Editorial: Where to now for Fletcher Building after 1500-job bombshell?

Ross Taylor announced the 1500 job cuts. Photo / Jason Oxenham

Editorial

EDITORIAL

No business wants to lose staff, no chief executive wants to announce cuts. No business wants to shrink: capitalism's aim is expansion, growth, new jobs.

Fletcher Building has dropped the bombshell of 1500 potential job cuts: 1000 In New Zealand, 500 in Australia.

The company is a big employer and prominent brand: Its website says it has more than 16,000 people here, in Australia and the Pacific Islands.

At one stage, this was closer to 20,000 when it still owned Cincinnati-headquartered laminates leader Formica and a roof tile manufacturing business it established in China. But the business had already been pared back and those parts sold.

Today's operations span manufacturing, distribution and retail, home building, and major construction and infrastructure projects.

The firm's origins date back to the 20th century with a wooden return-veranda villa that still stands, overlooking Dunedin Harbour. In 1915, Scots builder and stonemason James Fletcher and his family started Fletcher Bros. That grew to the mighty Fletcher Challenge of the 80s and early 90s.

Fletcher transformed this country's built environment with iconic structures such as Auckland University's Clock Tower, the Museum of New Zealand: Te Papa Tongarewa and the Chateau Tongariro.

As author and MP Paul Goldsmith wrote in the hardback Fletchers A Centennial History of Fletcher Building (David Ling): "This is as much a story of New Zealand as it is of the company and it is as much a story of the people who made the company as it is of the buildings they constructed - from railway stations to banks, houses, to art galleries, hospitals, to schools, suburbs to cities."

Today's Fletcher Building carried on from Fletcher Challenge's remnants, listing on the NZX in 2001, a mere sliver of the once-larger empire which had pulp and paper, forestry and energy.

As an interesting aside, in the 19 years it has operated this century, Fletcher Building has never appointed a Kiwi as its chief executive: Australian Ralph Waters, fellow Aussie Jonathan Ling then British-born Mark Adamson have been at the helm, followed by Australian Ross Taylor today.

Waters and Ling were responsible for vastly expanding Fletcher Building in the previous decade. The big question they were constantly asked was "what are you buying next?" Their ambitions seemed to know few bounds.

The Herald described Ling's audacious hostile takeover for ASX-listed Crane Group as "a lightning raid from Penrose" when it hoovered up its operations to give Fletcher a bigger Australian footprint.

Water and Ling's moves have more latterly been undone as Adamson and Taylor have been in a contraction phase. A five-year strategy Taylor launched in 2018 aimed to bring the business back to its core and rising profitability.

But Fletcher suffered mightily during the lockdown: The $703m NZ International Convention Centre and $1b Commercial Bay construction sites lay idle. As analyst Grant Swanepoel put it, "the Government shut them down entirely for a whole month".

That resulted in nil income for April for a business with a New Zealand workforce of around 10,000. As the Americans like to say, "you do the math". Even the Government's wage subsidy, contributing $67.6m to Fletcher, was not enough to stave off the inevitable.

Many KiwiSavers have a stake in Fletcher, so this corporate tale is not just one to be looked at from a distance or without any involvement for most New Zealanders.

The big question is now: Is this rock bottom and where to from here for Fletcher Building? Let's hope it is up.