When the red ink began flowing from one of this country's biggest builders up to the Asian owners, executives here got their wings clipped.
The NZX-listed Richina Pacific, which owns Mainzeal Property & Construction, declared a new set of rules for the Kiwi builder. For starters, Mainzeal could forget tendering for any more high-rise apartments.
Mainzeal is in the big league, along with Fletcher Construction, Hawkins and Multiplex Constructions (NZ), and has built some of the country's largest projects, including the award-winning Ngawha Prison in Northland and now the country's largest covered stadium.
Although Richina's net annual profit rose from US$7.8 million ($11.7 million) in 2004 to US$10.3 million last year, Mainzeal suffered on two projects: the 16-level Scene One, Two and Three apartment blocks on the waterfront and the $80 million Vector Arena at Quay Park.
Losses were "significant and unexpected", Richina said.
The situation looked bad last year when Mainzeal's Auckland-based boss, Neil Ranford, was reined in on a number of fronts.
Richina's New York-based chairman, John Walker, outlined the scale of problems, citing huge labour and material supply problems dogging Auckland's building sector - particularly on the stadium, which will be the country's largest indoor entertainment and sporting venue.
Mainzeal was due to pass the arena's keys over next month but cannot finish the stadium until July or August.
Mainzeal's new rules are:
* It will no longer enter into high-rise apartments projects;
* It will undertake an independent company-wide review of a range of key issues, including pre-contract risk assessment procedures and contract terms;
* It will undertake further work to ensure that it has the key people to maintain a strong and profitable market presence in New Zealand;
* It will further integrate its operations and financial controls into the group structure with greater oversight by corporate management in key areas.
Asked about the apartment problems, Mainzeal general counsel Martin Reid last week partly blamed Building Act amendments.
Late last year, Mainzeal sought Department of Building and Housing intervention in a dispute over sign-off of one of the Scene buildings after Auckland City withheld a code compliance certificate unless the block's single means of fire escape was changed. The company is still building at least one apartment tower.
Richina Pacific owns Mainzeal Property & Construction
* It released its full-year result to December 2005 last week.
* It is NZX-listed, Bermuda-based, headquarters in Singapore.
* It also owns Shanghai Leather Company and Blue Zoo Beijing.
* Mainzeal is one of New Zealand's largest building firms.
* It is putting up the country's largest covered stadium, Vector Arena.
* Cost over-runs and labour shortages mean the arena will open late.
*Anne Gibson is the Business Herald's property editor.