By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Fears were growing last night that one of The Bahamas’ largest and best-known construction companies has shut down permanently with some 54 employees already terminated.
Cavalier Construction, which was founded 64 years ago, was said by multiple construction industry sources to have closed its doors last week and laid-off all staff after it was unable to win a sufficient volume of high-value, large-scale projects to support its significant overhead costs.
John Pinder, director of labour, said his department had been notified by Cavalier that it was terminating 54 persons “due to lack of business” although he said the contractor had made no mention of any plans to close in its letter to Dion Foulkes, minister of labour.
“They’re starting the process now. The minister was notified more than a week ago,” he said. “They only said they let go 54 due to lack of business. They didn’t say that [they were closing] in the letter, but that’s what I have heard; that they have gone out of business.”
Martin Todd, Cavalier’s managing director, last night confirmed to Tribune Business that 54 employees have been terminated. He would, though, neither confirm nor deny that the contractor had closed its doors for good, instead promising to issue a statement today.
“To be honest, I’ve not got too much to say today,” he told this newspaper, dancing around the closure question. “There’s a few things going on that I need to deal with.” Mr Todd, however, replied: “I can confirm that. There’s nothing wrong with that” when asked about the lay-offs.
The Bahamian construction industry was abuzz with talk of Cavalier’s possible closure late last week, with many wondering what it said about the current state of the sector and the meaning for its future.
The repercussions are likely to be felt well beyond Cavalier itself, given that the company will have been responsible for hiring numerous sub-contractors, skilled craftsmen and labourers to work on its various construction sites. Equipment and building materials suppliers may also be impacted, along with clients whose project may already be in progress.
Several contractors, some speaking on condition of anonymity, blamed the situation on an inconsistent flow of high-end projects necessary to support what was Cavalier’s relatively large fixed-cost base by Bahamian construction industry standards. “They were the cat’s meow. They were the big boys on the block. It’s sad. I never thought I’d see that happen,” one source said.
Another told Tribune Business: “Sources deep within the organisation and management have recognised they [Cavalier] were simply unable to continue because of lack of work over the last five years and because they were carrying such overheads.
“They were running a $100m construction company when they were not earning $100m in revenues. The Public Hospitals Authority’s Critical Care Block was the last major project to carry their name. They couldn’t continue to incur these losses. They were doing a big house at Lyford Cay, but it was not enough.
“This is real stuff. They successfully completed the last renovation, extension at the Mall at Marathon, and did it really well. The challenge is that when your costs are at that level you need a lot of jobs. They were a $100m construction company that needed a lot of volume to sustain themselves, and simply did not have it. You can’t have just one Mall at Marathon extension.”
The construction industry source also suggested Cavalier’s potential closure signalled trouble for the wider sector, adding: “It’s going to do no good for the strength of the construction sector. Cavalier is the oldest construction company in The Bahamas.
“When a company like them shuts down that should be very unnerving for the sector. Do you understand how significant this is? It’s the former Balfour Beatty contractor.”
Stephen Wrinkle, a former Bahamian Contractors Association (BCA) president, yesterday told Tribune Business that “rumours” had been circulating in the construction industry for some time surrounding Cavalier’s financial health.
He, however, suggested that the company’s problems again highlighted the difficulties major Bahamian contractors face in “getting in the door” on major multi-million dollar foreign direct investment (FDI) projects.
And Mr Wrinkle argued that it further highlighted the need for the Government to overcome its reluctance to implement the self-regulatory licensing system set out in the Construction Contractors Act, as this would certify to developers what individual contractors are capable of doing.
“The overheads running a company that size are tremendous,” he said of Cavalier, “and without having the volume of work to keep that going it’s difficult. The volume of work hasn’t manifested itself, and the costs of doing business are already prohibitive.
“It’s extremely difficult to balance that cost. It’s historically been a problem for the industry. It’s a feast or famine model, and when you’ve spent years growing to the size of Cavalier and don’t get an opportunity to participate on the major projects, they’re stuck with these overheads and costs they’re carrying.
“Bahamianisation has not reached the construction industry,” Mr Wrinkle has continued. “You’ve got all these foreign construction companies working in The Bahamas, and the large Bahamian companies have a difficulty getting their foot in the door.”
He cited China Construction Company’s (CCA) The Pointe, together with Mediterranean Shipping Company’s (MSC) Ocean Cay private island, as examples of projects where foreign companies had taken the lead.
“They take our labour, pay them higher rates, leave and labour comes back to us wanting the same higher rates we cannot afford,” Mr Wrinkle said. “It’s a lose-lose situation for the Bahamian companies. Unless we have policies that position Bahamian companies for these FDI projects this is going to be the result.
