Liam Carroll: I did it my way?

Liam Carroll: I did it my way?

Postby garethace » Mon Jul 13, 2009 10:21 am

After receiving the securitised income he went on a share-buying spree, investing in everything from sugar to ferries. Millions were invested in Greencore, Irish Continental Group, McInerney and Aer Lingus, stocks that had little in common other than the fact that they had land banks, and land was what Carroll understood.


http://www.tribune.ie/business/article/2009/jun/28/where-did-it-all-go-wrong-for-carroll/

I found the quote in this Sunday Tribune article. It displays the fundamental mistake we all made. LC didn't understand land, what he understood was construction management really well. Better than anyone ever has done in this country and perhaps many others. It was when LC convinced himself he knew about land, that he made the biggest mistake of his career. LC’s life is one of two contrasting halves. As a young man he stumbled out of the dull world of engineering consultancy and into a world he didn’t fully understand. Along the way he met people, shook their hand and promptly hired them. They were great people who knew their business or trade well. The kind of people the Irish nation had turned its back on before. LC did very well out of this relationship and reaped the rewards.

Zoe was a business that understood how to save a thousand euro here or there, without compromising the integrity of the final product. LC drummed that idea into his employees and built a beautiful low-cost enterprise around such a simple approach. LC had a very fresh and unencumbered vision of construction management. Which enabled him to stumble across a niche that wasn’t been served at the time: inner city apartments. LC only had one big idea during his lifetime and that idea was enough. Or was it?

On the day that LC lost 20 million on Aer Lingus shares I was on the phone to a carpenter trying to beat down a price on a couple of timber doors. I was walking in the foot steps of those who had gone before me. I was learning to build constructive relationships with most players in an industry that I know. On that day, our financial director ran past me, a mobile phone pressed to his ear babbling excitedly to a man on the other end: We have un-wound all of our positions. There is no doubt about it, Zoe were a brazen bunch. They fooled themselves into believing they could re-invent the rules for whatever market they went into. After all, they were Zoe developments.

The real truth is there was an absence of strategy and comprehension behind most of what Zoe did in the end. That is why LC had his ass handed back to him on a plate by the marketplace. You might be able to game the system for a while. A system created by mere mortals, a system of tax incentives and development plan guidelines. Especially a system engineering by the people you know in Fianna Fail. LC is so intelligent he could juggle all of those things. He had worked his way up from the bottom. As someone said to me, he had bought the tin of paint and the bucket of nails. He hired the guy who sold him the bucket of nails who became employee no 5 or 6.

Gaming a system created by politicians or a planning authority is one thing. But the marketplace is a different matter entirely. It is like a hive mind or super intelligence. It doesn’t behave like an organisation made up of human beings should. It can display its own emergent behaviour when you least expect it. There is something happening in the marketplace, which experts cannot even explain to this day. If LC’s strategy had been working on any front, he might have pulled through with some scratches and bruises. But in the end, the company he built was carried off the playing field lying on a stretcher and needing a machine to breath.

What ultimately ruined LC was the one billion windfall his company earned from securitization of all future rental earnings. On that occasion, there were a shrewd collection of bankers from BOSI sitting opposite the table from Danninger. (Normally, it is Danninger who have the upper hand and sit across the table from a bunch of clueless civil servant planners working for a local authority) But on this occasion Danninger met more than their match. They had the ingenuity to make made LC feel like he was the man in charge.

LC couldn’t wait to get his hands on the securitization money. I remember when fortnightly site meetings working for Danninger became something surreal. You would find yourself sitting in a draughty site office with a group of tradesmen. They looked at you as if you had landed on site, not in a helicopter but in a flying saucer. I felt like asking the question, do I have two heads or something? But didn't ask, because I was afraid the answer might be yes! Nothing seemed implausible during that brief time. If you completed a seven story building and had to knock the building, because land values had increased again, that is what you went and did.

Society can only judge this now and decide what to do. It shouldn't be up to the likes of Sean Dunne to tell Ireland that millions of tonnes of CO2 emissions embedded in the concrete at North Wall Quay has gone to waste. It is time for green legislation to be passed under the European Energy Performance in Buildings direction, which deals with this lunacy. Sean Dunne as a director of a development company should be made to answer to his corporate responsibilities towards climate change prevention.

I wrote a short essay about the ‘smarter’ economy to send to LC early in 2009. I wanted to express my concern as an employee that we were doing things wrong in the company. Like the local authorities who didn’t want to compromise the authority of their ‘Mickey Mouse’ housing departments, by allowing a sustainable rental model to develop and grow in Ireland – Danninger was working with a concept of commercial real estate that couldn’t scale with the developments we could build.

http://designcomment.blogspot.com/2009/05/notes-on-smart-economy.html

Within day I received a redundancy letter in the post from the financial director who had un-wound the AerLingus shares. I guess LC wasn’t too impressed with my suggestions for building a sustainable economic future in Ireland. I remember at the end with Danninger, all economic logic went out of the window. It was like the Germans building V2 rockets to shoot down the thousands of allied bombers flying above in the skies over Berlin. Every kind of hair brained idea was pulled out and hurriedly transferred onto drawing paper. Anything with as many thousands of square meters rent-able floor plate as possible in order to grab more securitization of rental income from BOSI.

It was surreal in my mind, that a company that had started out to become the Ryan Air of the residential propety market, now wanted to become the AerLingus of the commercical world. It was like BOSI were selling our great little company a drug we could not say no to. The first 'free fix' was more than likely the two floors BOSI leased in Danninger's speculative Chapel House development in 2007. BOSI must have felt confident they would own the whole building within a year, which they did. People talk about Sean Fitzpatrick a lot in the media. But some one else sold Danninger the product that eventually killed them. Along with the good hopes and dreams of 1,000 employees too. One of the last jobs I worked on for Danninger was the new BOSI headquarters located at Cherrywood. But now I realize that project's only purpose was the carry the fool even further. You can still see the tops of pile foundations I designed with my colleagues if you take a drive out. Which I often do, to stare at them in disbelief. Stupid pile caps.

Having attended a couple of lectures at the Engineers Institute of Ireland I wrote a report about Dublin Airport Authority’s capital investment program of €1.8 billion over a ten year period. Now there are a group of guys who know what to do with a couple of billion. They have a plan and they publish it on their website for everyone to see. Danninger doesn't have a website and isn't in the phonebook. What sickens me most is that we were in a joint venture with DAA. Was it possible that Danninger also could learn from DAA? I sent my report to the directors concerned to see if the ideas could be of any help. Too little and too late unfortunately. BOSI had already ran away with the loot.

http://designcomment.blogspot.com/2009/06/dublin-airport-authoritys-capital.html

After all, it was the Irish nation who was paying DAA to do what they do very well. Why shouldn’t we learn some of the capital management techniques that UK consultants Turner and Townsend had pioneered in Ireland? In all fairness, wasn’t Danninger in some kind of joint venture with DAA? Similar to the smart economy essay I wrote, I got nowhere with the DAA report either. The criticism was that DAA should be re-aligning themselves to a Danninger way of doing business, not the other way around. I will remind you, they are a brazen sort of bunch.

While working for Danninger I began to listen to some of the pioneers in the sustainability movement in Ireland. I heard Gerry McCaughey talk about his company Century homes, and the housing projects he tendered for and won in the UK with his new parent company Kingspan. McCaughey later obtained a position as director at DDDA. Gerry was the right man, but in the wrong job for sure. Paul Leech the eco-tect, is one of those pioneers that I would have liked to have invited to work with us. I think it could have been a very productive cross-fertilisation of ideas and I know that Paul Leech would have enjoyed a challenge of ‘greening’ up our organisation. I know there would be differences and we both would have to compromise. But eventually I feel I could have turned Danninger around towards a more sustainable direction. Now I fear it is too late. Some other developer might lead the way, but I doubt they can do it in the same way that only Danninger could.

The one positive thing that I have taken away from my experience working for LC is a truly deeper and more sophisticated appreciation for sustainable development ideas. This has taken me a long time and a long hard road I can tell you. Listening to Eamon Ryan of the Green party on RTE television yesterday evening I was impressed by what he had to say. It isn't what he has to say, but the way in which he can say it. (In spite of many interuptions from the RTE TV presenter) John Gormley knew how to choose a good man for the long road in Eamon Ryan. While working as a lowly project manager at Danninger I used to augment my education with whatever cheap on-the-job learning experience I could. I spent a lot of time hanging around the lecture theatre in my Alma Mater, Bolton Street technical college. It was close by our offices in Parnell Street.

http://designcomment.blogspot.com/2009/06/multi-layered-definition-of.html

On one occasion I listened to Dick Gleeson describe his ideas for a sustainable and low carbon city. What is that guy smoking I thought to myself? But now I think that Dick Gleeson was on to something. I scribbled down my ideas for a new knowledge campus in the Custom House dock area. We need to advanced beyond the level of what Dermot Desmond and a couple of accountants (Haughey included) could envisage in the dark 1980s. What Dublin and Ireland needs now is the Irish Financial Services Centre Mark II.

http://www.archiseek.com/content/showthread.php?t=7692

My conclusion is that we need in Ireland to wean architectural consultants away from designing glass boxes in peoples’ back gardens. We need their design input in figuring out the most valuable route for the Dublin metro project: the most valuable that is in creating new opportunities for urban regeneration. Rather than reinforcing the same old status quo of O’Connell St. We need to re-invent Merrion Square, Customs House Quay and the area east of the Mater hospital heading towards Croke Park. There is vast potential to be un-locked in those areas and it would be sustainable too. Every major capital investment program by the Irish state, including the national spatial strategy, has been vacant of any input from the design professionals that were educated by the same Irish state.

The finger of blame for that should be pointed squarely at the Royal Institute of Architects of Ireland for being backward and impoverished with their vision. Their system of handing out rubber medals for glass box house extensions has ruined the profession they were responsible for developing. (A profession I onced tried to become part of myself) I think they and all the other land professional institutes should have to answer to a new central state body. That central state body should have an executive with experience in the building industry. Not some poor old architectural consultant who means well.

We can’t sustain the Mickey Mouse scale approach of the RIAI any longer. Too many billions of Euro capital are being squandered as we speak. While architects are contented to stay in some incestuous relationship with public spending on small school and housing projects. Architects need to venture forth into the real world, stand up and be counted with the Rebar Engineers of the National Spatial Strategy. We only need a fair referee for that to happen.

I feel that the current approach we have towards land assets in this country is un-sustainable over the longer term. What we are doing in Ireland is putting all of our eggs into one basket. On this occasion it was LC’s basket that gained and lost, (and BOSI's that gained in due course) but that is purely academic. We could equally refer to LC and BOSI in this case as Mr. X and Mr. Y. Depending on one Mr. X or Mr. Y to guarantee the sustainable management of an asset class of this scale is a recipe for disaster.

The same problem was very apparent in the stage management of the Dublin Metro project. What we need is a land taxation scheme in order to burn the hands of developers or banks who hold onto land that is too much or for too long. The stage management Bertie Ahern orchestrated with Metro North, reminds me of watching a hoist movie where all of the crooks meet at a pre-designated location after the job is done. All of the ‘loot’ is distributed in shares to the team members out of the back of a van. What happened when government unveiled the new route of the Metro project was very similar. I know that, because I was in the crowd and jostling for a position when the van doors would swing open.

But noticeably absent from the crowd on that day were architects. The real architectural and urban discussion which should have been the main focus didn't even take place. This is what I try to argue for in my idea for a new Customs House Quay knowledge campus. (A heck of a lot better idea that a sports campus and Bertie bowl) If I could take a best guess, I would say for the Metro project to pay for itself we will have to introduce land tax. Expecting Metro North to pay for itself through ticket fare sales alone (as we did in the LUAS project) is a waste of time. The minute the line is drawn on the map, the financial gain is captured by private land owners. Those are the people we have to tax.

I did make one very ballsy suggestion, even by my own standards while an employee at Danninger. I had introduced myself to David Wetzel when he gave a lecture in Dublin. David worked for the Mayor of London for years and had offered to speak to Danninger about his ideas to do with land taxation. I am surprised I wasn’t fired for that one. But I did believe and still do believe that companies such as Danninger need to embrace the future rather than try to hold it off for forever. In the end, the marketplace has a strange way of telling you what it wants. Whatever LC had to offer to the marketplace in 2007, it certainly wasn’t buying.

http://www.archiseek.com/content/showthread.php?t=7672

It seems that Carroll could not have chosen a worse time to move into the stock markets, as he sought to diversify away from property.


