What went wrong at Fletcher
|08 Mar 2018 10:15 AM|
What went wrong at Fletcher
It is extraordinarily important that when a major Kiwi company with the name of Fletcher runs into financial difficulties, we all take notice.
Fletcher obtained the platform to become one of our largest construction companies from the 1935 Michael Joseph Savage Labour Government that ramped up social housing and affordability for all New Zealanders.
From that massive investment by the Savage Government into the private sector comes the Fletcher story, which is now deeply embedded in the consciousness of generations of Kiwis.
This company is so embedded and so large it influences the pricing of everything in the New Zealand building industry. This includes nails and wall panels right through to the labour and trades that go into the construction industry. That much influence gives companies the ability to set the prices in a marketplace, where they have significant dominance.
The Fletcher board claim they were not told by management vital information or the true financial losses facing this multimillion-dollar organisation. But it beggars belief that a board of directors with such significant experience and knowledge of their fiduciary responsibilities could oversee two years of deficits - the 2016-2017 deficit one of the largest in modern New Zealand corporate history.
This is on the back of last September's announcement of a "board refreshment" initiative following the departure of two directors - one being the chair of the audit & risk committee.
My family used to be employed by the Fletcher Construction Company. We were all steel workers and I recall as a kid the company putting on Christmas functions for its workers at Coyle Park in Pt Chevalier. My father had great regard for Sir James Fletcher because he said Sir James truly cared about his workforce, how they were housed and that they were paid a fair 40-hour wage that was enough to feed and provide for their families.
Fletcher ran trade training programmes and ensured apprentices were looked after and well-skilled. I recall on these sites that there was a Code of Ethics and Duty of Care to other tradies. We would not condone second-rate work by other trades - and equally, they would not accept ours.
Then along came market deregulation and sub-contracting on a vast scale. Add the leaky building fiasco to this Fletcher performance, and to me it appears there's a breakdown in the construction industry around standards, values and ethics over the years.
I do not accept some quantity surveyor, well down the food chain, is responsible for hundreds of millions of dollars' worth of debt. It's like the story of the bishop blaming the altar boy for a bad sermon. It is simply not true and the spin around the story means, as usual, those at the top end of town can walk away without adverse impact.
But ask the poor chippie, sparky, plumber or drainlayer whether they would be so lucky if in contracting to Fletcher they made the same decisions in running their businesses. They know, and you know, their houses would go, their vehicles would go and more than likely their marriages would also go as a consequence, because they were too small and they failed.
Forget corporate responsibility to Fletcher's shareholders. Where is their social conscience and responsibility when bidding and receiving funding on massive government contracts?
That is why the Government has to better regulate the provision of material and labour to the construction industry and do-it-yourselfers or DIYs.
The true definition of capitalism is unchecked monopoly. Bizarrely enough, the true definition of communism is exactly the same.
Think about it.