“It goes back to licensing the contractors and regulating the industry. The Ministry of Works is not inclined to do that, so the industry is stuck. This [Cavalier] is a direct result of that; the non-participation of Bahamian companies in the growth of the country.”
Cavalier Construction was founded in 1956 by the late Godfrey Lightbourn and Eugene Pyfrom, who were 50/50 partners. They sold the business in the early 2000s to a management-led buyout, which was headed by late managing director, Richard Wilson.
Mr Wilson, who joined Cavalier in 1973 as chief estimator, was promoted to vice-president in 1989 and served as its managing director from 1989 until May 2018, when he stepped down due to ailing health. His passing was announced almost a year ago in late January 2019.
It is unclear why Cavalier appears to have hit difficulties so quickly following his death, but other senior management figures have also departed the company within the past year. Stephen D’Alewyn, its former chief financial officer, left on August 23 last year according to his Facebook and LinkedIn pages.
Among Cavalier’s major jobs in The Bahamas have been Albany, Bayroc, the Atlantis Convention Centre, Caves Point and the Nassau Straw Market. Its offices are based on Crawford Street in Oakes Field.
Comments
ThisIsOurs 4 years, 3 months ago
weird. Almost unbelievable. Could illegal gaming together with wholesale give aways to the foreign man completely obliterate the indigenous Bahamian?
K4C 4 years, 3 months ago
wholesale give aways to the foreign man
What in the world does that have to do with the possible closing of Cavalier ?
In a time way way back in the Bahamas construction company's thrived, some were Bahamian some were foreign.
You Sir have to ask the former and sitting government why they have allowed so many non Bahamians to be in this industry.
ThisIsOurs 4 years, 3 months ago
thats the question...I don't have an answer
Well_mudda_take_sic 4 years, 3 months ago
Bahamian businesses are dropping like flies sprayed with Baygon under the most unfriendly business environment created by the corrupt Minnis-led FNM government. The foreigners are picking what remains of our carcass clean ...... and heaven forbid we ever capitulate to the great pressure being put on us by Red China to join the WTO ....... that would be the final nail in the coffin for most of us, including the Bahamian professionals, i.e. medical doctors, lawyers, accountants, etc.
Tweedle-Dumb Minnis and his incompetent cabinet ministers haven't done a thing to help local businesses and private sector employment since May 2017. In fact the opposite is the case. They've made it next to impossible to profitably run any kind of local business enterprise, all the while unjustly enriching the select few of their cronies with overly generous and well padded government contracts not to mention their favoured foreign interests like the cruise ship industry and the Red Chinese construction projects. What an absolute disaster for our country and its people!
Clamshell 4 years, 3 months ago
Respectfully, Mudda, an organization of the size, complexity and history of Cavalier doesn’t just collapse within 2 years. The downward spiral for an outfit like that takes much longer.
Well_mudda_take_sic 4 years, 3 months ago
I take it you're one of the very few who believes the corrupt Minnis-led FNM government has created a better business environment for local non-politically connected private sector enterprises since May 2017.
Clamshell 4 years, 3 months ago
No, I don’t believe any such thing. Quite the contrary. But what I do believe in is reality — not ill-informed, hyper-partisan emotional ranting, from either end of the political spectrum. And if you somehow believe that Cavalier Construction lacked political connections ... well, I’ve got a nice bridge to sell you in Brooklyn.
observer2 4 years, 3 months ago
I think you know who out west who mix up wit all da chinese, governments dem and errie foreigner take all dey business.
High end large real estate projects booming in de bananas. So many rich foreigners and Haitians on every single job.
Cavalier just did not evolve with the new corrupt environment. So dey gone like da dinosaur.
....but we learn nuttin.
Well_mudda_take_sic 4 years, 3 months ago
The founders of Cavalier, Godfrey Lightbourn and Eugene Pyfrom, were well known for playing quid pro quo with Poodling and his PLP boys in order to get lucrative large scale construction contracts. Those were the days when most government corruption took the form of kickbacks from willing construction companies involved in major projects. It's how the Mosko family and others like them got filthy wealthy. Our corrupt governments (PLP and FNM alike) have since found new and easier ways of bilking the public purse ( as funded by taxpayers and national debt) out of mega millions of dollars annually. Just look at BOB for instance.
bogart 4 years, 3 months ago
Cost overruns by both govts, both parties sitting in Parliament Assembly across the same table. BOB-see Nassau Guardian Friday, October28,2016 Business Section. "Resolve loans were only worth $22.5M" . BOB- see Tribune Tuesday, October 31, 2017. "Gov't pays '3x' value of BOB's toxic loans".
