7 Feb 2013

Mainzeal likely to sold to another building firm: Key

4:25 pm on 7 February 2013

The Prime Minister says it is likely Mainzeal will be liquidated and eventually sold to another building firm.

The future of Mainzeal is unclear after the company was put in receivership on Wednesday, jeopardising the jobs of hundreds of employers as well as sub-contractors.

Mainzeal is New Zealand's third largest construction firm, behind Fletcher Construction and Hawkins, and has been involved in projects worth $7.5 billion throughout New Zealand since being founded in the late 1960s.

John Key questioned the timing of the business going under, saying it would have been understandable if Mainzeal had gone into receivership several years ago during tougher economic times ratherthan now.

He says the receivers will give a clearer picture of what the company's financial problems are.

"My guess is if the company is liquidated, which it looks like it's going to be the case, then it is highly likely it'll either be bought in part or in totality, and certainly we would expect those workers to find jobs in other places because we know in places like Christchurch and increasingly in Auckland there's actually a shortage of skilled workers."

But Mr Key says his real concern is that sub-contractors may not be paid.

He told media he does not believe the receivership will delay the Christchurch rebuild and would not cause building costs to go up in the South Island city due to less competition. He said he doesn't believe Mainzeal's financial problems are related to the rebuild.

Earthquake Recovery Minister Gerry Brownlee said on Thursday that while it is too early to know much about the company's debts, he is confident sub-contractors will not be left in the lurch and the rebuild will continue.

Mr Brownlee said he expects any staff who lose their jobs will quickly be employed by other construction companies and the Earthquake Recovery Authority has put Work and Income on standby to help job-seekers.

Mr Brownlee says the Mainzeal has been the project manager for Vero Insurance and Vero is not concerned the receivership will hold anything up.

'A one off' says Joyce

Economic Development Minister Stephen Joyce has described the receivership of the construction company Mainzeal as a one-off for the industry.

Mr Joyce says the receivership of Mainzeal is not directly related to what is happening in the construction sector, which he says has come into an upswing.

Mr Joyce says skills will not be lost and the projects Mainzeal was working on were likely to be picked up by other companies.

"Particularly given the construction cycle where there is undoubtedly a pick up and we're seeing that in all the trends in terms of increased wages in the construction sector, increases in Christchurch and increased employment and the pick up in things like apprenticeships. I'm reasonably confident the construction sector is coming into an upswing now."