The journalist Neil Callanan at the Sunday Tribune has got his analysis back ways. (It is time for the reporters and everyone else to learn some basic economic theory I suggest) That is the trouble in Ireland. We became so far removed from the original goal of exporting a product to a global marketplace, that we find it difficult now to work out the basic logic of how things work. It wasn't that the market went bad when Liam Carroll moved into it. It was precisely because Liam Carroll and others like him, went into the market selling themselves as the product, that the market turned against them.

It was almost a sure bet that anything they touched would sink to the bottom. They thought they could fool the markets the same way as they tried to fool everyone else. I think we need to get real in this country as George Lee would say. We need to start viewing ourselves and every company in Ireland as a product. Then ask ourselves the question, if I was a potential buyer in the global context would I be buying the product? The answer the market gave in the case of LC was a categorical no! We are not buying your brand.

We need a robust management and rental model for property belonging to both private builders and the local authority. The fact that Corcoran Jennison were not awarded the tender for the public housing projects when McNamara chickened out is nothing short of a scandal. We have our local authority representatives to thank for that one. As we speak there are people in local authority flats trying to pull themselves up by the boot laces. While having to suffer the sale of all kinds of toxic waste outside of their own door step. The truth is, the same model should work for both private and public housing rental demand. The two should co-exist together in proper private company supervision. There is no need for Part V of the planning act. It was shoved in their so local authority planners would not feel guilty about themselves and could engage in a futile blame game with mean old nasty developers.

We need diffusion of the ideas developed during large capital investment programs engaged in by Dublin Airport Authority, ESB Networks, the Railway Procurement Agency and other power houses of construction excellence. We need to realise that the low carbon city is really a return to good urban principles that have been around in Europe and elsewhere since the middle ages. In that respect, we need architects sitting at the table when decisions are made about investment programs: be it the national spatial strategy, the Metro North or whatever else. To that end, we need architects to work outside of their own field. They are too addicted to their own marketing crap. We need them to understand cost benefit analysis, net present valuation and the language of finance and project management.

http://designcomment.blogspot.com/2009/05/going-beyond-base-elements.html

When we have all of the above elements in place then we can feel ambitious about a future for our country, but not until then. The land taxation idea has been tried by successive Labour governments in Britain since the end of the Second World War. Each time the conservative governments ousted Labour, they dismantled whatever land taxation scheme that Labour had put in place. It has been a series of trials and mishaps throughout the later half of the twentieth century. But as time moves on, it is becoming more apparent that land taxation in a modern twenty first century nation is the way to go. We need our best brains working on putting all of these elements together into a package that will prove a winner as far as Ireland is concerned.

Danninger had no real confidence it itself or any of the four main elements I mention above. Let that be a very stark lesson to other Irish companies out there. It could be you next. As Danninger matured and became larger the business and banking world wasn't very kind to it. LC should have done like Michael Dell did. Michael had the cop to know he wasn’t a million dollar or a billion dollar grade manager. Sure Michael knew what to do with a few thousand dollars here and there. He started his computer manufacturing empire at his dorm room in university. Michael never finished his studies at university because he had created his own employment. In order to retain that employment and enhance his opportunities for the future, Michael employed people who could run a large scale operation.

LC needed a manager capable of expanding the vision to embrace progress towards a sustainable model for construction. LC did not find this person. I get the feeling that is why LC was thrashed so mercilessly by the marketplace in '07 and '08. The marketplace wants to buy into a vision, and for good reason. It aught to be the same on the public sector side of the equation too. I hope that Danninger is taken over by a bank soon. If I was to wave a magic wand today, and take charge of company, the first thing I would do is hire back all of the long term employees that Danninger lost. Those guys are the bed rock of that company and it cannot or should not afford to be waste them.

We often complain about the improper compensation that executives companies receive. Danninger was like the opposite to that. A firm case could be made for the opposite. The reason we don't see court cases from ex. Danninger directors, is probably because they were simply men and women, not hired from the executive class. In future, all Danninger directors should receive some piece of the action. I would focus on the re-training of ex. Danninger employees around the points I have described above.

Danninger is like a mini construction industry itself within the larger construction industry. That is why it is so valuable to Ireland as a company. I would make that case and go to the marketplace for re-capitalization. Danninger is a company where progress and new innovative techniques are easy to introduce, in cooperation with the CIF, Homebond, SEI and whoever else. There are efficiencies to be won inside a walled garden. I would plead for some architect to display a forward thinking view, and work directly for a great company such as Danninger. During the Celtic Tiger it was impossible to hire architects to work at Danninger. Consultancies were offering huge packages to the few we had.

I would then give our old friend Sean Fitzpatrick a call and ask him to be involved as executive manager. He is the kind of guy I want sitting opposite BOSI the next time a deal is struck that could decide the future of a company. The right sort of re-organisation at Danninger would give Sean Fitzpatrick and LC a chance to really redeem them selves. To make up for the betrayal of many employees who worked tirelessly for them down through the years. (Indeed to repay a debt to the whole country) If they could find a way to lose billions, then I hope they can find a way to re-create that lost wealth also. Sean Fitzpatrick was never interested in banking anyhow. Since the earliest days he sat around the boardroom table with Desmond and Haughey his obsession was with building. We need many of those old players to re-group around a table now in 2009. I suggest that my idea for a new knowledge based 'smarter' economy at Custom House Quay, with help from the right team of architects could go along way.

Brian O’ Hanlon
garethace
 
Posts: 1579
Joined: Wed May 14, 2003 9:01 pm
Location: Dublin, Ireland

Re: Liam Carroll: I did it my way?

Postby garethace » Mon Jul 13, 2009 10:22 am

It might sound more than a bit crazy, but in spite of what has happened, I still want to return the company.

To re-build again.

As do many others.



Brian O' Hanlon
garethace
 
Posts: 1579
Joined: Wed May 14, 2003 9:01 pm
Location: Dublin, Ireland

Re: Liam Carroll: I did it my way?

Postby garethace » Mon Jul 13, 2009 10:24 am

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My Two Page Rescue Plan for Danninger

Regarding the land at Cherrywood a plan needs to be prepared to extract some of the potential out that site. Designating the land as a strategic development zone is certainly a help. As so often is the case in Ireland, we think putting on a band aid will solve the problem. A comprehensive and sustainable model for development needs to be prepared now, so that we can see a real successful utilization of the site.

On the other hand, this plan should not take 12 months or two years to compile. (DunLaoghaire Rathdown County Council do not seem to understand this) DLR Coco do not care if Danninger falls into an abyss over the next two years. Their jobs will still remain nonetheless. We need to start moving on Cherrywood right now. To keep moving has always been the Danninger way. I definitely subscribe to that thesis. When Dell computer company pulls out of Cherrywood (and it will) we need to retain those workers in the same area. We can't afford to keep hemorrhaging talent out of the work force as we are doing at the moment. We need to roll out some projects to keep the kindle of the knowledge economy glowing in Ireland.

The other option is to do nothing with the land, which has been served by a new LUAS line. I think we should try, because the presence of that expensive LUAS infrastructure deserves an effort. In the interests of ensuring haste of development on a 400 acre site, and before Danninger can get off its knees, I have a strategy in mind. (Haven’t I always) It is something completely foreign to the culture of Danninger. Something they have never tried before to the best of my knowledge – to work with another builder or developer. But in the case of Cherrywood where the site is much so large there is no other choice. This is how I envision cooperation between Danninger and another builder will work.

I know that residents of the Glenamuck road area, nearby Cabinteely and Carrickmines will wish to protest. But I believe we can come up with a green and sustainable vision that can provide everyone with a return. What I have in mind is a phase one project. The purpose of which would be to service the land, provide basic infrastructure and some employment in advance factory or light industrial buildings. Sean O’Laoire has presented some very interesting ideas of his visions recently in the Irish Times newspaper. Sean is the kind of figure whose presence is needed in the Cherrywood building process.

I would invite another builder to start developments of this nature at the Carrickmines end of the site. Rohan is one builder I know would by ideal for this. They were big in the 1970s, but didn't bother with the Celtic Tiger madness. (It is interesting the players in the construction industry who were absent from the Celtic Tiger boom. Perhaps they were the wiser ones) I have studied what Rohan built at Dublin Airport Logistics park and I think that sort of model (adjusted to work more like the Carrickmines Retail Park) could serve a purpose in the overall sequence of development.

There are a lot of things about logistical warehousing that are needed in order to deliver a low carbon future for Dublin and for Ireland. At the time I looked at feasibility studies on the Harristown site, Danninger didn’t like the Rohan model. The largest units they built were 4,000 meters squared. The securitization of real estate rents worked best when you had much larger amounts of floor plate. (Hence the monstrosity built at North Wall Quay)

So I suggest now, we look at a mixture of small and large floor plate sizes at Cherrywood. In order to create some kind of low level employment activity. To create a real science and technology park in my opinion demands a kind of bottom up approach. With a clever and sustainable property management model to fit around that. It has to somehow blend seamlessly with the existing neighborhood amenity and eco-system. A good model in that respect is Bernard McNamara's Elm Park. It has to add sufficient value to what already exists in the location, rather than subtract. That needs to be clearly defined in the contract.

There will be a need for renewable generation of energy on site. The local communities should benefit from greener energy and improved asset valuation of their land and buildings as a result. A lot of the industrial and logistics buildings will require 3-phase power etc, and proper water infrastructure, all of that will be laid out. That is the kind of thing that Danninger needs to learn about as a company to go forward. It can only learn that in cooperation with the right partners. There is an opportunity for many bodies such as ESB Networks, Dublin Airport Authority and the RPA to be involved in the implementation.

Together we can create some model that will underpin and sustain the smarter economy in Ireland. The net present value alone of investment in infrastructure to support light industry on Cherrywood site is worth the effort. We will have proper levels, manholes and digital survey information. We need to buy this infrastructure now rather than wait for Danninger. That is why I feel the Dublin Airport Authority with Turner and Townsend need to get involved. They will complete their upgrade works program soon and need to kick start their new ‘Airport City’ project. There is a considerable amount of expertise we can share with each other.

We can do a lot better than grazing wild ponies on the fields at Cherrywood. Though I see no reason why ponies shouldn’t form part of the overall solution. Part of the sustainable vision at Adamstown ‘Strategic Development Zone’ was to install the infrastructure in advance. Adamstown was very successful in this regard and we have already learned how to deal with the process. Danninger do not know how to build roads and services and never will. But should investigate Adamstown and learn from that model. Danninger does prefer to go someplace like the Dublin Docklands or the city centre. Someplace where there are already services there to hook into. That is my reason for wanting a development partner on the site at Cherrywood to roll out the civil engineering investment in advance.

Danninger should start to build at the Loughlinstown end, exercising the kind of construction it knows best. Which is clever, well organized and high density – a very sustainable kind of building method that only they know how to do. In twenty years time or more as Danninger moves across the site, progressing towards the Carrickmines direction, the industrial buildings shall be demolished as required and re-built over. The average life span for industrial building stock is short anyhow. As ideas about manufacturing and logistics change with the times. You can see this process of removal of industrial and accomodation of mixed used development at Park West near the M50. (Accessible from Kylemore and Nangor Roads)

In return for putting down the infrastructure and a few cheap buildings to get employment and people moving into the area, the development partner should receive the Greencore shares. To be paid to them in installments as the work is completed. The development partner should be the kind that knows what to do with Greencore’s type of land banks. The development partner should also receive the rent from the buildings on the Carrickmines end of Cherrywood site. That is an administrative burden that Danninger is not interested or capable of carrying.

I would like to extend my sustainable model of development in relation to Danninger with the rule of three. Namely, the three sites the company owns: Cherrywood, Harristown and Clonburris. The same development partner who work with Danninger at Cherrywood could be involved at Harristown also. By the time Clonburris site is ready for opening Danninger should be ready to offer the full sustainable vision.

It took Microsoft until version 3.0 of their office product to get it right. At version 1.0 and 2.0 the competition's product was always much superior. But Microsoft kept on trying. By version 3.0 of MS Office they had put many parts of the jigsaw puzzle together. Indeed, no competitor was able to match what they could offer by then.

All of the elements will converge for Danninger by their third attempt at Clonburris. By that time, I hope that Danninger is the kind of company that has learned all of the right lessons. This is the kind of plan I would take to the marketplace today in search of re-capitalization. The same marketplace that rejected LC so horribly in ’07 and ’08 will not turn down an offer to be in partnership with the new and properly directed version of the company.


Brian O' Hanlon
garethace
 
Posts: 1579
Joined: Wed May 14, 2003 9:01 pm
Location: Dublin, Ireland

Re: Liam Carroll: I did it my way?

