A Super City for infrastructure

By Steve Hart

Auckland's integrated approach is paying dividends, says Downer's CEO. Steve Hart reports

Auckland's harbour bridge.
Auckland's harbour bridge.

Cos Bruyn, CEO of Downer, is pleased the Auckland Super City is getting into its stride and says recent transport projects announced by the Government wouldn't have happened if eight councils were still running the show.

"The Super City is adding value and clarity to the infrastructure space," he says. "I don't believe the transport announcements by Prime Minister John Key would have happened under the old regime. It's only been achieved by Auckland coming together and having an integrated approach to transport."

Despite the prospect of work on the horizon, it is lean times for the construction industry outside of Christchurch. "Work is hand to mouth at the moment, and that is having an impact on the whole industry," says Bruyn. "Right now we are relying on maintenance and operational expenditure, and that has been constrained in recent years.

"People have been a bit circumspect about committing too many funds in terms of investigation and preliminary design. You always have to do some pre-work to see if a business case stacks up. In the past we would have found a lot more money for exploratory work."

On the road-building front, Bruyn says unless work gets under way soon, then demand for tarmac will overtake what is planned.

"I think there is a real danger, based on the current schedule, that by the time these roads are completed we'll still be suffering from congestion," he says. "I think we need to find ways of building those roads sooner rather than later.

"And if funding is a constraint, then we need to overcome that - but that has got to be a political choice. Public-private partnerships is one solution. It isn't a silver bullet, but there are one or two significant transport projects that could be started with private money - and Downer would consider taking equity in a project.

"We were prepared to take an equity position in Transmission Gully, but were not shortlisted."

Bruyn concedes there will always be a part of the population who will refuse to pay road toll charges, but says if public money is not forthcoming, then alternatives need to be found.

He says the prospect of more local authority amalgamations may cause a downturn in construction and infrastructure work.

"What we observed from Auckland City is that work dipped while the new council took time to settle in," he says.

Another concern he has in the prospect of tougher rules around health and safety at work.

"I am a wee bit apprehensive about some of the regulatory environment post Pike River," he says. "Pike River was a tragic event and some key lessons were learned.

"I am supportive of work safety - we need to lift standards - but I think we need to be careful that the pendulum doesn't swing too far in the opposite direction. It can create a lot of uncertainty for employers. It is important the Government sets the standard so it is a level playing field across the industry, and all companies are held to account, regardless of their size."

Bruyn says one only has to look at the recent Fonterra issue to understand that New Zealand is a fragile economy, but believes the market is improving. "The Government is invested in some key projects, but it also needs to be cognisant of what's happening in the smaller areas, and make sure they are not forgotten."

Recent projects

• EMU (Electric Multiple Units) maintenance and stabling facility for Auckland Transport. Value: $100m.
• Wairakei Power Station Bioreactor for Contact Energy in Taupo. Value: $30m.
• Munda Airport runway, road upgrade, and the Nusatape Airport runway in the Solomon Islands. Value $20.2m.
• Silo Park Waterfront in Auckland. Value: $10.2m
• Telco maintenance services for TelstraClear. Value: $150m over five years.
• Mahinerangi Wind Farm for Trustpower in Otago. Value: $6.8m.
• Seaview fuel terminal for BP in Wellington. Value: $17m.

Current and future projects

• Eastland Port - log storage expansion in Gisborne. Value: $14.4m.
• Field services for ultra fast broadband and rural broadband initiative for Chorus in the central North Island and South Island. Value: $1bn over 10 years.
• Wigram Skies Stage 5S and 2R and Ngai Tahu Properties in the upper South Island. Value: $1.3m and $3.4m respectively.
• Three Waters maintenance contract for Tauranga City Council.

Top 9 customers

(By value of work done for the financial year 2012 - 2013):

• Chorus
• Auckland Transport
• Vodafone
• Contact Energy
• Hamilton City Council
• Ngai Tahu
• Wellington City Council
• Telecom

A pipeline of projects in the South Pacific

Downer has been working in the South Pacific for more than 30 years, picking up work funded by aid agencies based in both the US and New Zealand.

The company has worked on roads, bridges and airports in Papua New Guinea, Bougainville, The Solomon Islands, and Vanuatu.

Downer staff recently completed a $20 million project to bring the airport at Munda, in the Solomon Islands, up to an international standard, and in 2010 staff completed a 150km road around the island of Efate in Vanuatu. This project employed more than 300 local people and 30 expat New Zealanders.

Jeff Oldman, executive general manager at Downer, says infrastructure work carried out by the firm is seen as a major contributor to the economies of the island nations it works for - with weekly wages of around $250 paid to each of the islanders it employs.

"Downer is very proud of its successful association with the New Zealand Government's international development programme, NZ Aid," he says. "The Munda project was funded 100 per cent by the New Zealand Government."

The company has been working closely with engineering consultants Aecom NZ on its Pacific projects such as the US$60 million Vanuatu Roads project and the NZ$17 million Cassidy runway upgrade in Kiribati. Last Monday Oldman flew to the official opening of the Munda Airport runway with Foreign Affairs Minister Murray McCully.

The Munda landing strip was built in 1942 by the Japanese. It was bombed by the Americans, who took it over and rebuilt it in 1943.

Before Downer could begin work on upgrading the airstrip the area had to be cleared of unexploded World War II bombs. More than 10,000 items of unexploded ordnance were found.

Downer also helped shave around $1 million off the $23 million cost of the runway work by using locally sourced limestone (also known as coral), a material not initially thought to be suitable for use on a runway.

Oldman says: "That material is not found in New Zealand, so we had half a tonne of samples analysed so we could design the pavement using local materials, minimise the cost and save up to $1 million on the project.

"The advantage of using the material was that it was locally available, we didn't have to ship it in."

While Downer continues to tender for work in the Pacific, Oldman says the firm faces competition from companies in New Zealand, Australia and Asia.

He says: "We continue to pursue aid-funded work across the South Pacific, and are constantly tendering for work, including a project to build five wharves in the Solomon Islands that will be funded by the Asian Development Bank. We are very confident about the pipeline of projects."

- NZ Herald

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