By NEIL HARTNELL
Tribune Business Editor
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.