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Contractors brand concrete supplier shrinkage ‘big blow’

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Stephen Wrinkle

  • Gold Rock blames GBPA/DevCO for ‘undercutting investment’
  • Closure of block and ready mix units key to ‘long-term survival’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian contractors yesterday warned that a Grand Bahama concrete manufacturer’s decision to shut down two of its units is “a big blow” for major commercial and infrastructure projects in this country.

Stephen Wrinkle, an ex-Bahamian Contractors Association (BCA) president, told Tribune Business that Gold Rock Corporation’s products had been “an integral component” in large-scale developments and the industry will now be forced to consume critical foreign currency in sourcing alternative products from abroad.

He spoke out after Gold Rock, whose principals are the Florida-based Del Zotto family, blamed the decision to close its concrete block and ready mix concrete operations on the Grand Bahama Port Authority (GBPA) and its Grand Bahama Development Company (DevCO) affiliate refusing to renew the now-expiring five-year contract that saw the latter supply it with the aggregate for its products.

Gold Rock, in a statement posted to its website, accused Freeport’s quasi-governmental authority and DevCO of “undercutting any and all good investments” on Grand Bahama and refusing to work with it. It added that the closure of its block and ready mix operations was critical to its “long-term survival” as this would preserve scarce aggregate for its remaining concrete structuring business.

In its message to staff and customers, Gold Rock asserted: “Gold Rock was notified of extremely limited access to necessary materials to support the block and ready mix divisions. Gold Rock requested a meeting for a sustainable solution with GBPA/DevCO, requesting reasons as to why we would have limited access to the necessary materials upon the renewal of our contract.

“No representatives with a decision-making ability attended the meeting.. Gold Rock was told that what was proposed was non-negotiable; the remaining materials were ‘promised to be sold to an international buyer’.” That “buyer” was not named either by Gold Rock or the GBPA and DevCO, which rapidly issued media statements in response to the controversy stoked by the company.

The dispute erupted over Gold Rock’s efforts to negotiate a new contract with DevCO for the purchase of aggregate that is used in its concrete manufacturing processes. “They had a contract with DevCO for five years, buying the rock quarry from them for their concrete and cement products,” said one source, speaking on condition of anonymity.

Charisse Brown, chief executive and chief legal counsel at DevCO, for which Hutchison Whampoa has Board and management control, denied that it has “terminated or cancelled any contract” with Gold Rock. Voicing “surprise” at the company’s position, she conceded that the five-year contract involving the supply of aggregate fill had expired last month.

“As the 2017 contract was due to expire, DevCO began new contract negotiations in earnest in May of this year,” Ms Brown said. “The terms and conditions of the new proposed contract are now in the final stages.” However, several contacts suggested that “reading between the lines” it appeared that DevCO was also talking to other parties.

Ian Rolle, the GBPA’s president, meanwhile denied that the regulator had any involvement or contract with Gold Rock involving “the sale of aggregate stockpiles (boulders and fill) in the Devonshire subdivision”. He placed responsibility for the matter with DevCo.

Gold Rock, though, maintained that the GBPA and DevCO “disregarded” the concerns it voiced over the loss of aggregate/fill supply, and the impact this would have on its concrete-making business. “We cannot continue to sustain further investment in the affected businesses with the limitations imposed by GBPA/DevCO,” the manufacturer warned.

“We have been blessed to find such good people since we came here 30 years ago. Our business, like many others that have tried to work with GBPA/DevCO and their affiliated companies, have been met with roadblocks that are ‘non-negotiable’, undercutting any and all good investments into this island. It is unfortunate that we have been forced to make this decision, but we cannot work in conjunction with GBPA/DevCO any longer.

“It has made it impossible to have a sustainable investment on this island. When asked about an alternative source of aggregate materials they proposed we design and build them a marina. Gold Rock will not be doing that. Our hearts are heavy for our employees, their families and customers affected by this, but it is out of our control,” Gold Rock continued.

“Gold Rock does not anticipate a resolution to this issue because of the lack of acknowledgement and response to the concerns we have expressed. These terms have led to us shutting down two of our divisions in order to sustain enough aggregate for our structure manufacturing for the long-term survival of Gold Rock.

“In summary, it has become clear that the Port Authority is willing to undercut our 30-year investment for their own short-sighted financial benefit. This has forced the Gold Rock family to take this position.” No mention was made of how many jobs were likely to be lost or the financial impact on the manufacturer.

However, the relationship the Del Zottos and Gold Rock once enjoyed with the GBPA appears to have soured considerably since 2016, when the latter selected them as its joint venture partner in the Freeport Light Industrial Park project - a development that did not proceed. 

Reaction to Gold Rock’s move was mixed yesterday. Several construction industry sources yesterday described it as “bizarre” given that there were multiple sources of aggregate and fill in The Bahamas that could it could turn to as an alternative to DevCO’s supply.

Others said the gap created by Gold Rock’s withdrawal from concrete block-making and ready mix concrete will likely be rapidly filled and taken over by other industry players. They pointed especially to Bahamas Hot Mix, which yesterday rejected suggestions that plans to ramp-up its own Freeport-based ready mix and asphalt production was connected to Gold Rock’s woes, describing the timing as a coincidence (see other article here).

Mr Wrinkle, though, suggested the demise of Gold Rock’s two divisions will be keenly felt. “I was just about to place an order with them,” he revealed. “It’s going to have a significant impact. Most of the pre-cast concrete - well basins, catch basins for drainage, pre-cast pipes - they did a lot of stuff for infrastructure works. We’ve come to depend on them.

“It’s a big blow for local industry. We’ll have to import it from the US now. That’s a critical component to the construction industry. If that was pulled out from underneath us because of negotiations with the Port Authority, that’s not a good sign for business. It’s happened too often. They turn off the spigot and you’re left hung out to dry. There’s no recourse.”

Mr Wrinkle said contractors and developers had previously done “substantial business” with Gold Rock, adding that its move to shutter those two divisions will increase foreign exchange outflows by forcing companies to source alternative products overseas “for no good reason”.

“It’s the wrong direction to go in, closing down a business of that magnitude and impact. It’s a red flag warning,” he added. “The Government should not encourage, and nor should the Port Authority, the exporting of our raw materials. It’s not a progressive policy for the advancement of Bahamian manufacturing, that’s for sure. Same old, same old.

“If we have to take that foreign exchange and US dollars to buy septic tanks and drainage tanks, that’s another hit. It’s not just that we’re taking food out of families’ mouths, we’re also taking US currency out of the local economy. All the commercial building developers, all the roadworks going on, those people buy from them.”

Leonard Sands, the present BCA president, said the fall-out from the closure of Gold Rock’s two divisions would largely be confined to major commercial and infrastructure (roadworks) projects because its products were little used in residential work.

“Without those products being supplied locally, we will have to go back to what we were doing before, casting things in place on-site,” he told Tribune Business. “You will have some efficiency being lost from pre-made products being supplied and installed, and now having to pour them and put them in place rather than having them supplied and installed. You will lose that efficiency.

“I don’t think they were an across-the-board business to the industry like many think. The impact will not be so significant as to cause shockwaves throughout the industry.”

Comments

The_Oracle 5 months ago

Smoke and mirrors, they fired no one today. Other suppliers will step in to fill the void.

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killemwitdakno 5 months ago

Use foam panels for easily replaceable homes.

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