Building giants restructure as market troughs
A wave of change is sweeping through the construction industry with Mainzeal and Hawkins Construction both setting up new company structures.
Mainzeal chief executive Peter Gomm said the more difficult environment since the onset of the global financial crisis was behind plans for the company to move to a new model for its business.
Mainzeal plans to reconfigure itself and run its business through five completely new companies which it has already incorporated.
Mainzeal is believed to be the biggest asset in the privately owned Richina Group, which is associated with Auckland businessman Richard Yan.
Under its current structure, Mainzeal's operations are consolidated into Mainzeal Property & Construction, which has two 100 per cent subsidiaries, Mainzeal Project Services and Mainzeal Living, which in turn owns a 75 per cent stake in Mainzeal Stonewood Joint Venture Limited.
Mainzeal Property & Construction also owns a 50 per cent stake in MWH Mainzeal Joint Venture, a company heavily involved in the rebuilding of Christchurch.
Under the planned changes, Mainzeal's operations would be consolidated into a new company called Mainzeal Group, which will also have four subsidiary companies, Mainzeal Ltd, Mainzeal Construction, Mainzeal Construction SI and MPC NZ Ltd.
Gomm said the planned changes were designed to make the company more sustainable in the face of changing market conditions.
"We've been looking at our business model for some time. And with the global financial crisis, the world has to recognise it's a different place. Construction's in a different place."
The company's operations would become regionally focused and overheads would be spread over a broader base of businesses, he said.
However, Mainzeal's board still had to approve the changes and Gomm did not expect them to be implemented before next year.
The planned reorganisation follows a similar move completed by Hawkins Construction earlier this year. Like Mainzeal, Hawkins Construction also has a long history and its website proudly proclaims that it's "a company that's been around for more than 60 years."
So people may be surprised to
know that although the business of Hawkins Construction has been around for a long time, the company called Hawkins Construction Ltd has only been around since February.
That's because in February, Hawkins Group incorporated a new company called Hawkins Construction 2012 Ltd.
Then in April, there was a shuffling of ownership of the shares in Hawkins Construction Ltd, the company that had been in existence since 1963.
On April 4, all the shares in Hawkins Construction Ltd were transferred from McConnell Ltd to Hawkins Group Ltd, a company incorporated in December last year.
Then a few hours later on the same day, the same shares were transferred again, from Hawkins Group Ltd to Hawkins Construction Group Ltd, a company that had been incorporated just a few weeks earlier.
Then on May 1, Hawkins Construction Ltd changed its name to Hawkins Construction North Island Ltd and Hawkins Construction 2012 dropped the 2012 from its name and became simply Hawkins Construction Ltd, the two name changes occurring contemporaneously.
This unusual shuffling of names and shareholdings was part of a broader restructuring of the group's affairs, Hawkins Construction executive General manager Dan Ashby said.
Ashby said the changes followed an operational review of the business and were driven by the need to separate its infrastructure division, which had previously been part of the construction company, and by the need to better service its operations in Christchurch.
Like Mainzeal, Hawkins is also heavily involved in the rebuilding of Christchurch, but lately has been more in the news over a financially disastrous project to build a new prison in Australia.
Correction: Stonewood Homes.
An earlier version of this article stated that Mainzeal Living owned a 75 per cent stake in Stonewood Homes. That was not correct. Mainzeal Living owns as 75 per cent stake in Mainzeal Stonewood Joint Venture Ltd, a company which builds homes in Christchurch under a commercial arrangement with Stonewood. The remaining 25 per cent of Mainzeal Stonewood Joint Venture Ltd is owned by Stonewood Living Ltd. Both Stonewood Living Ltd and Stonewood Homes Ltd are owned by interests associated with their director Brent Mettrick. Mainzeal does not own shares in either of these companies.
- © Fairfax NZ News