Postby garethace » Thu Jul 16, 2009 4:45 am

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Very good Managers but no Leaders


The parallels between the organization that Henry Ford built and the one of LC abound. Because in essence, every tiny decision had to be made by one man. Eventually this brought the Ford motor company to its knees, as Henry himself became older and slower. The same thing that became the engine for innovation and value-creation in the beginning, was exactly what caused the destruction in the end.

So how did LC deal with the burden of administration associated with running complex construction projects? (See my definition of Systems Engineering below) The short answer is, he didn't. A story from the construction of Barrow St development should help to illustrate my point. As always happens on a building site when decisions aren't made at the top, everything threatens to boil over and things escalate to crisis proportions. LC would arrive into these situations always very calm and cool. There was much debate about what to do. Should we do this? Should we do that? So in the end, LC thought hard for a moment and then announced: Do what we did the last time and walked off.

That was the extent of the contract between site and developer. (You must remember that both were the same company anyway) It didn't take much administration. That is how LC managed to wring unnecessary costs out of the system. LC had found a way to outsource decision making down the ladder to the guys wearing hard hats. As it turned out, they were often more able in construction management than many of our consultants are. They can be more than willing designers too. Health and safety legislation published now, doesn't enable that to happen. There is a requirement to have very clear lines of responsibility set out, as to who is the designer.

It is called design build in the USA. The Americans like to give things cool names. It means the the builder becoming a designer. The separation of design and industry is a bit like the separation of Commercial from Investment banking. The separation was imposed at one stage to enable fairer competition. Designers had a tendency to own a stake holding in a building products manufacturing company. That in turn made them biased against other products available to the marketplace. Danninger were known to some in Ireland as the kings of Design Build.

The highly speculative building model that LC introduced to Ireland went hand in hand with his 'Design Build' construction management techniques. The clients were getting the floor space at a 50% market discount, they wouldn't ask questions about how it was built. But that is not to say quality of construction was compromised in Danninger. On the contrary they became very like the Toyota of the building industry. LC embued that philosophy of constant improvement through evolution rather than revolution in all his employees. In the end, I think he was very successful and I am glad to have learn about quality while in Danninger.

What the speculative model really required to work, was that Zoe acquired land in the right place and put 'X' no. of rent-able floor plate area on it. Or alternatively, 'X' no. of sale-able residential units. No further questions were asked by either party, and anyways no answers would have been forthcoming. All you would meet is a brick wall. (No pun intended) I think this over emphasis on the need to gain land at the right price, ultimately forced Zoe to gamble too much on botched land acquisition strategies on the Irish stock market. There hunger for land became insatiable to the point of affecting their better judgements. Either that, or they were simply plain stupid when it came to understanding how the market works. Certainly I would have made LC step down as company CEO before building a 30% stake in a company stock.

The speculative building model and the Design Build construction management techniques had also joined forces with another innovative element, low cost and lean construction. Much has been written about the Toyota manufacturing process that the Japanese invented. LC likes to drive Japanese cars. Indeed, I have studied Toyota myself in order to understand better what the Danninger culture was about. When I say that Danninger's system was lean, this is what I mean: An subcontractor only earned €5,000 profit and enough to pay his salary on 50 apartments. If the subcontractor tendered for any more than that, he would lose out to a competitor.

Dell computer manufacturers also studied the Toyota system and engage in a similar 'tough love' relationship with their suppliers. That is how LC built 10,000 apartments in Dublin city, like a Japanese automobile running on petrol fumes. That is why today, there isn't a street in Dublin where LC has not bought a piece of land or built something. My own lasting memory of working for Danninger was completing my first major build project. When you had finished your first project, that was a rite of passage. You were in the family now, so to speak. On that occasion though, the value of the land on which my eight storey building was standing had risen so steeply that LC wanted to knock it again. I had no problem with that and got working on a demolition scheme with my structural engineer. Yeah, you could say I had arrived.

I learned something very important at Zoe developments. Whenever I was struggling with a detail or a specification, I asked myself the question that LC would always ask: Will this prevent or assist in the sale of the product. Often I would realize that doing something, had no impact on the sale of the end product whatsoever. The philosophy being, there was plenty of other aspects that do impact on market-ability which I should focus my time and energy on. I often come across architects who have not learned that lesson.

I know a lot of Zoe company directors and I like them. We did get along together very well. But in many ways Zoe had the worst directors possible. They were a bunch of structural engineers. Within the company itself, LC's directors didn't push back. They were not like the sub-contractors that LC had to work with on site. That ultimately proved fatal. As the renowned business teacher Warren Bennis said, we have too many managers and not enough leaders. Zoe directors could not manage so much as a whimper as LC proceeded to squander €800 million of company capital on the stock market.

Easy come, easy go. I believe LC is one of the best construction managers Ireland has ever had. I think he aught to be recognised formally by the Construction Industry Federation while he is still alive. But LC is the last man I would want to have as my company CEO.

I think the reason that Zoe managed to do so well in the business of construction is that sub-contractors answered back. Maybe it was out of ignorance, lack of sophistication or both. But it did have a positive and crucial effect on how Zoe did business. At one stage while renovating the hospital at Brunswick Street North a machine operator broke the main ESB cables servicing the site. It set the project schedule back by a week as the ESB had to come out and re-connect. A sub-contractor was there and said to LC he warned the driver not to do that. LC's only response was, you didn't shout loud enough.

In the company, there seemed to be an unshakeable confidence in this man they considered a genius. In fact, there still is. But was the motivation behind obedience a good one? I often heard an expression in Zoe, something like: "I am not the billion dollar developer, he is." LC was all powerful within the company. But it wasn't a healthy kind of power. He was left entirely on his own because no one else would stand up to the mark and take responsibility on their shoulders. All were willing and able to try out some innovative practice in construction management. As long as LC took the stick.

I believe that this left LC in a very isolated position. That is probably why he looked for a way out. In the end, the only way out was through market capitalism and the stock market. He lost everything in the process.


Blue Magic


I have read numerous articles by the Irish newspapers in the past about why Zoe developments are the bad guys. But Zoe only engineered their product to dovetail with the requirements of a financial system down the line. That is what gave them the real 'buzz', being 'hot wired' into the global financial system. All of the banks were competing to provide what they felt was the best financial 'products', but in the end there was only only product for Zoe developments - securitisation. A strange word that, for something that turned to be so insecure in the end.

You know, I have personally met employee no. 5 and 6. LC was too ashamed to give them the final handshake. They were men who had worked all their lives. One of them asked me how to apply for social welfare. He had never done this before in his life. It was a strange land in which himself and his family found themselves all of a sudden. LC made a lot of big promises to a lot of people. In the end, he didn't deliver on any of them.

http://www.tribune.ie/business/article/2009/jun/28/where-did-it-all-go-wrong-for-carroll/

Securitization turned out to be the 'blue magic' of the building industry. The Frank Lucas (and it wasn't Sean Fitzpatrick either) of the banking game introduced into Ireland a product that was better than the competition at a price that was lower than the competition. That is all there was too it. The boys were fairly and squarely hooked, there was no going back.

But no one writes an article which takes into account the fact that Liam Carroll is an intelligent player and designed a product to work seamlessly with the system he was given. The system of market capitalism operated by banks in relation to land and property in this country appears to be beyond reproach. For most of the Celtic Tiger there wasn't anything like a National asset management agency. Builders had to work with all there was. In every case, that meant a banking institution. It is like the relationship in computer manufacture between OEM's such as Dell and the company with all of the control, Microsoft. It is called systems engineering I was told while working in the development world. The first paragraph from wikipedia says:

Issues such as logistics, the coordination of different teams, and automatic control of machinery become more difficult when dealing with large, complex projects. Systems engineering deals with work-processes and tools to handle such projects, and it overlaps with both technical and human-centered disciplines such as control engineering and project management.


http://en.wikipedia.org/wiki/Systems_engineering

It is all too easy to write a newspaper article about a building development company such as Zoe developments. We can easily blame the developer in question for his or her work being wrong, or unsightly or whatever else. Should it be the duty of company executives in development companies to re-organize the system in banking? If so, then it begs the question what exactly are our public representatives in Dail Eireann supposed to be doing?

I have great confidence in builders who put sheep's wool into walls as insulation. They are good intelligent guys with families and a livelihood to preserve. They are interested in building up a business that will last for decades rather than years. But we have to ask ourselves the question, at the scale of Zoe developments (10,000 dwelling units built in Dublin City area alone) who is actually paying for this stuff?

I remember when the insurance companies and pension funds purchased most of the property created at McNamara's Elm Park development. How else would a country such as Ireland afford to build such a lunatic project? I remember how astonished hardened designers and engineers were at the site photographs that I showed them of Elm Park. Jim Pike congratulated the architect at the site visit. But what Jame Pike did not do is comment on the first stage of any sustainable development model: how is this thing being financed?

Mind you, it was a very different and somewhat chastened James Pike I heard speak at the Architectural Forum's 'Open House' debate at Liberty Hall theatre in late 2008. After he had let go of a hundred staff members. This was the fifth recession he had experienced, he told the audience on that night, feeling somewhat ashamed about the whole mess. On that occasion he sounded pessimistic for Ireland's chances and did mention the fact that land values in Ireland are at the root of the problem. Particularly the problems of architects. I thought it was a very honest contribution from a man who has a life time's worth of experience.


Architects or Parasites?


In terms of creating a model for sustainable development in the future, I would add something in relation to the architectural profession. They normally get off the hook, when it comes to allocating responsibility for how builders behave. It is nice to try and pretend that architects are squeaky clean professionals and removed from the dirty business of development. The reality would seem to indicate otherwise. Architects tend to 'hang around' the carriers of the disease. Not to remain immune, but so that they can become infected. They are the parasites who effectively spread the virus from one host to another.

Even though the individual host will collapse and die as it did in Danninger's case. The parasite will live on. I listened to architectural consultants during the Celtic Tiger commonly boast about making their clients millionaires. It sounded like the main feature in their 'sales pitch' to me. It is this competition amongst architects to get more clients than the other, is what compromises the entire system. Despite all that has happened, all of the lives that lay in ruins because of what I term 'blue magic', nothing has changed. Danninger is still struggling on, possibly still high on the overdose and desperately trying to submit a scheme for East Wall Road that will 'save' the company. Attached to that dying corpse as always is a few blood sucking parasites.

We need to drop the pretense for good. We need to accept the fact that architects are in it for the money. Only then we can begin to erase any superfluous boundaries between professionals and builders. Only then can we begin to create a true model for sustainable development. This is why LC was so suspicious of architects. They would try to steer him away from innovation. LC wanted to start afresh and design a whole new approach to construction from the ground up. In the early stages, LC's company needed to stay away from parasites.

A classic example of the spreading of the virus by a parasite is the idea of putting timber on the outside of buildings. In spite of the fact this doesn't work in the Irish climate. It was a fad which infected the entire profession, and can be traced back to a single junket holiday organized by RIAI to Barcelona. Spain has a climate which is more forgiving to external timber clad buildings I think you will agree.

Architects can be resistant to systemic change in construction and management in areas that matter most. Except for rare exceptions, they are not interested in working with the fundamentals of what are we doing, how do we do it and why? Liam Carroll was interested in establishing change at a fundamental level. Not in sticking timber on the outside of buildings and pretending to make a contribution that is radical. The architect's position within the building contract seems to confine them to making those superficial alterations. Change needs to happen now more than ever. But it needs to happen first on a higher part of the food chain than where developers such as Carroll take up position. Then we will see a new generation of developers innovate in a way that is promising for Ireland the long term.


The Final Chapter


LC is quite possibly the best construction manager I will ever work with. But LC should have read the dummies guide to being a CEO. The only thing LC had left to give to his faithful employees in 2009 was honesty. Like a betrayed partner in a broken marriage, the employees could have accepted honesty and been satisfied with it. But in the end, I don't think the employees were even shown that little bit of dignity. It is the same with many of the sub-contractors I speak to now. The odd thing is, they don't measure the bad debts in terms of financial cost alone. They also measure it in terms of the honesty displayed to them by the main contractor. From that point of view, Danninger never appears very high on the list.

http://designcomment.blogspot.com/2009/07/covering-up-mistakes.html

The letter I received for their financial director is an insult to someone's intelligence. The standard letter speaks about the downturn, but fails to mention a small matter of the €800 million they squandered on the markets buying what I call 'blue magic' in '07 and '08. The letter demonstrates no corporate accountability to employees at all. That is ultimately why the markets rejected LC.

