A Bay of Plenty and Waikato builder could be next to lay off staff. Photo / Supplied
A Bay of Plenty and Waikato builder could be next to lay off staff. Photo / Supplied
A Bay of Plenty and Waikato builder is considering laying off staff because it must “urgently reduce expenses”.
AHS Group, with offices in Tauranga and Hamilton, told staff: “The company’s financial situation must be addressed urgently to avoid the company breaching the Companies Act and putting everyone’s roles in jeopardy.No one will have a job if the company is liquidated.”
Pete Davenport, managing director of the business, told the Herald when asked about the situation today that layoffs were being pondered but nothing had yet been decided.
However he did acknowledge financial stress and uncertainty around two big health centre building jobs at Cambridge and Pukekohe which had not gone ahead as planned. There had been delays on those projects and no work had yet started due to holdups, he said.
“If we’re not building anything, we don’t particularly need a whole lot of builders,” Davenport said.
A number of builders have hit tough times lately with inflation driving up prices, supply issues, staffing shortages, and trouble getting further work due to the housing market downturn.
Davenport said just under 30 staff were employed in the two locations but he couldn’t say how many might go due to the consultation period not being finished yet.
One staffer estimated around nine positions could go and that person forwarded the Herald an internal AHS Group document outlining why layoffs were being considered.
Davenport confirmed that document was authentic but expressed concern the Herald had it.
“I’m pretty upset about it. I don’t know where to go from here. Putting the boot into us at this stage is pretty unfair. We have some excellent people.”
That document dated May 28 had been seen by 12 to 15 staff, he said.
It cited redundancy costs yet to be advised and a company contribution of $100/staff member towards career counselling.
Reduced morale due to staff member/s leaving meant the business would engage with people and acknowledge challenges “but reiterate that value that they bring to the team”.
It also outlined a concerning situation at AHS.
AHS Group has offices in Tauranga as well as Hamilton. Photo / Mead Norton
“December 2022 and January 2023 were two months whereby the company watched tentatively to see how the commercial viability of the company would develop. We were hopeful things would change for the better in February 2023. This did not happen.
“In fact, the opposite happened. The gap between the company’s expenses and the company’s revenue increased dramatically to the point of concern. Draft management accounts to 31 March 2023 are currently showing a break-even profit on a turnover of $16.70 million which is extremely concerning,” the May 28 document said.
AHS had no certainty around the work ahead. The residential arm of the business was expected to bring in more work but that had not happened and was not likely to happen in the forseeable future, it said.
The company referred to the late Sir Patrick Hogan, the breeder of thoroughbred racehorses.
“In addition, there have been difficulties with the proposed design and construction of the hospital in Cambridge. With Sir Patrick’s passing we have had delays and a different family regime/structure to negotiate with. Our expenses have been significantly larger than envisaged. This too has had a detrimental impact on the company financially,” the May document said.
Concerns had been raised about bank guarantees and the company’s financial situation must be addressed urgently.
Redundancies would ultimately save money: “Disestablishing roles surplus to the company’s requirements releases funds to pay the company’s creditors and will provide a small financial buffer, allowing the company to better survive if the construction of the hospital in Cambridge and or in Pukekohe is delayed”, AHS said.
The Cambridge medical building to be called the Health Hub was to be a major facility of 7300sq m on Victoria Rd. AHS said in 2021 that Lady Justine Hogan and Dr Luk Chin were involved in that.
“Given the substantial growth in the area, medical services have been under pressure for some time. With increasing pressure on the public health sector, Justine Lady Hogan and Dr Chin believe that Cambridge urgently requires additional capacity of medical services. This will provide a level of independency from Hamilton which is also facing growth demands,” AHS said on November 1, 2021.
The May 28 document which went to some staff said a review had been conducted of insurance, vehicles and a relocatable office in Te Puna which had been shifted to Cambridge. Contact had been made with ACC to reduce costs.
The company’s website showed it had built the Petpal Pet Food Factory at Taumarunui, Te Puna Kindergarten, fitted out a Pacific Radiology building in Hamilton, built many other commercial, health and medical buildings and a number of residential projects.
The management team had more than 35 years’ experience in the industry and AHS had in-house design managers and draughtsmen to support its construction teams, AHS Group said.
