Monday, 04 December 2023
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDRIVEN Car GuideThe CountryPhoto SalesiHeart RadioRestaurant Hub
Voyager 2023 media awards
Subscribe

Advertisement

Advertise with NZME.
Home / New Zealand

NZ firms Fletchers and Downer 'fuming' as $371m Govt KiwiRail contract goes overseas

Tom Dillane
By
Tom Dillane
6 Jun, 2020 05:00 PM4 mins to read
Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail
Focus: Fletcher Building net profit drops by $7m to $82m 'in line with expectations'. Video / Jed Bradley

Construction companies Fletcher and Downer are reportedly "fuming" after a $371 million Government rail contract was awarded to overseas companies - costing the Kiwi firms hundreds of local jobs.

Three sources within the companies have told the Herald on Sunday they were unsuccessful in their joint bid for the Papakura to Pukekohe rail electrification contract in South Auckland.

READ MORE:
• KiwiRail may ask the Government for help in covering the costs caused by Coronavirus
• KiwiRail has received an extra $1 billion from today's Budget to help rebuild NZ's rail network
• Premium - KiwiRail appoints new board members but doesn't tell public
• KiwiRail loss widens in 2018 on further writedowns


It is understood the KiwiRail contract has been awarded to a joint bid from Chinese-owned firm John Holland and South African-owned McConnell Dowell.

The competing New Zealand and overseas tenders were reportedly "very, very close" but cost was a determining factor.

Greg Miller, chief executive of KiwiRail ,at the Otahuhu Auckland depot among the trains and shipping containers.   Photo / Alex Burton
Greg Miller, chief executive of KiwiRail ,at the Otahuhu Auckland depot among the trains and shipping containers. Photo / Alex Burton

One source within Fletchers said the contract would have saved many of the 1000 local jobs slashed late last month in response to Covid-19 economic losses.

John Holland reportedly has only around 10 New Zealand-based staff. Neither John Holland nor McConnell Dowell responded to the Herald on Sunday's requests for comment.

Advertisement

Advertise with NZME.

According to Fletcher's chief executive, Ross Taylor, the company has around 9000 New Zealand-based employees after the 1000 cut.

Downer says it has around 5000 New Zealand staff.

McConnell Dowell has 3500 in total in Australia, New Zealand and Asia, and John Holland has a limited presence here.

The contract was one of three projects under KiwiRail's $1 billion Auckland Metro Rail Programme, which also includes the $315m third main line out of Auckland between Wiri and Quay Park, and further support for the $4.4b City Rail Link.

Advertisement

Advertise with NZME.
Fletcher Building chief executive Ross Taylor. Photo / Greg Bowker
Fletcher Building chief executive Ross Taylor. Photo / Greg Bowker

KiwiRail chief operating officer of capital projects David Gordon would not confirm the contract was already decided.

"We have not concluded negotiations with any party for this contract, but can confirm we are in discussions with a preferred supplier," Gordon said.

"We cannot confirm who that preferred supplier is at this time, nor can we disclose information on the individual tenders."

The KiwiRail Papakura to Pukekohe project - expected to begin at the end of 2020 - includes electrification of 19km of track currently only available to diesel trains in South Auckland. Photo / File
The KiwiRail Papakura to Pukekohe project - expected to begin at the end of 2020 - includes electrification of 19km of track currently only available to diesel trains in South Auckland. Photo / File

The Herald on Sunday was told awarding the contract to John Holland and McConnell Dowell came down to a cheaper tender.

Related articles

Business

Meat companies link up to buy Wallace operations

07 Jun 05:00 PM
Business

More 'unreliable' Chinese locos needed to keep pace with freight volumes

10 Jun 09:56 PM
New Zealand

Conjecture over CEO's reasons $371m KiwiRail contract sent overseas

13 Jun 05:00 PM
Business

Fletcher to lay off 1500 staff, predicts 30 per cent drop in building consents

19 May 08:42 PM

Gordon admitted price estimates were a factor in judging the applications.

"We can confirm that the weighting applied for the contract, and disclosed to bidders at the outset of the process, was 70 per cent for non-price attributes and 30 per cent for price," Gordon said.

"All bidders were required to demonstrate how they will support New Zealand manufacturing and industry for the materials supplied."

Steve Killeen is chief executive of Downer New Zealand.
Steve Killeen is chief executive of Downer New Zealand.

Minister for State-Owned Enterprises Winston Peters would not be drawn on the wisdom of the KiwiRail electrification contract going overseas, but pointed out the unsuccessful firms could still win another $315m Auckland rail project soon.

"KiwiRail cannot be influenced by ministers in their tender process, and must follow government procurement rules, which at this time do not allow them to discriminate against foreign-owned companies," Peters said.

"However, companies that work on infrastructure projects, whether foreign-owned or locally owned, are encouraged to use New Zealand sub-contractors and workers wherever possible."

Advertisement

Advertise with NZME.

He said Fletchers could still apply for the major Wiri to Quay Park project.

"If Fletchers claim that they are laying off 1000 staff due to missing this tender then such an excusatory claim won't meet close scrutiny because it is simply not true."

The $371m project to electrify 19km of track is expected to begin at the end of the year and includes two more platforms at Pukekohe Station and future proofing for extra lines.

Only diesel trains can operate between Papakura and Pukekohe, so passengers from south of Papakura must switch trains to get to and from the city.

Electrification will improve commuter capacity.

Deputy PM Winston Peters (front) has suggested Fletchers apply for an upcoming contract. Photo / Tania Whyte
Deputy PM Winston Peters (front) has suggested Fletchers apply for an upcoming contract. Photo / Tania Whyte

KiwiRail Holdings Limited is a New Zealand state-owned enterprise responsible for rail operations in New Zealand, and also operates inter-island ferries.

Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail

Advertisement

Advertise with NZME.

Latest from Business

Premium
Business

Market close: Gentrack continues strong run on mixed day for NZ stocks

04 Dec 05:21 AM
Premium
Business

Zespri says leap in kiwifruit volumes to weaker China market next year 'a big task'

04 Dec 03:34 AM
Premium
Business

Another craft beer business in financial trouble, liquidator appointed

04 Dec 12:36 AM
Business

Travel stars in latest trade stats but demand for consumer goods guzzles up Kiwi dollars

03 Dec 10:43 PM

Navigating the ‘decade of uncertainty’

sponsored

Advertisement

Advertise with NZME.

Latest from Business

Premium
Market close: Gentrack continues strong run on mixed day for NZ stocks

Market close: Gentrack continues strong run on mixed day for NZ stocks

04 Dec 05:21 AM

The New Zealand sharemarket lacked direction and finished flat.

Premium
Zespri says leap in kiwifruit volumes to weaker China market next year 'a big task'

Zespri says leap in kiwifruit volumes to weaker China market next year 'a big task'

04 Dec 03:34 AM
Premium
Another craft beer business in financial trouble, liquidator appointed

Another craft beer business in financial trouble, liquidator appointed

04 Dec 12:36 AM
Travel stars in latest trade stats but demand for consumer goods guzzles up Kiwi dollars

Travel stars in latest trade stats but demand for consumer goods guzzles up Kiwi dollars

03 Dec 10:43 PM
How to make a win-win-win from waste
sponsored

How to make a win-win-win from waste

About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2023 NZME Publishing Limited
TOP