LC did everything the banks expected of him his whole life. LC re-organized the construction industry at such a fundamental level that in the end it became 'hot-plugged' into the Irish banking industry. It could think of analogies such as the child in the mother's womb attached by an umbilical chord. But the purpose of such a close relationship is to grow something at the beginning. Failure to severe that umbilical chord at some stage only leads to a relationship that grows most incestuous and weird as time progresses. The purpose of a banking system should be to enable life to happen, not to strangle it after wards.

The same providers of what I called 'Blue Magic' knew that LC was wading in too deep with public quoted companies. The banks follow the markets like you or I would follow the Premier League in soccer. It was like sending Shamrock Rovers up against Manchester United. There might be a millionth of a chance they can pull it off, but the odds are significantly stacked against them.

It seems that Carroll could not have chosen a worse time to move into the stock markets, as he sought to diversify away from property.


The journalist Neil Callanan at the Sunday Tribune has got his analysis back ways. (It is time for the reporters and everyone else to learn some basic economic theory I suggest) That is the trouble in Ireland. We became so far removed from the original goal of exporting a product to a global marketplace, that we find it difficult now to work out the basic logic of how things work. It wasn't that the market went bad when Liam Carroll moved into it. It was precisely because Liam Carroll and others like him, went into the market selling themselves as the product, that the market turned against them.

It was almost a sure bet that anything they touched would sink to the bottom. They thought they could fool the markets the same way as they tried to fool everyone else. I think we need to get real in this country as George Lee would say. We need to start viewing ourselves and every company in Ireland as a product. Then ask ourselves the question, if I was a potential buyer in the global context would I be buying the product? The answer the market gave in the case of LC was a categorical no! We are not buying your brand.


Brian O' Hanlon


P.S. The above piece I would have to dedicate to Yvonne Farrell, who designed the world's best building in Italy this year. She made the comment about Ireland, now what was that? Oh Yes! Ireland had only construction and no architecture.

Even in that statement again, there is a lack of confidence to take on the real challenge and discuss the issue of who is paying for all of the construction in the first place. It is too easy to simply pin the blame on builders.
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Re: Liam Carroll: I did it my way?

Postby jdivision » Thu Jul 16, 2009 4:07 pm

Brian I'm curious. Do you genuinely think the global collapse of equity markets was because they didn't trust Liam Carroll? As for the DAA, senior officials didn't even know if they had a stake in the Horizon lands until I asked them and if Danninger was such a good company why did it let planning lapse on two sites as well as agreeing the deal with Bohs without checking with the DAA. There's also the Sir John Rogerson's quay site where Liam accelerated development to try and get sufficient works completed to justify an extension of permission.
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Re: Liam Carroll: I did it my way?

Postby SunnyDub » Thu Jul 16, 2009 5:15 pm

the market is some super intelligent place...you're not the brightest either really
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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Jul 16, 2009 9:21 pm

jdivision wrote:Brian I'm curious. Do you genuinely think the global collapse of equity markets was because they didn't trust Liam Carroll?

As for the DAA, senior officials didn't even know if they had a stake in the Horizon lands until I asked them and if Danninger was such a good company why did it let planning lapse on two sites as well as agreeing the deal with Bohs without checking with the DAA.

There's also the Sir John Rogerson's quay site where Liam accelerated development to try and get sufficient works completed to justify an extension of permission.
Neil



All very good questions Neil, and I wish I had time to look at drafting responses to them properly. I have decided to wind down on my analysis of LC and Danninger. I think I left people with some interesting points above, and I think that was worth doing. For your benefit though, there are a couple of issues I have dealt with below.

Best of luck, and good reading.

Brian O' Hanlon


George's half of the story


If you are going to tell me that LC's relationship with the 'Blue Magic' kind of financial products offered over the counter by banking institutions in Dublin wasn't toxic, I don't know what is. In my view it was pure poison to them. Nuclear waste, subprime and what ever else you can think of rolled into one. The exact same rubbish that sold to the kids nowadays as canabis resin. (Smoke weed kids, if you must, but stay away from soap stone as it known in Britain in the Rege tunes) There are health and safety studies carried out now, to understand the effects of kids enhaling burning plastic, shoe polish and the Lord knows what else. That is effectively what banks handed to these builders and they couldn't get enough of it while it lasted.

While I think that George Lee did the whole country a great service by making programs such as this:

http://www.rte.ie/news/2009/0318/howweblewtheboom.html

George Lee means very well. I don't doubt that and I did issue him with a copy of the above documents this week. However, in George's analysis of the systemic problems were excellent in his TV program, he only could see a half of the picture at best. It is the half of the story to do with the stimulus pumped into the construction boom by McCreevy in order to make it boom-er. That is the push side of things. But what people don't realize is that the 'pull' side of the same machine is in operation as we speak. The public press is fixated on the 'push' side, because it enables them an opportunity to take another cut at the government. That is what sells papers and what people want to believe.


My Contribution to NAMA


If we really want to solve the crisis it is essential first that we obtain a whole systems view of the process. Nobody in this country has that trick down better than LC. Why would I see any more of the picture than George Lee? Well, to be frankly honest I wasn't clever like most of my colleagues in Bolton Street college of technology. I wasn't degree standard at all. Indeed, if you ask anyone they will tell you I broke all records in the architecture course for being at the bottom of the class. So this person is probably right:

the market is some super intelligent place...you're not the brightest either really.


But because I had no other choice, and no one else would take me on board, I went to work with Danninger. There my eyes were opened for real. That is where one could see the whole process laid out from end to end. You couldn't get that anywhere else. Whether you believe it was toxic or not is one thing. But there is way, from end to end and all system engineered. They had it perfected. That is why we need to hold onto Danninger I believe. Danninger's problems are like Ireland's problems in microcosm. Danninger is a much more simple kind of problem than the larger Irish problem. If we learn what should be done with Danninger. Then be definition we will learn a great deal about the entire system. What I mean is, we will be working for the first time ever with a whole systems view, rather than a partial one as in the past.

That is why I am interested in helping. That is why I sent my CV to Nama today. I don't think that many people understand the dynamics and process flows of the construction industry well enough, in order to affect serious change. That is my problem. They are all clean cut professional and well respected professionals. I was a very poor and simple itinerant drafts person or project manager who stumbled from pillar to post. That enabled me in turn to gain such a useful perspective on things.


Liam Carroll, The Genius.


You have to understand how much in awe the directors of the company were of their boss. Right up until the day he fired them and they were left without a pot to piss in. Some of them told me how Liam, if he managed to pull off the land deal with Greencore would have confirmed 'genius status' for every more. He would be written into the anals as it were. It was interesting to me, when it came to building the BOSI new headquarters at Cherrywood Science and Technology Park, all of the low cost, design build and lean construction/design techniques that LC had innovated down through the years went out the window. I was told by a director, these BOSI guys aren't like our normal tenants. They are sharp f***ers. They will have crossed every T and dotted every I.

How right he was. But what he didn't know, was BOSI had only taken them for a ride. BOSI had them convinced they were really as good as they thought they were. That left them open and very vulnerable to a very clever and kind of manipulative attack. Danninger felt they were still in the driving seat, right down until the last concrete pile had to be stopped due to shortage of funds.

The (Illuminati) Formula

http://www.youtube.com/watch?v=CM4jrODRjJ4

If one had the sense to commission a study of the impacts of LC wading into the markets as deeply as he did, what would it cost? I don't know. We always complain about the government stalling projects in order to commission a report. But then again, a report that cost €100,000 would be a lot cheaper than €800 million. But you see, here again the Danninger culture of 'low cost' worked against them. They often boasted about how they could get reports of all kinds done at a fraction of what other people paid. In many ways, the boasting sounded like ladies talking about the fact they never pay top price for designer wear. But still manage to look a million dollars, or a billion.


Danninger hated consultants


LC was clever in some ways. He hired one top level fellow into the company in early 2008 I remember. I got to know this person over a few months. We had worked with a lot of the same people in the past. His assessment of Danninger was quite revealing. But I recall he wanted to engage Buro Happold consultants to do some engineering analysis of the North Wall Quay project. He reckoned that €100,000 or so spent on the analysis would result in saving of a few million. This is where the arrogance of some of the directors really comes into it. They would insist that they were so much more clever and sophisticated than lazy external consultants, they didn't need to spend €100,000.

My friend was quite shocked at the display of short sightedness from such a high profile board of directors. He was also quite dismayed at the way in which they had put his good idea down. Kind of like, a kid getting smacked on the wrist, that is how you were brought down to size. He wasn't long with the company, but it was a very early introduction to the culture. You can sometimes hire a top consultant not to squander money, but in order to save it. My friend's conclusion was that Danninger reminded him alot of the Dunnes family. Owners of the Dunnes store chain, they would fight tooth and nail over tupence. But when it came to saving a few million Euro they would miss the boat every time. My friend was confirming the same suspicions I had of Danninger. But it was nice to hear the analysis coming from another very intelligent source.

I had come 'Direct from Dell' computer factory myself in Limerick city to work at Danninger. Michael Dell wrote in his autobiographical novel, Direct from Dell, wrote of the fact, that when he was making thousands of dollars he knew how to run that business. The growth of his empire was rapid however, and soon it was earning millions, not thousands. Michael Dell didn't know how to run that kind of business. But he took the brave step and hired a couple of million dollar class managers to run his company. Soon Michael Dell's company was no longer a million dollar company but was a billion dollar world wide giant. So Michael Dell, had to go searching again for the managers with the right experience to run his billion dollar company.

In contrast, if you look at the Danninger board of directors it is the same couple of guys since the beginning. Yet the company had grown by several orders of magnitude. Growth was indeed its biggest success and its biggest enemy.


Thomond Park Stadium


Look at what Pat Whelan has managed to do with only €40 million Euro at Thomond Park in Limerick. These are the kinds of people that Danninger needed working for them. I know it sounds like I am blowing my own trumpet here, but I believe I was a worthy late addition to the company.

http://www.limerick.ie/Press/Pressreleasesarchive/2009/PatWhelanisthe2008LimerickPersonoftheYear/

Tom Cosgrove working for Punch Consultant Engineers in Limerick noted how Pat Whelan could see the advantage of spending €100,000 on wind tunnel testing of a scale model of the structure. It did end up saving the project many times the test costs later in steel tonnage. Because it enabled the engineers to work outside the normal regulation design for steel in places. That enabled the engineers to make the structure lighter with confidence and still have it certifiable with the codes. Basically the codes are there to help people get by in the absense of expensive testing. The normal road bridge project for instance would not justify the expense.

But my friend at Danninger was proposing €100,000 worth of tests for a project on North Wall Quay worth in the region of a quarter billion Euro! About six times the budget of Thomond Park stadium. But still the arrogance of Danninger directors was astonishing. They were still excellent people when it came to cost control on normal sized infill apartment schemes etc. They paid an awful lot of lip service to the phrase 'low cost', but when it came to finding economies in projects of a certain scale, they were simply out of their depth. In the end, they compared themselves a bit too literally with Michael O' Leary and Ryan Air. They ended up swallowing their own bull shit.


Harristown Football Stadium


By the way, it might be of interest to note, the reason I attended the presentation of the Thomond Park paper at Engineers Ireland was because I was looking ahead to the football stadium project planned for Harristown. But if you look at the Dalymount stadium deal, you can see my point about land taxation and Bertie Ahern. It is like the hoist movie and distributing the loot from the rear of the van. There wasn't any real urban discussion going on. Now if we had a land taxation attached to urban transport infrastructural projects, as suggested by David Wetzel who had involvement in the Jubilee line in London, Canary Wharf etc, it would have burned the hand off of LC the minute he touched the idea.

If we had land taxation to pay for transportation projects in this country (instead of transportation companies such as RPA trying to pick up miserable pennies off of ticket fares) it would have one further important advantage. It would enable us to have all the breathing space for architects, planners, developers and banks to engage in a more productive and a sustainable design process. It would introduce a necessary 'brake' into the system. That is precicely what Zoe developments didn't want to allow happen. I think they were aided in certain ways, by a Fianna Fail failure to introduce innovative new smart taxes.

The whole Danninger philosophy was to ensure a certain amount of 'panic' at all stages. If people were panic-ing, then it meant that everything was going as planned. If people were panic-ing they were probably busy and they were probably doing their job. This is what the whole lean cost, low cost strategy produces. It does cut out with a lot of bull shit. But it is also a very negative way. In other words, you can carry it too far. You can use the strategy to introduce new innovative ideas to the construction sector. But you can become quite resistant to innovation and ideas yourself. If that makes any sense.


