Another example of being asleep at the wheel. One I know about as one of my Vistage CEO members runs a USA Division owned by this corporation. His business is doing fine/great.
Today has turned out to be Fletcher Building’s St Valentine’s Day massacre. It’s the day the company’s profitability, economic value, reputation and integrity as a public investment were gunned down.
The writing has been on the wall for some time as it drip-fed the bad news of cost overruns, writedown in asset values and restructuring costs as it battled the vagaries of the global construction and building products markets. It’s had to contend with cheap competition from the likes of China, the slowdown in housing markets around the world following the global financial crisis and the fluctuations in currencies on its multinational business. But it often crowed about the benefits of its multi-billion dollar pipeline of big construction projects here and abroad, which were the backstop and defence against fickle markets and demand. It is now clear that Fletcher Building chased almost any and every big job going. It was lead contractor in the Christchurch earthquake rebuild, the International Convention Centre in Auckland, airport developments in the three major cities, a new prison and a new apartment and commercial development on Auckland’s waterfront. But by its own admission the company has botched the basics of pricing, scheduling, and supply. Sir Ralph Norris, the Fletcher chairman, has spoken of quantity surveyor estimates, which were as much as 100 percent wrong, rising building costs and the flow of communication from management to the board as some of the reasons for losses. Fletcher’s stock has now fallen 35 percent in the past year.
Sir Ralph Norris has fallen on his sword and said he will step down. Some said he should have gone last year when then-chief executive Mark Adamson was abruptly shown the door in July, when the company had its second profit warning in a few months.
Read about other examples in my blog category Who’s Been Asleep at the Wheel?