Nobody home at major building company
It was heading to be the Waikato's biggest house building company, but today Chinese-owned and operated Starplus Homes is at a standstill, its phones unanswered, its Hamilton showroom deserted, its sales staff out of a job and contractors and subcontractors owed hundreds of thousands of dollars.
The six-year-old company is understood to have more than 50 sections and partially completed houses in Cambridge, Flagstaff and Rototuna, and dozens of projects in Auckland, but Starplus' sole shareholder and director Richard Zongyan Lee, of Auckland, can't be found and his phone numbers are dead-ends for Kiwi sales staff told to go home last Friday.
The phones go unanswered at the company's offices in Aquila Crescent, Rototuna, and Auckland. But while creditors say they have been told Starplus has "ceased trading", it is not in receivership or liquidation, according to Companies Office records.
Starplus employs a lot of Chinese labour, but unfinished house sites in Flagstaff's Magellan Road were deserted yesterday. Starplus is known for building spec and affordable homes.
Yesterday there was no evidence that any potential purchasers had been caught in the uncertainty. A spokesman for Mitre 10 Mega Hamilton said reports that Starplus owed the company around $5 million were a "gross exaggeration". He declined to say how much was owed.
Some contractors, who would not be named, said they were owed between $40,000 and $200,000 for earthworks and drainage.
But they were staunchly loyal to Mr Lee, who they said provided contractors and tradesmen with work when work with Kiwi companies dried up in the recession. They believed that if calm prevailed, and no creditor action was taken against the company, it would trade out of whatever situation it was in.
However, one Hamilton developer who would not be named said he was not surprised by the uncertainty around Starplus as subcontractors often had to "line up for payment" in person.
He said Starplus seemed to have grown rapidly and uncertainty was bad for the whole industry. "I take no satisfaction from what's happening there. I'm not going to sell any more houses out of it."
He was concerned about houses that were partially completed if subcontractors removed joinery and other materials if they were not paid.
"What happens to them in the meantime? Someone's going to buy that house one day and that's not how things should be done."
Waikato Master Builders Association president Richard Hull said Starplus' application to be a member of the federation some years ago had been rejected. Starplus was one of Waikato's biggest house builders and could even be the biggest, he said.
Master Builders Federation chief executive Warwick Quinn said the recovery in the building sector was a dangerous time for companies.
"They can grow too fast, don't have the infrastructure, and it gets out of control."
Fixed contract prices could also spell disaster when the pace picked up.
"It may take months for a job to start, and by the time building starts, labour costs have gone up, building material costs have gone up, and they've lost margin," Mr Quinn said. "It's one of the traps if they are not wary."
One contractor owed around $50,000 by Starplus said Chinese developers helped each other and were already arranging to take over Mr Lee's partially completed house sites.
Meanwhile, former staff at Starplus' Rototuna showroom were anxiously watching their bank accounts to see if they had been paid. Sources said they had been told to go home last Friday by the-then general manager Mark Ransley, who said he was leaving the company. Mr Ransley did not return calls.
Starplus was one of four Chinese building companies in Hamilton that two years ago faced allegations of shoddy workmanship. The Waikato Times reported in January 2011 that the Master Builders Federation had accused several new industry entrants, including Starplus, of poor workmanship and unprofessional practices.
Mr Hull said the city council had rejected the claims.