Harvard Business Review


Danninger certainly weren't stupid. If our Irish government could demand the same degree of value from all our consultants, Ireland would be a lot better off today. But I guess you can carry that a stage too far. Remember what I said above about Design Build? Danninger had a contempt for consultants which bordered on the absurd. But it is well founded on an experience that in construction, the consultant only wants to make his life as easy as possible. It is to do with team dynamics and that is an entire area of study in itself. Danninger understood it quite well overall.

Harvard Business Review has published a lot of papers on the subject of joint ventures. Some of the papers I have read focus on the fact, that one partner in the venture will sit there and do nothing. While the other carries all of the load and provides the other with finance. I found one of Rossabeth Moss Kanter's paper using a Google search as an example:

http://mis.postech.ac.kr/board/upload_data/global/CollabAdvantage.pdf


Why not leave the Rebar out?


The anti-consultant culture at Danninger has its roots in those very early days when LC worked as a young engineer at Jacobs. But while LC did have suspicions about certain aspects of the American construction culture, there were other parts of it which he loved. Namely the Design Build idea, the Lean Construction idea and the entire notion of speculative development. Put together in the right fashion with the right group of directors, it became a lethal concoction.

An old structural engineer I knew had been in the building game for many a long day. His first job as a young graduate was to assemble a pre-fabricated kit of an aircraft hanger in Northern Ireland during the second world war. The building came without a set of instructions. But being full of piss and vinegar at that age, the young engineer set above putting it together. He worked the whole summer, but without success.

Fast forward to the 1980s in Dublin. My old engineer friend told me about the American consultancy firms who arrived in Ireland during the 1980s. They came over in a kind of disguise. The carpet baggers is what he called them. It is a little chapter of Irish construction history that has gone un-recorded. They had arrived as part of a government aided scheme, with the IDA to encourage innovative construction techniques here in Ireland. To try and get something moving. Rather as we are trying to do in 2009. There brief was to come over and build advance factories in Ireland. But rather than doing something silly like that, they had other plans. Ireland was a good base from which to conquer much of this part of the world.

You must recall that droves of military teams became civilian contractors and project managers in the US following WWII. Indeed, the entire discipline of project management really got going as a result of WWII. My old friend worked for the carpet baggers because there was no other work in Dublin. Many of them were ex. US military with contacts in the middle east.

Colonel Gaddafi was one of the early clients. He wanted to build bomb shelters at the time. The only trouble was he couldn't afford the cost. So rather than lose the contract in the middle east, the ex. US military lead designer in Dublin had a plan. Why not leave out the steel out of the bomb shelter altogether? Who would ever know? The main function of the shelter was to provide the appearance of security anyway. We not half the cost and go ahead and build it. So that is what they done. It is only one example of the kinds of value engineering exercises the American consultants were good at. I suppose it is what you would called 'Lateral Thinking'. That is the environment in which LC cut his teeth.

Remember that Colonel Gaddafi and Charles Haughey (Innovator behind the Dublin Docklands with Dermot Desmond) had a great mutual admiration from each other. In a famous RTE radio interview, Gaddafi predicted that Haughey would lead Ireland to greatness. LC is still working with Dermot Desmond today. You will notice that almost all of the Irish stock market shares were off loaded by Desmond in '07 and '08, Then promptly bought up by Liam Carroll. That is the common link. I suspect the relationship goes right back to the days of Colonel Gaddafi. I think if we really want to find answers we aught to start asking people questions in Libia.


To Hell or to Connaught


To be honest with you, I could see Danninger for exactly what it was and the kind of political system that spawned a company like that. But after all of that is said and done, I would like another crack at the wip. The reason the directors in a company like Danninger are so bent out of shape, is because life and the system we gave them was like that also. Yeah, I believe firmly in Ireland's case that LC wading in like John Wayne into a bar room brawl to establish 27% or 30% positions all over the place was what really brought down the market.

There is a reason why we do need our public representatives to be honest. I will explain, it is related to how markets operate. When the media carried all of those stories about the Irish prime minister not being able to account for £15,000 in his bank account it wasn't a very big story. Indeed, it wasn't a big amount either. But what it did do, was alert people around the world to the Irish situation. People became quite curious and started to have a decent look at some of the stocks in that region. It is like hearing a strange noise coming from your engine. Even if you know nothing about engines, you tend to pull over and pull up the hood anyway. I don't know, in case a gremlin jumped out and bit you in the face or something. I don't know. Human nature is what is, human nature.

When the world began to look at Bertie Ahern, they also began to look at LC. All they could see from a long distance was a man who was selling very little. Very little other than the proceeds of cash from favours that had been granted out in years previously as tax breaks, by the same Bertie Ahern. People began to understand there was something wrong with Ireland. Even though we got indepence from Britain in 1922, the story hasn't changed yet in Ireland. It is still about land. Who has it, who doesn't. I have no doubt that if the Celtic Tiger continued to roll out, we would see bodies piling up in Connaught as we did in the time of Cromwell. That is the kind of dis-functionality the world saw from a distance, when it looked at the Irish stocks.


Why Save Danninger At All?


Danninger is a nice company to work in. Everyone knows one another and that can be very productive. I am not saying there were not problems with the culture. That is the reason I would like to regain an opportunity to work there. Some employees had gotten quite lazy and it wasn't a good deal for them. Many of the directors were naive when it came to things that financial controllers should be wise about. That is true of every other building company I know in Ireland though. Danninger weren't looking ahead at the whole low carbon economy concept, as planners in the local authorities were doing. This was silly. But there were some great aspects about the company. One's you might not find again in any other company.

That is why, on balance I would like to help to save it. For real, not like some parasite that throws in a planning scheme for extra floor space on East Wall Road. There are elements of the Danninger philosophy and business model that Ireland could use right now. I would be willing to throw in my lot with NAMA as someone experienced in the construction and design side of what goes on. That is where I believe I could affect a difference.

Watch out LC! I'm coming to get you!


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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Jul 17, 2009 12:02 pm

But before you ask Neil, I think I had left out one or two items in the above.


Dunnes Stores of the Building Game


The point is, if the new 'American trained' breed of 1980s Irish construction managers were willing to pull that kind of stunt with Colonel Gadaffi, they were hardly going to allow a few dandy boys up in Dail Eireann roll over them. Very much the opposite. There were still elements of the same culture remaining in the culture I was exposed to amongst the directors of Danninger. I often heard the following kind of statement from them. The government (meaning Bertie Ahern) are busy going around taking credit for the Celtic Tiger. But the truth is they don't have a clue why it happened.

Danninger would claim credit for knowing who started the boom instead. There are some revealing things in that attitude, and in some sense Danninger were right. But having placed themselves in a position of such responsibility for having 'engineered' an economic up-surge, they also make themselves duty bound to the livelihoods of the people they employ. The guys like the sub-contractor working on the 50 apartments. Here is where they backed down totally from responsibility. Any sense of honesty and fair dealing was absent. Having blown €800 Euro of capital and many peoples' livelihood on an arrogant and ill conceived plan to corner the stock market.

This is the truth that the people of Ireland want to hear now from their public representatives. Newspaper reporters more than anyone have to stop painting a picture of LC as some kind of hero. As some kind of poor little billionaire victim who lost his piggy bank. It is closer to the truth to say he was a powerful individual, the Ben Dunne of the construction industry who screwed people to the wall, and then some. He is still screwing people today by breaking contracts and promises he made. LC is an old man. The last time I shook his hand I was amazed by how weak his grip was. But in another sense, his control over the Irish nation is still strong. We are unable to stand up to him. I know that LC himself would have more respect for us, if we did.

When the directors of a company such as Danninger are unable or unwilling to do anything that should ring alarm bells at the Construction Industry Federation. It is not only the National Asset Management Agency's problem. Tom Parlon himself aught to get involved. Unless we have that cooperation on a joint front between both agencies then it is pointless. The reason that directors at Danninger will do as little as possible, is because they know there are things higher up the food chain which aren't quite right. They will not and cannot allow themselves to become the example for a system that is corrupt. As one director told me, don't think because you are so far down the pecking order that when they need an example they will not come after you.

You may believe that Brian O' Hanlon is unfit material to be employed by NAMA. Indeed you might be right. But I know the industry. I have carried the bucket of nails. Even if I made the cups of tea and did the photocopying at NAMA, that much alone would send out a strong message across Ireland. That NAMA is not exclusively made up of people who never saw outside of their executive suite. It would send out a message to the sub-contractor working on the 50 apartments for a developer, that there is someone looking out for his rights. That in turn would enable us to keep working and possibly avoid further strikes, similar to the one we saw recently.

More than that, the directors who worked for LC and other developers would have a chance finally to talk back to their employer. But they would be allowed to do it through a public agency. Even if LC and others had to pay them more compensation to shut them up, even that would be an improvement. Because I am aware from history, that the majority of the American car industry was started up by employees ejected from the Ford Motor company.

The simple reason why LC treated his directors so poorly was that he was afraid they would start the next General Motors. LC didn't want anyone around him who knew remotely what to do with a billion quid. That was the basic underlying I was fired from Danninger, along with a couple of other individuals in the company's history. It was Henry Ford who invented the production line. It was Alfred Sloan at General Motors who developed the management and administration system through which the production line realized its full potential. That is how you deal with old men like LC. By taking the system they invented and progressing it to the next level.


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Re: Liam Carroll: I did it my way?

Postby shadow » Fri Jul 17, 2009 1:03 pm

Where is this going?
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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Jul 17, 2009 6:26 pm

shadow wrote:Where is this going?


Okay, if I was to summarise it to a short couple of points, it would go something like this. Liam Carroll and other builders want to believe that the market went bad. That is a great way to look at things from their point of view. Because it relieves them of any need to feel accountable for their own actions. Even though they were very active participants within the system. They had all kinds of choices they could have made. They made the wrong choices.

Companies like Danninger are so used to getting it easy, from government, from every angle . . . that when something finally went wrong, they lashed out at everyone around them. Namely the employees and sub-contractors who had worked their back sides off. I remember going to collect my few personal items at my desk in Parnell Street. I had the door slammed in my face by the company's second in command. But I was with the company two years, I could deal with that. I knew employees no. 5 and 6 who had worked most of 25 years for Liam Carroll and he didn't even gratify them with a goodbye handshake. We are being spun a story in the press about Liam Carroll. Especially in articles like this one here by Neil Callanan:

http://www.tribune.ie/business/article/2009/jun/28/where-did-it-all-go-wrong-for-carroll/

The Sunday Tribune article shows one of the worst conclusions we could come to, when thinking about the Irish property developer. In terms of how we think about their position in Irish society in the past. But also how the developer behaves within society from now on. That is why I bring NAMA into the writing here. NAMA will basically define what the role for property developers will be in this country going forward, and nothing short of that. I would like to work for NAMA very much. But it would enable me the chance to ask Sean Dunne some very burning questions I have, about his attitude towards embodied energy in concrete used to construct the office block at North Wall Quay. What is his attitude towards combating climate change, as a builder, as an executive director of a company?

Neil Callanan's article claims that we should think about Liam Carroll and his mishaps as someone who walked up to a vending machine to buy a tin of coke. The machine accepted his one Euro coin and gave him back nothing in return. That turns Liam Carroll into a victim of circumstance, which is far from being the real truth. If one was to believe Neil Callanan's analysis, we should now proceed to beat the shit out of the machine. Because it is the machine's fault. That is what Zoe developments wants the Irish public to believe. Remember what I said about the strength of Liam Carroll's grip on the Irish nation? There is nothing 'sustainable' about the vending machine analogy on any level. You can put all of the sheep's wool into construction of houses you want. We might as well give in trying to achieve a sustainable economy in Ireland if we are going to continue to believe the Sunday Tribune tripe.

On the other hand, I would claim to know Liam Carroll and how talented and resourceful an individual he is. I would furthermore claim that through his reckless behaviour on the stock markets he left himself down terribly and many others who supplied him with services and skills. In theory the market exists to give the money to people who know what to do with it. That is why electricity power generation was de-regulated in this country. That is the theory anyway. The market place does not exist to give you back your one Euro coin. But to give you back €1.50 or €2.00, if it feels you are doing something worthwhile. If you were an internet company in 1999, it might have given you back €10.00. On the other hand, if the market doesn't feel you are capable of using the capital in an intelligent fashion, it will keep the Euro and give it to someone else.

In other words, someone else now has Liam Carroll's one Euro coin. The point I am making is that Liam Carroll squandered the Euro coin recklessly. Because all of the people who worked for Liam Carroll down through the years were an extremely sophisticated and talented bunch of people. Let's say for arguments sake, that Liam Carroll's design and construction crew weren't pushing hard enough on the boundaries of what is possible today with energy saving construction. Fine. Let's say for arguments sake, we cut the €800 million he lost in half. (Being very generous to the guys with the sheeps wool) Danninger as a company still deserves to have €400 million left in capital to spend on doing projects. That is why Liam Carroll is such a complete arse hole in my opinion.

