Arrow joins Chinese construction giant
South Island construction firm Arrow International has landed a prestigious partner, China's largest construction company, to bid for Christchurch anchor projects.
Hugh Morrison, chief executive of the New Zealand design and build firm said that eight weeks ago his team was in China to sign a memorandum of understanding (MOU) with China State Construction Engineering Corp.
This would enable the partners to enter into a joint venture in both New Zealand and Australia, he said.
China State Construction was the second largest construction company in the world, the largest in China and had a total annual construction turnover exceeding $100 billion.
"(Initially) the focus is on Christchurch and projects of scale," Morrison said.
These would include the anchor rebuild projects but no formal bids or submissions had been lodged yet, Morrison said.
Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said many people had not gotten their heads around the sheer scale of Christchurch's rebuild.
"What we need more than anything in Christchurch is the ability to build scale. We don't have the capacity in Christchurch to rebuild the city in a reasonable timeframe because we lack the ... capacity."
The deal was a good example of a local company creating an international partnership to help speed the rebuild up.
"That probably sounds quite strange to a lot of people ... who feel the rebuild hasn't started yet. In the commercial sector, where these guys are working, we're still deconstructing, but it's going to happen and it's going to happen quickly."
Townsend said New Zealand needed to create more of these partnerships so it would be ready when the peak of the rebuild hit.
He believed the deal with the Chinese company would not come at the expense of work for locals though.
He understood the companies intended to bring material resources and expertise from offshore, but not labour.
China State Construction was globally recognised for giant projects such as the Shanghai World Financial Center, Hong Kong International Airport, and the Beijing Olympic Aquatic Centre.
It is part-owned by the Chinese Government and listed on the Shanghai Stock Exchange.
"They see this joint venture as a key (entry) to understanding the Australasian market, and building a reputation in this area," Morrison said.
Arrow annually turns over more than $250 million in construction projects, and had had a lead project role with the $220m Forsyth Barr Stadium in Dunedin. Arrow is owned equally by Ronald Anderson, of Mosgiel, and Robert Foster, of Christchurch, Companies Office records show.
Morrison said a covered stadium in Christchurch could be built for less than $250m and was a project Arrow was interested in. He noted some issues had occurred around the stadium's costing, with the Government still looking at that.
Arrow, with China State Construction, was also likely to be interested in the metro sports facility, a bus exchange and the justice precinct. The formal part for the bid process "looks some time away, so we're just considering whether there are other options," he added.
China State Construction was already supplying Arrow with steel for building projects being tendered for in Christchurch.
The two companies had been introduced about six months ago when China State Construction was in Christchurch on a fact- finding tour, Morrison said.
The Chinese consulate in Christchurch had helped in forming a relationship, cemented by four trips by the Chinese to Christchurch and return trips to Shanghai.
"It was a dual approach. They sent a manager over here, and they were investigating the market, and I think he also came with a mandate from China Development Bank to also investigate opportunities as well, because the two entities work quite closely together.
"We [Arrow] started at the same time looking for a joint venture partner looking for the larger scale projects, and we looked at a number of larger parties in Australia and then we wanted to go and look further afield."
There had been some discussions between the Chinese bank and the New Zealand Government, Morrison said.
Arrow had visited China State Construction in Shanghai before continuing a conversation that led to the formal MOU.
Arrow with more than 310 staff had put a simple expression of interest for the planned convention centre but had missed being part of a shortlist for that anchor project. It was involved in the Antony Gough project in Hereford St, near the Avon River.
"We're also involved in another two [design-builds] in the $40m category. They haven't come to market yet," Morrison said.
COMPARING THE TWO
China State Construction Engineering Corp
Largest construction conglomerate in China
Over 120,000 staff
Ranked 100 in the 2012 "Fortune Global 500"
Revenues of more than $100b a year
10 branches throughout New Zealand
Working in Christchurch for more than 25 years
$250m in revenues a year
- © Fairfax NZ News