Wayne Hartner's world is crumbling

By ANNE GIBSON

To his mates, Wayne Hartner appeared to have it all: the boat, the Epsom house with swimming pool and tennis court, a corporate box at Eden Park and his own building firm.

The one-time chippie, whose trademark touch these days is a white, two-piece suit and gold chain, had certainly made good. But this week, the king of Auckland's construction industry found out what it is like to be the bad guy.

In front of 200 devastated creditors at Tamaki Yacht Club yesterday, he conceded that his world was beginning to crumble.

Asked what would happen to the proceeds from the sale of his boat, which is on the market, or his house, which he moved into just before Christmas, he declined to answer.

"I guess at this point in time I am probably in line to lose everything, and it looks very much like I'm going to," was his only response.

On Thursday, Mr Hartner pulled the plug on his ailing empire, calling in receiver John Waller to take over Hartner Construction, a firm which in just three decades had grown to be New Zealand's fourth-largest builder behind Fletcher Construction, Mainzeal and Hawkins.

The collapse has cast a shadow over the $50 million Hilton Hotel, which Hartner was building and which is six months behind schedule. It will also affect the 235-apartment and retail complex housed in the renovated and expanded "sheds" on Auckland's Princes Wharf.

The company's demise has much wider ramifications for the construction industry, with the fallout placing many other firms in jeopardy.

Scott Pearson, of Scotty Construction, has worked on two projects with Hartner and is owed $80,000. He knows of other firms much worse off than his.

"Everyone tightens their belts. Contractors will stop working on a monthly basis - they'll start asking for fortnightly payment - and basically other companies around can't afford to trade that way.

"Also, the suppliers will start saying they want money on the 20th or no credit, and so it's very negative right across the board."

Mr Hartner's troubles started when he bid to build five of the six apartment-retail blocks on Princes Wharf for David Henderson's Kitchener Group. It was a $200 million dream which has become his worst nightmare.

Mr Hartner, now 56, was brought up on a farm on the Manukau Peninsula and went to the Awhitu District School and to Sacred Heart College.

He left school at 15 and later boasted about his lack of scholastic achievement.

After finishing his building apprenticeship in Penrose, he made up his mind to run his own company and went solo around 1965. He was a successful builder, knew how to talk to people and had an eye for detail. He worked out of the back of a van doing labour-only business.

In 1970, he founded Hartner Construction with his wife, Gaile. They began with an office and builders' yard in Penrose, initially doing up shops and gradually moving on to much larger commercial work. The firm weathered the 1987 sharemarket crash and built up a staff of 200.

In 1994, Mr Hartner hired former Mainzeal man Nigel Ainley as general manager.

Mr Hartner headhunted the high-rise building expert to allow him to step back and concentrate on development. Many believe Mr Ainley deserves a large part of the credit for the firm's growth.

However, he was replaced by South African Peter Kay in March last year. He refused yesterday to discuss why he left.

Mr Hartner's single most ambitious project was Princes Wharf, a development which was also partly the undoing of Goodall ABL - the building firm owned by Queenstowner Graham Hill which went bust last March owing $20 million.

Goodall was building the apartment block at the end of Princes Wharf, Shed 24, while Hartner's men toiled alongside on the other five wharf sheds.

Some of Hartner's other big projects include the 18-level J Street apartment building in Wellington's Johnston St, the award-winning Viaduct Carpark, a state-of-the-art medical building for the Bledisloe Estate Trust in Parnell, the new Albany Executive Motor Inn and the Watermark building in the Viaduct Harbour (now the Sebel Suites hotel).

The firm was also responsible for many Auckland apartment blocks, including Phoenix Gardens, Tower Hill, Connaught Apartments, Highgate and Park Central.

But the bread-and-butter work came from less glamorous addresses - Hartner had a deal with supermarket operator Progressive Enterprises to refurbish and build various Foodtown and Countdown stores.

Early last year, Mr Hartner boasted to Management magazine: "Everybody knows they can come and see me." But the line rankled with hundreds of tradespeople, building suppliers and subcontractors, squeezed for cash after contracting to work for Hartner.

The article described an international conglomerate with six subsidiaries and partnerships throughout Australasia and the Pacific. Yet the company remained a private, family-controlled concern with Mr Hartner very much in charge and hands-on.

Last year, at 10 pm on the Saturday of Auckland's Anniversary Weekend, he could be found at Countdown in Papakura fixing a door which would not close.

He later began to get defensive. "The rumours which are flying around about us have very little foundation," he told Trade News. "If you do the right thing by people, you can't go too far wrong. Construction is all about relationships. New Zealand is really only a village, so you can't afford to fall out with people."

In fact, Hartner Construction was indeed falling out with people, in some cases not paying bills for up to 18 months, and citing the "pay if and when paid" clause in building contracts which the Government is about to outlaw.

Retentions on work it had done and disputes over variations to contracts it had completed resulted in the company not getting paid in full by various developers. With the slim margins of the building industry, things were beginning to look shaky.

It went from bad to worse last June when wall and ceiling fitout firm Alotech went into liquidation - a domino effect from the Goodall collapse.

It filed a petition in the High Court at Auckland to wind up Hartner over what it claimed was a $1.3 million debt. Hartner, in turn, claims Alotech owes it $1 million.

Hartner also claims it is owed $3.5 million by David Henderson's Kitchener Group, which Mr Henderson strenuously denies.

The subcontractors had their hands out too, complaining they were having trouble paying wages and carrying the cost of supplies.

The legal wrangling and disputes made banks reluctant to help, putting a further squeeze on finances. All this came at a time when the firm should have been - and needed to be - flush with cash, as the job was coming to an end.

The house of cards was beginning to tumble. It certainly did not help that the industry's boom times were coming to a rapid halt, and promises of new sources of cash were drying up.

The Hartner empire was being squeezed from every possible direction. Yet he continued to build himself a mansion in Epsom, on land valued at $1.3 million, and many in the city were becoming increasingly bitter.

Several firms have already gone bust. International Building Systems, for example, claims Hartner owes it $380,000. It has also gone into liquidation.

Professional arbitrator Geoff Bayley blames the Princes Wharf job for Hartner's troubles. He believes the bid for the job was too low.

"This is a disaster for the construction business.," he said yesterday.

"It will take a lot of other firms down with it."

Building Subcontractors' Federation executive director Peter Degerholm concurs. He has pushed for new laws for the industry but notes that they will come too late to help Hartner and all its subbies.

Meanwhile, Bernie Montgomerie, liquidator for Alotech, is crowing. Just 10 days ago, Hartner general manager Peter Kay described the Alotech winding-up petition as "injudicious" in the Business Herald.

"Clairvoyant, or just bloody right?" crowed Mr Montgomerie yesterday.