If you stop looking at the marketplace as a vending machine that gobbles up peoples' money, then everything changes. Then Liam Carroll becomes accountable for his actions. Then he is no longer a victim, but someone who was careless and dis-regardful of peoples' livelihoods in the construction industry. We have to restore some sense of morality, dignity and pride to the construction industry that I know and respected. Otherwise we are looking at stopages and strikes by workers in Ireland for the next 50 years. During Liam Carroll's tenure as a leading builder within the industry, a lot of innovative construction management techniques were introduced. The were techniques and ideas that badly needed to be introduced. He deserves credit on all that account. Indeed, the Irish market place did reward Liam Carroll well.

But that wasn't enough for Liam Carroll. He felt he deserved more. In the pursuit of more Liam was willing to compromise the values. The basic values of morality, dignity and pride in the construction industry that I know and respect. That goes away beyond money. It goes away beyond redundancy from Danninger. Don't think those electricians last week were standing outside building sites only for money. Liam Carroll thread on the very legacy of my own people who came before me. They fixed roofs, they built walls and even fought the British in the war. In Liam Carroll's company, it was values that were allowed to erode. Not high brow values like one would expect from architects or planners, but basic values that every chippie and plumbers knows and understands.

That is Liam Carroll more or less taken care of, for those of you interested. Then we meet the guys like Johnny Owens on the small scale. Johnny Owens became a star of George Lee's program, How we Blew the Boom. Johnny was also featured in the primetime piece, as a developer of houses in Mullingar that will not sell. His worry is that guys in suits will come down from Dublin and replace the relationship he once had with his local bank manager. Johnny's fears are justified I think. There is a fear amongst all builders that they are going to be shafted by a bunch of accountants based up in Dublin. That is my reason for wanting to become involved with NAMA.

http://www.rte.ie/news/2009/0409/primetime.html

Like it or lump it, builders are a part of the community we live in. Like teachers, priests and drug dealers. Builders can be a very talented and resourceful bunch of guys. I am not saying they are perfect, and they should be held more accountable for their actions, there is no doubt in my mind. My blog entry tries to emphasize that. They haven't been honest or fair.

http://designcomment.blogspot.com/2009/07/covering-up-mistakes.html

But I still know there can be some way found to work with them. I guess one could compare it to the treaty of Versailles after WWII, which set out terms that Germany couldn't possibly meet in order to shame them. Where did that get us? My personal worry is that the treaty that is struck by NAMA will only cater for the Liam Carroll's of this world. When in reality, it should try to help the Johnny Owens.

Forget about Liam Carroll now. He had his chance and permanently blew it. He could have rode through the storm and out the other end if he wanted. For the love of Christ, €800 million was about all that Dublin Airport Authority had to build what they needed. But in my view, Liam Carroll thinks that the government will still bail him out. That he is simply too big to be allowed to collapse. I suppose, at Liam Carroll's level, they are so used to gettiing securitization deals, tax incentives, blue magic and whatever else you can think of. They are so overdosed on all of that kind of filth from the credit markets. They cannot even see what reality is anymore.


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Re: Liam Carroll: I did it my way?

Postby jdivision » Fri Jul 17, 2009 6:58 pm

Brian, Carroll doesn't talk to the press. What was Zoe just went into examinership.

PS your argument's all over the place and is impossible to follow, changing by the post.
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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Jul 17, 2009 7:45 pm

jdivision wrote:Brian, Carroll doesn't talk to the press.


Your point being that it makes life difficult for the reporter. I know, that is a fair point.

That is why Liam should never have gone near the stock market.

Unless you are a front man, a PR expert like Steve Jobs or someone, the stock market is not the place to venture.

You see, Carroll doesn't even talk to his own directors and employees anymore.

So you can imagine how they must feel.

The banks knew that Liam wasn't a front man, and still coaxed him to get into the markets.

It is like encouraging a child to swim in a bath of sulphuric acid.

Watch those millions all dissolve.

What was Zoe just went into examinership.


Can you re-phrase perhaps?

You said that Zoe went into examinership. When?

Have you a link?

PS your argument's all over the place and is impossible to follow, changing by the post.


I know, it is a complex subject.

Like I said somewhere in the above, Danninger it is a much simpler problem to understand than the whole of Ireland.

If we can sort out what went wrong at Danninger, it gives Ireland a much greater chance to sort out it's problems at the macro level.

That is my argument for wanting to hold onto Danninger as a company.

The trick is how do we now save the construction management formula that Zoe had developed to such an extent.

But kill off the parts of the company which were unsavory and un-sustainable to say the least.

This is going to have to happen with every single poorly performing company in Ireland.

We are going to have to get used to getting skilled at the art of compromise.

That might sounds a bit stupid.

That is why the arguments above do wander a good deal.

All the above was written for a select audience of trades people who equally as pissed off about not being paid their dues as I am.

I was taken care of financially by Liam, to give him credit there.

(No pun intended)

But there is a stink of dishonesty and ineptitude in corporate relations about the redundancy letter which got so far up my arse, I cannot even begin to describe to you.

http://designcomment.blogspot.com/2009/07/covering-up-mistakes.html


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Re: Liam Carroll: I did it my way?

Postby parka » Fri Jul 17, 2009 8:36 pm

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Re: Liam Carroll: I did it my way?

Postby jdivision » Fri Jul 17, 2009 9:21 pm

garethace wrote:Your point being that it makes life difficult for the reporter. I know, that is a fair point.


No my point is that you seem to assume he did. He didn't. The analysis is based on feedback from others who know him and industry experts.

As for Zoe, it was broken up into different parts, which are now heading for examinership.
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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Jul 17, 2009 11:01 pm

jdivision wrote:No my point is that you seem to assume he did. He didn't. The analysis is based on feedback from others who know him and industry experts.


They are experts, I'm sure of it. But still the total picture you get from the expert can be wrong. Liam is quiet. But Liam was great to work with on construction projects. That is what he knew, rather than land. It was other folk who convinced Liam during the Celtic Tiger boom era, that he knew about other things. Isn't that true of almost all of us? Certainly, in the last year I am finding out things about sustainability and energy conservation that I imagined I understood well. Now I realize I had only scratched at the surface. That is the truth about the Celtic Tiger. We convinced ourselves as a nation we were smarter than we actually are. That is why we ultimately paid a price.

Liam is a quiet man because he thinks about his projects and his work so closely. He doesn't ever let up, and neither did any of his employees while working with him. As long as he was intensely focussed so were we. I don't know if I will ever regain that intensity of focus in my life again. I worked 60 hour weeks for the man and even managed to enjoy myself. I like to express my dis-satisfaction sometimes. But while I worked for Liam, I found a lot more time to do work and waste a lot less time on banter. If that makes any sense. I know that is a tall one coming from someone who writes 100 words per minute. But while I worked for Liam I think I got to know myself a lot better. So did other people. It is complex, it is paradoxical, it is the story of human beings since the beginning. Never neat and tidy.

As for Zoe, it was broken up into different parts, which are now heading for examinership.


I asked around about that. Yeah, what is required is some decisiveness on the part of Zoe. Like I said, it is a mini construction industry within the construction industry. It needs to decide which parts of itself are toxic and need to be isolated and dealth with. Exactly like Ireland on the macro level. The industry needs to know where it is headed. A lot of contractors have struggled through 2009 on basic momentum from jobs that had to be finished out etc. Zoe are in un-chartered territory for them. They are fighting for their lives as a company for the first time ever. I really don't know if there are guys left now in the company up to it.

The one thing of lasting value that Zoe had to offer was an ability to make a problem as simple as possible. That is a great skill to have. You come across situations all the time in construction which threaten to break your will to live. That is when I thought Zoe came into their own. They broke the problem down into some a mere human being is able to tackle. For someone with limited brain capacity such as myself, that approached proved to be a real winner. A lot of our planners and the people who publish legislation should take note of this.

Fallible human beings have to build even the most impressive structures. The construction management should fit around the fact that human beings are flawed, liable to make mistakes and sometimes plain stupid. Architectural consultants in particular often have the luxury of being separated from what they design. They keep asking for too much. They don't drive for excellence in construction in any good way. They need to understand construction half as well as Zoe understand it. Architects draw things that cannot be built. They tell people to do something, without knowing how to do it themselves. Liam Carroll cut through that kind of rubbish and worked back to the brain bones of the problem. That is Liam Carroll's real legacy. That is what he was good at.

I look at a development by Zoe like someone else looks at an automobile that was manufactured in a certain way. The traces of that manufacturing process are still left in the eventual artifact. In a lot of Zoe's work I can see something quite clever, something that was built into the system, ease of assembly. A deep awareness of the logic of how things are put together, in what sequence and by whom. Other people don't see that. Especially architectural critics who expect something to conform to a certain appearance in order to have design merit.

What can I tell you? You cannot buy this kind of an intelligence of methods of assembly anywhere else in Dublin city. In that respect Danninger was a unique entity. Some of the architects Zoe were obliged to hire in the end simply exported the task of detail drawing to a foreign country. The story came full circle in a way. In the early days the Carpet Baggers Liam Carroll worked with in Ireland did drawings to send to Libia or Berlin military installations. In the end, Eastern Europe did drawings to send back to Ireland. A strange business is construction.

I have no doubt that in the end Liam Carroll wanted to learn more about how finance and construction projects come together in the age of digitally created stock market financial instruments. We were on one floor at Parnell Street using the old technology of computer aided design. While someone on the floor above our heads was breaking the projects we built up into binary 1's and 0's in another way. What can I tell you? Liam was too old when he started that experiment and he pushed the innovation of financing of projects too much before its time. Before we understood land taxation, capital investment methods, low carbon accounting and ways to support a smarter economy.


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Re: Liam Carroll: I did it my way?

Postby GrahamH » Fri Jul 17, 2009 11:53 pm

garethace wrote:
I look at a development by Zoe like someone else looks at an automobile that was manufactured in a certain way. The traces of that manufacturing process are still left in the eventual artifact. In a lot of Zoe's work I can see something quite clever, something that was built into the system, ease of assembly. A deep awareness of the logic of how things are put together, in what sequence and by whom. Other people don't see that. Especially architectural critics who expect something to conform to a certain appearance in order to have design merit.



Zoe's business practice was indeed dynamic, and may very well inspire interest from a mechanical perspective through its resultant developments, but do you think this methodology translated properly into reality Brian? That is to say, into well-planned, attractive, comfortable, sociable, safe, urban-focused homes for human beings?
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Re: Liam Carroll: I did it my way?

Postby missarchi » Sat Jul 18, 2009 11:01 am

from a printed paper...

Almost all financial planners derive a large slice of their earnings from commissions.
Financial planners are paid on the basis of products they sell rather than the advice they give.
Many bank financial planners have been richly rewarded for the the volume of investments they sell.

"Beware of the shark"
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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 2:19 pm

GrahamH wrote:Zoe's business practice was indeed dynamic, and may very well inspire interest from a mechanical perspective through its resultant developments, but do you think this methodology translated properly into reality Brian? That is to say, into well-planned, attractive, comfortable, sociable, safe, urban-focused homes for human beings?


In short, no. But I am not the person you should ask. I know how to build something and put it together better than most architects do. Especially when I am given access to the people and resources I had to work with in Zoe developments. But I suggest Sally Lewis's little book, Front to Back for a much better discussion on that subject, than I could ever offer. Engineer's love how things are made. I tried for ten years at Bolton Street to become a member of the architectural profession. But when I work with engineers, as I did at Zoe developments I feel much more energized and at home.


Too many products


I had a friend who was financial controller of the precast concrete plant in Kildare, the one set up by Menolly homes boss Seamus Ross. It was a plant operated by a bunch of very talented and innovative engineers. Too talented and too innovative perhaps. My friend told me he had been asked to do a re-organization at the facility. He discovered to his dismay that the engineers had no less than 80 different products! None for which the engineers had a clear idea of a market or a consumer. They simply wanted to invent more and more cool ideas.

Until my friend an accountant came along, the engineers in the factory had a free rein. So he simplified matters for them, and told them to perfect the techniques of manufacturing one product first. Then he would allow them to proceed to product item no. 2. You can see now the benefit now of having different points of view within the one organisation. Zoe developments developed a business culture to take advantage of that also. When it worked at Zoe, it worked very well because you had the different inputs feeding into the project together.