bogart 4 years, 3 months ago
.............should also have included the some 50M the govt boughts in BOB rights offering, noone seems wanted to buy further in investment years ago and the more continuous event of Govt buying the old known as Phil's building on Gladstone Rd. but there after decided it was unsuitable and secured rental building for Post Office facilities from former Cabinet Minister. An aspect of likely and further expense is lawsuit relating to previous Govt relations to have Post Office across from the Independence round a bout. The Phil's building seems to have from a Crown Land parcel that then evolved or morphed into the structures thereon etc.
enough 4 years, 3 months ago
Let's not forget that the construction industry is grossly over saturated, everyone calls themselves a contractor and overvalued (what these guys charge is ridiculous). That coupled with that fact that you have a lot of local persons fronting construction companies that are actually owned by foreigners and literally taking bread out of the mouths of local contractors. This all is a recipe for disaster for this industry. I cannot understand why the Bahamas Contractors Association is not more vocal.
hrysippus 4 years, 3 months ago
This country has employment laws that protect long serving employees who can only be terminated at great expense to the employer. As a business survives longer so the employee termination liability increases until it reaches a point where the business is no longer fiscally viable. Taylor industries was a case in point, is Cavalier Construction another victim of our onerous industrial relations act? The law of unintended consequences in action?
bogart 4 years, 3 months ago
Eye weeping tears....by majority seeing Govt wastages, massive cost overruns 2x - 3x on govt projects billions of taxpaying dollars funds like incl buying land plans in Palmetto to build Clinic an just have half mountain graded down, massive clinic in Cat Island, roadworks in Nassau, Bahamasair jet just bought and old and not meeting FAA to go to Miami passangers turn back, water treatment plant Gladstone rd, massive baseball stadium improperly,18 million platform for PMH for billing etc, govt buying Freeport Chinese Hotel and paying off employees under Chinese, list can go on and not even listing doing works that would make the govt money....billions $$$$$.
All these billions just wasted, massive cost overruns, opportunities not taken would have Billions if prevented wastages would have had economy turning over creating, enabling businesses like Taylors and Cavalier to survive.
themessenger 4 years, 3 months ago
I feel sorry for the 54 employees who lost their jobs, but I don't think the sub contractor community will shed many tears as Cavalier is well known for short changing or simply not paying their subs, a Tricky Dick trademark, just ask the Flameless boys about the recent Hospital contract.
John 4 years, 3 months ago
whats to be expected when the largest construction in the country is being done almost exclusively of Bahamians. And yes the FNM's economic environment is not only unfriendly but toxic to Bahamian businesses. Expect to see many retail businesses close over the next several months as sales are down by as much as 40%. And this 'pay for a bag', fiasco is not helping the situation. It seems so stupid to walk into a jewelry store and spend $400 for a watch and they want to charge you 25 cents for a bag. Or go to an eatery and give your food unpackaged. Was this ever the intention to the law banning single-use plastic bags?
observer2 4 years, 3 months ago
Dey mussy ain put enough grease and shingles in dey contract (I mean consultancy fees). I know dey ain “lotion” when playing wit day big boys (IMF, UN, VAT, Bay St Boys, LC, Shell, Fortune 500 ...). Dey get .... over.
Dis ain you daddy’s PLP or FNM. Da big boys gone global. No longer 10% cash in. Bag. We talkin constancy fees paid to non transparent offshore companies that even anti corruption agencies of G8 countries can’t unravel.
Can anyone tell me why we even dealin with Shell with its documented history of corrupting third world countries and it’s terrible carbon footprint? The bananas will be underwater by the end of the century due to Shell selling nasty fossil fuels.
Every middle class Bahamian tryin to get dey kids and cash out. Any foo could see dis story ain ga end well for Bahamians. Excellent for rich foreigners with 90 day permanent residency tax certificates avoiding crushing 50% capital gains taxes in their home countries. But dis will crumble because the global standard is 183 days. We always takin short cuts.
jules13 4 years, 3 months ago
Fat Cats and Rats !!!! Imagine how many projects they worked on since 1956 ! and how much money and back door deals. No one was looking, it was a Bahamian company! Playing footsy with friends in high places, the Knights at the round table. Not the flavor of the month? Well, what happened is that not many contractors worth using would work for them anymore, just ask anyone the worked at PMH project and how cavalier took money in the settlement and cut the companies down or didn't pay them at all !!! Ask where that government funding went! it didn't go to the men and women that were trying to make an honest living. They used those funds to sustain lifestyles they enjoy !! ask the 54 employees if their address is in Lyford because that's where the fat cats live. While they were filling there pockets they didn't care about anyone other than themselves, this was a planned event screwing everyone and washing their hands. Did they except gov to step in and fill their pockets? Get out of the way so other businesses can do work.
AnthonyConstantinou 4 years, 3 months ago
Exiting an office is a terrible experience, no doubt—but it happens some time. Companies have job cuts for various reasons, and generally, these layoffs are not a reflection of employee's performance.
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