentally sorting the construction industry wheat from the chaff. Press business editor MARTA STEEMAN talks with companies establishing strong positions.
If you read the public notices each day in The Press, you will have seen that building companies are regularly being placed in liquidation, pursued by the tax man or others owed money.
Casualties of the rebuild, they are commonly small operators who’ve tried to expand too quickly, have too little capital behind them and too little experience in running a business to cope with the ebbs and flows of work that is characterising the regeneration of Christchurch.
The ups and downs of business are also being clearly shown in the latest Mainland Monitor’s economic report where business confidence, investment intentions and profit expectations are starting to pull back in Canterbury and the South Island.
However, there are some businesses who have never had it better and are skilfully navigating their way through the choppy seas of construction activity and establishing strong positions.
One of those is Calder Stewart Industries, a private construction company with manufacturing operations as well, hailing originally from Milton in Otago, where it has just invested in a large steel fabrication plant and where it maintains an 80-staff administration operation.
The lean years of the global financial crisis forced companies like Calder Stewart to reshape and adapt and that is standing the company in good stead.
At its gleaming offices on Blenheim Rd the understated quality fittings and the ordered, calm environment exudes a sense of control over its direction.
In charge of that is joint managing director Alan Stewart who has consented to an interview, though this tight family-owned business is wary of the double-edged sword of media attention.
Stewart says the company has its fullest forward “pipeline” of work in its history and at the moment something like 20 projects on the go from a 1000 square metre warehouse to an office block on the corner of Durham and Gloucester streets.
Much of its 70 per cent expansion to about 365 employees nationwide with as many contractors again, since the GFC, is down to the Christchurch construction work and a robust rural sector in Southland.
While the Christchurch City Council’s and the Canterbury Earthquake Recovery Authority’s focus is on the central business district and the city area, it’s only half the story of Christchurch’s regeneration, Stewart says.
A lot is happening – residential and businesswise – in Selwyn, Waimakariri, Rolleston and Ashburton, he says, which the general public might not be aware of.
The commercial and industrial rebuild will be no quick event.
“Where everyone thought it might be five years I think probably now the expectation is it is 10 to 15.”
That is preferable because it’s a more sustainable level of activity. The boom bust phenomenon generally hasn’t happened.
“Sure there’s a shortage of some trades and some materials and things like that but it’s not acute at all,” Stewart says.
Business owners are enjoying a choice of land for new operations because a lot of land has been rezoned for business activities in Rolleston, Hornby and Harewood and that will keep a lid on prices.
“There’s more land available currently that’s zoned for business than I’ve ever seen in Christchurch.”
Announcements of new building projects have come thick and fast in the past three months and Stewart says more are likely once the Government and city council projects get underway.
“A lot of investors that we know are actually sitting back waiting for those final concepts to come out so they can decide how their plans might evolve and what they might do.
“We will have a fantastic city at the end of it and I’m not just saying that to be politically correct. We actually will.”
One of his frustrations, though, is the city council’s drive to shepherd most of the office and commercial activity into the central city. Probably only 25 per cent of businesses want to be in the central city, in his view, because what they do may be rural or industry related.
“So why would they want to be close to Cashel Street Mall. It just doesn’t make sense for them but we seem to have this driver to actually focus all the commercial activity there as opposed to allowing it to locate in the suburbs where people want their activity to be.
“While we support the central city rebuild I think it doesn’t need to be at the cost of the rest of the Christchurch business community,” Stewart says.
This week another large construction industry player, Thermosash, a designer and manufacturer of building facades, opened an $8 million plus production plant in Hornby with Prime Minister John Key attending.
In the past two years Auckland headquartered Thermosash, with 279 employees nationwide including 80 in Christchurch, has completed 14 building projects in Christchurch and has doubled its business here in each of the past three years. It expects to repeat that this year and next.
Flush with success, chief executive David Hayes says: “From my perspective seeing the projects that are being designed and built, I think Christchurch will be very proud of what is going to be built here. It is going to be a magnificent city.”
To comments that growth in Christchurch is now slowing Hayes say the industry is running out of resources.
“It is not easy to bring in the scale of resources you need to build a lot of these buildings as quickly as people want them built. They will be built, it will just take longer and really that’s what Christchurch wants.
“You don’t want this massive building in two or three years. The quality won’t be much good. It will be much better for the economy here if it is spread out over a longer time.
“The building industry takes a huge amount of time to get itself organised and to get the trades to be co-ordinated so they all fit together like clockwork.”
The earthquakes in Christchurch forced a massive rewrite of construction codes because the quakes were twice as large as what the codes were designed for.
“Don’t underrate the amount of work that is going on in the industry and the quality of thinking that is going on here,” he says.
Christchurch residents who have not been into the centre of town for some time will notice the difference from months ago. Big office developments are rising out of the ground on Durham St and City Mall, a couple around High St, and more are on the drawing board.
Developer Nick Hunt says he’s feeling confident about his $100m Cashel Square development because the area is specific and concentrated. It’s one of the key retail projects in the new retail precinct of City Mall.
Hunt doubts though that the city can cope with any more building announcements.
“I think one can safely say that the buildings going up are more than enough to cater to the needs of Christchurch.”
A lot of major businesses have signed up to new premises outside the city centre and Hunt reckons the next round of buildings will have to wait for those businesses’ tenancies to expire and their decisions to return to the centre. Some of the green space in the centre may be there for quite a while.
Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend says overall businesses are now getting increasing clarity and information with Cera providing more of that, though getting projects “away” still involves “interminable” processes.
Economic growth will wax and wane. The reality is the city is locked into strong growth for the foreseeable future, he says.
While there is not yet more work than the city can cope with, every projection shows that this year labour and material resources will start to become critical.
“They are acute now but they are not critical,” Townsend says.
What the city does not have is a big plan. The blueprint is just the central city.
“We don’t have a big plan for greater Christchurch and we need it and we don’t have an inclusive community-driven aspiration for our city.”
– The Press 27/27/2014