Liam Carroll on the lecture circuit


Very few companies in any industry, much less the construction industry find that easy to do. That is why I feel that Zoe developments at its peak had something to offer this country. Not at the moment, because the banks have more or less dominated the situation. The couple of parasite architects remaining, doing the drawings aren't the kind that would understand the classic Zoe developments culture. They were merely pulled together hurriedly to do planning schemes as fast as possible to keep the bank happy. What a disgraceful mess and a step backward for innovation in Ireland.

The comments I made above about Zoe developments, the good parts of Zoe, have applications in almost every industry we have in Ireland. Outside of construction entirely. If Liam Carroll finds himself out of a job soon, he will be welcome on the university lecture circuit I have no doubt. (Not the consellation prize he wants I am sure, but don't knock it) Likewise the weaker elements in the Zoe/Danninger culture are things that can be addressed and dealt with, once Liam gives up full authority. (I doubt he would do that, which is why a bank or government agency should take over now) Once a Zoe director is able and willing to stand up to the mark and exercise authority in the company, that is when the company will take off.


Blue Screen of Death


Architects for the most part tried to exclude themselves from Zoe. Instead of the opposite. Get in there and get stuck in like I did. I can assure you the Zoe culture does have potential to become democratic and cater for a large range of view points. Bearing in mind the comments I have made above in relation to the pre-cast concrete factory. Architects wouldn't get it easy in Zoe. Certainly not as they do hiding behind the RIAI contract as external consultants. But that would challenge is one worth rising to. It would probably make them better architects.

The mechanical dimension and attention to logic in details was lost usually when external consultants were supplying design services to Zoe developments. That includes O'Mahony Pike, Traynor O'Toole and others. I remember a particular night shift I was working at Dell computers in Limerick. It was back in the xmas of 2001/02. In the very depth of the dot.com recession that never was, we were still shipping a million computer systems every three months. I was working on quality control that night, when suddenly all of the 'smiley faces' screen savers that show when a computer finishes its installation of MS windows turned to horrible blue screens.

It was a strange feeling, as the 1,500 workers in the Dell plant that night all suddenly ground to a halt. It was the only stoppage like that I remember in 12 months working for Dell. Which is a testiment to how well they had absorbed the lessons of the Toyota type of production line manufacture. I got flash backs of that scary experience several times when external architect consultants, who don't understand the production line that Liam Carroll created would make stupid design decisions in how to build things. These decisions are made at planning stage on drawings, by architects who design things to look okay on paper. But who haven't a clue what way it can be constructed.


Learning curve for Irish Architects


The cladding system on one of Liam's developments cost over €20 million alone. It didn't include the structure, decorating, excavation, land costs or anything. Only a cladding system. It was touch and go to make it even work. Because the architect in that case designed themselves into all sorts of difficulties in order to maintain a religion or an aesthetic. That is the kind of arrogance they are able to display with other peoples' money. I wouldn't mind but architectural practices are only dealing in mickey mouse sums of money in consultancy fees themselves. Most of the people working in architectural practices are let go now. There is so little money available to be made within that profession.

NAMA should not be a bonaza for the consultant architects here in Ireland. It should be an opportunity to investigate better techniques of linking design and knowledge of construction up with decisions that are made on the drawings at planning stage. There needs to be someone with experience in that agency who the developers and builders know they can trust.

(Sorry for the making the plug again)

What I know about the Zoe production line, the Dell production line and what I have studied about the Toyota lean manufacturing system are applicable to all areas of Irish business. That is where I feel the biggest contribution of Liam Carroll was made. But as I realized the first day I worked in Danninger having come from Dell, via another small project management company in the interim, was that Liam should have hired the million dollar managers he required. Liam probably knew what to do with hundreds of thousands of Euro. His directors knew what to do with ten's of thousands of Euro. Those are the kinds of sums that most building construction breaks down into. But you need someone with experience running a Dell computer factory, or something on that scale, in order to know what is happening to your millions.


Bankers on the drawing boards again


Zoe developments needed good help, and not the form that Irish banks are still trying to offer them now. This so called 'rescue package' that Zoe drew up with the banks is the biggest pile of rubbish going. It is in the banks personal interests to keep the old beast alive, as the banks effectively drew the sketches on the drawing board in the end for schemes such as East Wall Road. I think that Ruairi Quinn's comments here are worth reading and the Will Hutton article about British banks that he referred to.

http://www.ruairiquinn.ie/?p=18

This talk in the newspaper today about Zoe developments, or Dunloe Ewart 'trading' it's way out of difficulty shows me the extent to which the company has lost its way and is now being controlled by a bank. The bank is literally drawing up the planning permission scheme using Liam Carroll as the intermediary. That has nothing to do with the core competency of Zoe Developments. The lean design and manufacturing techniques it developed over the last 25 years.

That was the great dream at Zoe, to have architects and designers working up front at planning permission stage, (not bankers from AIB) who understood the entire Zoe developments production line process. Down to the level of how one trade interfaces with another. David Torpey is the only man left standing at Zoe developments who is fighting some sort of battle to keep that culture alive. But what hope has one man, when a year ago there was 300? Zoe developments was in essence an advanced form of project management. It had ideas of much value to other Irish companies.


The lesson from Intel


Clayton Christensen was asked to come in as a management consultant at Intel a number of years ago. Back in those days Intel believed that it's designers were its primary asset. That if the chip fabrication side of the business disappeared altogether, they would still be world leaders as a company. Because they would still have their computer chip designers.

However, Clayton Christensen disagreed with this analysis. Christensen believed that in the future the presence of fab-less designers in the marketplace would increase exponentially. It would be harder and harder to keep a competitive edge on that side of the business. Christensen's proposal to Intel was that they keep developing the silicon fabrication facility side of their business. That in the future, that is where the massive profits would be made. As all kinds of chip designers came to Intel in order to get their products made. It has been a number of years now since I read Christensen's paper about Intel. But I can tell you, I had a sense of Deja Vue when i saw this report come out in June.

http://www.isuppli.com/NewsDetail.aspx?ID=20345

Is Moore’s Law Becoming Academic?

The high cost of semiconductor manufacturing equipment is making continued chip-making advancements too expensive to use for volume production, relegating Moore’s Law to the laboratory and altering the fundamental economics of the industry, according to iSuppli Corp.



The lesson from Toyota


This is why I believe the banks have got it all wrong in terms of their strategy for Zoe developments. Not that they will carry any of the blame. The banks looked at the company that Liam Carroll built and thought they could understand where the real wealth was coming from - the land, the sites and future planning permissions. They got distracted by the trappings of wealth but they singularly failed to see where the wealth had been generated from in the first place.

The wealth in Liam Carroll's company wasn't contained in the sites that he owned. It was in the revolutionary new construction management and design. F*** sake, it is on the top of their letter head! All the banks are proceeding to do is kill what is left of the goose that laid the golden egg. This is why Ireland is served by such a bunch of ass holes in the banks. In other modern countries such as Japan, the banks actually know something.

Make a comparison with Toyota in Japan. Toyota have left their doors wide open for people from all over the world to come in and study their process. Even with numerous attempts by Ford and others to replicate the process in the US, they still cannot manage it. Yet Toyota can introduce factories anywhere in the world it wants, using local labour and make the system work.

Liam Carroll created a unique kind of culture in Zoe developments. It is a unique thing, a one of a kind. It is as native to Dublin, Ireland as Toyota is to the islands of Japan. The banks believe the logical thing is to squash that and build on the land. They are wrong I tell you, and seriously wrong at that. If the banks really had a brain rather than an arse to think with, they would see that in the future Ireland could be exporting Zoe developments, in the same way that Japan can export Toyota. That is big, but much too big for our banks to visualize.

I mean when you read my writing on the subject of Zoe developments you realize where the wealth was created. You realize where and how the value could be added. It is to do with ordinary human beings working on something and adding to it using their brain power, creativity and knowledge. That is all that human beings are able to do anyhow. That is what every good theory of economics states in some way or another. But trust the Irish banks to botch up the theory of economics with everything else.


Long Live DEC


Digital equipment corporation were definitely like that. They were like a small technology industry within the greater technology industry. You will notice I have extensive knowledge and study done in the area of technological development. That is why myself and Liam Carroll get along well as a team. In the end though, Digital Equipment Corporation fell apart for a series of reasons. All of which were traced back to the culture in the company that didn't know how to cope when it got to a certain size. Interestingly, what happened at Digital too, was the sales force culture took over the manufacturing side of things. That is when past employees of DEC say that all of the bad decisions were first made. Read much more in:

DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment Corporation
by Edgar H Schein (Author), Paul J Kampas (Contributor), Michael Sonduck (Contributor), Peter Delisi (Contributor)

People who worked at DEC always seem to regard it as the high point of their careers. I will make one comment though, if I may be so bold, because I am not an architect. When I walked around the 150 no. apartments that I did manage to build with Zoe before it all fell to pieces (Essentially the last, and the peak of evolution in terms of the design methods that Liam Carroll initiated 25 years ago) I couldn't help but get this strange feeling. I had gone to inspect that a few final roofing details had been carried out correctly. It was part of my usual duties exercising quality control on the job. It was towards the end of the job, and the site was kind of quiet.

I looked around and said to myself, you know the men who built this - their faces will be forgotten - even by myself in the passing of time. But there was some part of them embedded in the final artifact. I know it does contribute to a sense of well being to the place we created. Without the positive charma and companionship between the people and trades working with Zoe, the end product would have been missing something in it's soul.


It has been quite emotional


That sounds kind of silly I know. Because it really doesn't translate into words. It was an unexpected sense of the human touch in the materials, that made me feel I could live in this place. Or hand it over for other people to do so aswell. Cramped and all though it certainly was! This feeling caught me quite off guard on that day and I do remember feeling a bit teary eyed and emotional standing up there on that roof! I felt like a blubbering fool to be honest. Architects normally have to work on the little jobs in order to experience that. But working with Zoe developments one could also get that on the larger scale project. It was something amazing in my mind.

http://www.daft.ie/searchrental.daft?id=600395

I later had a chat with Merit Bucholz about this and other affairs when he built his project at Elm Park for Bernard McNamara. I suppose 'The Builders' do get a very bad press. But I certainly believe there was more motivation in it for them than money. That in the end, I think is what forced them to make some critical judgements in terms of finances they were not qualified to make. Either on their company's behalf or on behalf of the country either. What more can I add to it? 2009 has been a strange year for me. Seeing two of my favourite past employers, Dell and now Zoe developments go under.


Brian O' Hanlon


Gordon Bell's essay on the history of Digital

http://research.microsoft.com/en-us/um/people/gbell/CGB%20Files/DEC_Is_Dead_Bell_Appendix_Schein_Book.pdf

1977 Corporate Philosophy and Organization at Digital.

http://research.microsoft.com/en-us/um/people/gbell/digital/Dig_Corp_Philos_and_Org_7704.pdf
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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 2:41 pm

missarchi wrote:from a printed paper...

Almost all financial planners derive a large slice of their earnings from commissions.
Financial planners are paid on the basis of products they sell rather than the advice they give.
Many bank financial planners have been richly rewarded for the the volume of investments they sell.

"Beware of the shark"


There are all kinds of conflicts in the whole development cycle like that, which Ireland can change if it wants to. It is like introducing a smoking ban. Most would argue we are now better off for it. I used to enjoy a smoke in the pub myself, but now I look at it differently. I realize that I was creating emissions that would harm other peoples' health.

In that regard, our small size as a country, as a population of four million people, should be a potential advantage and driver for innovation and positive change. Especially in learning how to build a low carbon society. Lovins and Hawkens have a very interesting chapter five here on the building industry, which I have been encouraged by many people to sit down and read:

http://www.natcap.org/sitepages/pid20.php


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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 2:41 pm

-

Under 14 Football


I bought all of the newspapers today and read them with a sheer sense of relief. The last time I sensed an emotion that positive while reading a newspaper, I was thirteen years of age and my name had appeared in a 1985 edition of a local newspaper for winning the under fourteen, grade C football championship in West Limerick. I still have that newspaper page saved somewhere! Now I have a new addition to my modest collection.

I would like to give a personal vote of approval to the Irish Independent newspaper who today printed a story which read very well indeed. It was penned by Thomas Molloy. I would have gone a bit further and claimed that Carroll should have known an out-going Steve Jobs kind of figure was required to pull the stunts he tried to pull with the Irish stock market. I am no journalist and do not understand the rigors and challenges the profession must enforce on its members. But I know this much. Thomas wrote something worth reading for a change. Thomas is correct in his analysis, that the early success of Liam Carroll in taking over Dunloe Ewart in 2002, did encourage Liam to over-value his skills as a corporate and a stock market player.


