Watts & Hughes Limited is a privately owned commercial construction and development company with more than 70 full-time permanent staff at its Mt Maunganui operation.
Watts & Hughes Tauranga office was established 17 years ago and carries out all forms of construction: Commercial, retail, industrial, education and health sectors, along with residential.
It has currently more than $80m worth of projects under construction in the region with more secured work to commence in the fourth quarter (more than 20 projects), including Stage 2 Bayview Retirement Village, CHT Retirement village, SCION Innovation Hub and Suzanne Aubert Catholic Primary School among others.
We asked Mark Gutry, Construction Director, to provide some insights as to how the company, and the industry more generally, has been impacted.
What were the impacts of COVID on your business?
Due to the suspension of certain projects as a direct consequence of COVID-19 Alert Level 4, and the uncertainty of what would happen next, we saw a 20% reduction in work load (these projects have subsequently just come back on line).
There was a combination of factors: Uncertainty in clients’ minds, risk to LVR as well as limitations with cashflow resulting in reduction in monthly spend, which in turn influenced whether or not to continue with projects. A flow-on effect of this was a minor loss to a few of our valued and skilled staff.
More recently, we were significantly impacted by supply chains in and out of Auckland under the recent Alert Level 3 restrictions.
How did Watts & Hughes adapt to the situation?
With specific reputable and repeat clients operating, based purely on cash flow we saw capped monthly spend rather than progress against critical path programme (reduced staffing levels were required on sites, to meet reduced clients monthly spend to keep projects ticking over rather than suspend in uncertain times).
We also increased health and safety resource to ensure compliance and safety of all staff, suppliers and sub-contractors alike throughout the various levels of COVID.
How was the industry more broadly impacted by COVID?
The market has tightened considerably since initial Level 4 lockdown in terms of margins and numbers of contractors and subcontractors chasing work. We have also seen Ministry of Education look to defer some larger Educational projects due to funding in certain regions.
Main contractors are aggressively chasing current opportunities, but there are concerns that not everyone is complying with the CCA, in relation to retentions being held in trust accounts ,but rather look to securing work to retain key staff with projected, limited opportunities predicted in the first quarter of 2021.
Where do you see the industry heading in the coming months?
It is a very competitive and challenging environment to operate in as there is so much uncertainly over COVID-19, along with the General Election, which is deferring a number of projects, but overall the company is expecting a very busy 2021 based on current commitments and opportunities.
Fostering current and valued repeat clients will be the key to the continuity, as well as retaining work flows and key staff over the next six to nine months.
It’s a very interesting time for certain clients/developers and throws up lots of questions.
For example, do you hold projects back or be opportunistic with a tightening market to proceed in a commercially advantageous market (in terms of costs, low interest rates) in the hope that we come out the other side when New Zealand has the virus under control?