Casino Royale


The only comparison I can think of, is the initial £25,000 that Lord Lucan won on the roulette wheel at the 'Real Casino Royale' featured in a recent Channel 4 documentary. A certain fringe member of the British aristocracy, a mediocre man in terms of success prior to that, identified a certain tendency amongst high society. They loved to gamble big. A parallel could be drawn with some of 'The Builders' featured in Frank McDonald's book of that name. Parallels between both the players and the organisers of the roulette room. The London Casino became really big business. The accountant partner behind it all was actually an Irish man.

http://www.channel4.com/programmes/the-real-casino-royale

Poor old Lord Lucan never won another farthing from that Casino, and one is certainly left asking the question: was that game rigged in his favor the first evening? I am in no doubt that it was. I think that the same is true of Liam Carroll. When Liam sat down at the roulette wheel of the Irish stock market, he became consumed with his own consumption. The people I really blame is the choice few of Haughey's old mates who introduced Liam to that prestigious gaming room in the first place. What Liam Carroll does not seem able to appreciate is that he was gambling with the future of a company. Possibly even a size-able chunk of this country.

A guy such as LC who will fight over pennies, sometimes is not able to grasp what a billion euro is. Our politicians, love them or hate them are certainly better in that regard. To understand what a billion Euro is, requires you to examine all sorts of fuzzy and abstract ideas about society and the world in general. Liam Carroll was too practical a man for that. Similar to many characters featured in Frank McDonald's excellent novel 'The Builders' Liam did not have the 'fuzzy' sense about money like good politicians do.


Hire the A-Team


Somebody sold short on Liam Carroll's shares, whether through some financial instrument or whatever means. That is where the personal fortune of Liam Carroll was diverted to. It was the closest thing to a daylight robbery you can imagine. History will reveal the full details, I am in no doubt. The beauty of the con, is that everyone bought it, including journalists. Who proceeded to print an easier story about a poor victim or circumstance, rather than a man who was gutted and hung out to dry.

In classic end or dawn of century fashion, the fortune traveled down the fiber optic lines servicing Ireland's capital city. As Sean Connery once said in the movie 'Entrapment', where is the good old fashioned loot? There was no other way the share value can sink so fast in 4 no. separate companies. As someone said, the oldest and most obvious cons are the best. Nobody will even bother to suspect them. I doubt our fumbling fools in the Central Bank and Financial Regulators office would possess the tools necessary to detect such a crime in progress anyhow. That is another good reason that Liam Carroll should have stayed away from the Irish stock market.

The same may even be true of Sean Quinn's investment at Anglo Irish bank. Sean Quinn had walked into something very incestuous at BUPA Ireland previous to that. My sources tell me (and they are the best sources possible) that Bertie's buddies did very well out of the deal in Fermoy. Another large extraction of capital took place in that case diverted to specific individuals. If I was Liam Carroll today, I would feck the lot of them and throw my last remaining few bob into the financial computer wizardry equivalent of the 'A-Team'. Sargent B.A. Baracus is the only person who will sort these people out. I wouldn't care if I had to hire the Russian mob.

(That is why we need NAMA badly in this country, before things do turn ugly)

There was wholesale pillaging of the wealth of Irish people going on towards the end of the Celtic Tiger. Stuff that would make Sean Fitzpatrick look like a church choir boy. Celtic Tiger sized slices of the pie weren't enough for some people. A certain few individuals wanted to order the lobster. The fact that Liam Carroll was wiped out like so many Irish corporate leaders should come as no surprise. Zoe developments were too naive to appreciate the gales that were blowing out in the open seas of the Irish market place. Zoe had barely left port when they found themselves buried underneath the waves.


Brehon Law


There is an established tradition in Ireland of politicians cornering the most wealthy business people and taking money off of them. It became publicized with Ben Dunne but it probably goes back much further than that. It is one of the last vestiges of an Irish culture that refuses to go away. It is not specific to Fianna Fail as some people would assume. It is on every side of the house. When I worked for Zoe developments I was frequently cornered by people from across the political spectrum for possible favors. Even from lower members of the squeaky clean and green party.

They feel they are entitled to it. I am no historian of legal matters, but there must be some Breton law scribed down by some druid in a cave back in the dark ages, which gives Irish politicians deed and title to a business man's wealth. It is no wonder that Liam Carroll tried to keep to himself. He didn't owe favors to anyone and didn't want any in return. Unless you count the indirect gains through property development incentives and what not.

I suppose, that is why public representatives feel the need to corner the Irish business man when they feel like it. They believe they are re-claiming what is rightfully theirs to begin with. That is why they don't know one £15,000.00 from another. Someone mentioned the former Taoiseach as candidate for Dublin mayor on TV the other day. How stupid can four million people actually be? If we keep on sending out the message to the globe that we are in the stone age, we will be pummeled by the market place again, and again, and again.

In the Irish Independent article by Thomas Molloy, I learned with interest that Noel Symth had been a friend of Charles J. Haughey. I didn't know that, but we certainly cannot count it as a crime. To be honest, Dunloe Ewart's biggest problem was it was run by a bunch of financiers and solicitors who weren't real building professionals. The Dunloe Ewart estates before that had been managed by British Land. Who were not builders either. They are a collection of accountants working from their offices in London. Liam Carroll is a builder. He had his big opportunity to turn Dunloe Ewart company around and blew it.

So if friends of Charles Haughey, accountants from London or builders from Dublin are not able to crack the problem of Dunloe Ewart, who is? My suggestion is none of those three enterprises, but some kind of healthy and workable combination of them. (This is another reason why NAMA is showing so much potential) There are considerable challenges for team building and organisation within NAMA. It will require ego's to be swallowed by everyone. That is going to be a real challenge. But the process could work. It has to work.


An appeal to the RIAI


There are great assets that can be salvaged through the NAMA scheme. Take for example the human resources that a company such as Zoe developments had. The best architect in this country at the moment worked for Liam Carroll for the past ten years. He is a slightly built little man, but one who stands head and shoulders over all the rest in this country. His name appears on Zoe's standard letterhead and to me he is the Roger Federer of the Irish architectural profession. He is the man with the complete set of moves. However, when I told the current RIAI president I was working alongside this man, the only compliment he could muster was: What are you doing for that fella?

All of our judgements were poorly affected during the intoxicating times of the Celtic Tiger. I humbly submit to the RIAI body responsible for the promotion of design competency in this country, that their current state of unemployment has less to do with the economy and more to do with their failure to recognize real professional quality. The architect I worked with at Zoe developments could not be mistaken for something average in design terms, by anyone who had the privilege of working beside him. However, that man was also a director in a company, in an Irish construction industry that grew so fast in the last decade or two, that it lost its own sense of corporate integrity. There are bridges that need to be re-built on both sides.


New possibilities at NAMA


I applied for a position working at the new NAMA body because I feel supremely confident when Liam Carroll's assets come floating down in my direction, I will be one of the few individuals uniquely qualified to interface with what is left of Zoe developments. In a manner that is fair to them and also very firm. In other words, I don't fall into Liam Carroll's reality distortion field. I know that Liam Carroll and the rest of his directors would respect and work with an agency that included one of their own. Remember when I completed that first major building project for Zoe, I became an un-official family member for life. That is a nice family to be in. It more than made up for losing out on RIAI membership a decade ago.

If NAMA do not see fit to grant me this opportunity I wish them the best of luck in their endeavors anyway. The sheer scale and ambition of the enterprise will require many young and talented people to see it through. It is the right scheme for the turbulent times we live. A much more transparent and open process than a nationalised banking system. More open and transparent is what Ireland need in terms of communication with the rest of the world. The best of my ideas are contained in this thread here:

http://www.archiseek.com/content/showthread.php?t=7692

But the one word of caution I do humbly submit, is that the Johnny Owens scale of builders are the people who really deserve the sympathy. I don't have the full legal jargon to describe it. But I think the Johnny Owens scale of builder were second parties to whatever went wrong. I think that it is the larger players in the game and in particular those who did 'polite introductions' at the real Casino Royale we should be going after. We can go after the Lord Lucan's if we want to, but it really doesn't solve the underlying problem. In the case of the Clermont Club casino, as soon as gambling was legalized in Britain the romance of it being something illegal vanished. Gambling became something the ordinary man could do. I don't know if that was progress or not. I will leave that judgement entirely up to you.

http://www.rte.ie/news/2009/0409/primetime.html


Brian O' Hanlon
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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 4:18 pm

-

The man who got fired from Danninger for stealing gravel.

I once talked to the foremen who managed the fit out for one of Liam's large residential developments. They had worked extremely hard to achieve the fit out of 40 no. apartment units per week. A staggering achievement which is un-equaled anywhere in the country. Their attitude was quite pessimistic after the ordeal though. They were only waiting to be fired after all of their hard work.

“We should have robbed him!” someone proclaimed in a defiant and rebellious tone. What is one supposed to do, walk out the front gate with a sink or shower tray shoved underneath one's jumper? Well, I guess everything can and did walk off a Danninger site at some stage. Liam's own crew never were up for that kind of messing. But at the same time, those who worked for Liam on large jobs were powerless to watch everything. Large amounts of gear did disappear on the large jobs.

The site that really took the biscuit though was Limerick. Loads of gravel were ordered for Danninger's Shopping Centre that ended up spread on peoples' front driveways. A bit of steel, whatever you needed. Some lads at Limerick thought the wealthy property developer was a bit soft. He didn't need all the wealth and tried to relieve some. Liam came down hard on it and promptly fired people. Imagine going home to your wife and telling her you were fired by Danninger for stealing gravel. Liam knew the game better than anyone did. He had no problem protecting himself when it came to building materials.

I should have remembered from my time working at Dell computers. Where guys would smuggle Intel processors out of the factory in their steel toe capped boots. Not many could find a market for the smuggled loot outside though, as the sockets for the chips were quite specific. However, the human temptation to smuggle a piece of cutting edge technology out in one's sock proved too difficult to resist for some. One guy, undoubtedly not on his own, escaped with €250,000 worth of gear before being caught.

The truth is though, Liam Carroll was simultaneously keeping an eye on loads of hardcore down in Limerick city. While at the same time trying to manage millions on the stock market in Dublin. One could claim that Liam Carroll tried to manage everything. In the end, he was able to manage nothing and lost everything. There is a lesson in that somewhere about the whole human condition. But the biggest mistake Liam made was in not watching the people who really had their hands in his pockets.

The load of hardcore in someone's driveway, does seem like such small potatoes now. But small potatoes is what he knew best. He should have stuck with it. Now, I certainly have to find a better hobby than ranting about the Irish construction company. But I felt like sharing the story, while I still had the recollection of it in my mind.


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Re: Liam Carroll: I did it my way?

Postby KerryBog2 » Sat Jul 18, 2009 10:51 pm

I've loads of free time. Too much, in fact.. However, no offence, but I've not got enough to read in detail all that old guff above above.

Carroll rolled his dice, used lots of borrowed and some of his own money and failed. Just because he did not have a helicopter, or live in D4 or whatever, is no excuse. He had / has an ego, which made him do what he did. So what. It does not make him special for me.
I have more respect for people who traded prudently and paid their bills. It has been obvious for years to anyone with a modicum of wit to perceive that the construction sector was a bubble. These guys need to get real .
K.
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Re: Liam Carroll: I did it my way?

Postby jimg » Sat Jul 18, 2009 10:52 pm

Somebody sold short on Liam Carroll's shares, whether through some financial instrument or whatever means. That is where the personal fortune of Liam Carroll was diverted to. It was the closest thing to a daylight robbery you can imagine. History will reveal the full details, I am in no doubt.

You are better sticking to topics you have experience of, Brian. The mechanics of markets means the exact opposite; if there had been large short positions in the stocks that LC bought, this would have been of benefit to him and others long in the stocks.

There is no conspiracy involved in figuring why Irish bank shares valuations collapsed last year. We don't need to wait for history - it is already completely clear. According to market fundamentals, the share price of a company reflect the equity (excess of assets over liabilities) plus the present value of expected future profits. Until the start of 2008, most people still believed that the exponential growth in Irish banking profits would continue their trajectory or at worst slowly level off and the share prices reflected this. Once doubts about future profits grow, share prices fall; this happens in every sector everywhere in the world; there is nothing special about the case with Irish banks.

A few people in Ireland were blinded by their own success and ego and refused to even consider doubting the Irish banks. These are ones who got burned.

I don't want to sound like a harsh school teacher but I think if you stripped your essays down to just your direct experiences in the trade, you could actually produce some very good and interesting writing which would have wide appeal. As it is, the interesting bits are drowned out by what comes across as an attempt to portray erudition but instead results in disjointed incoherence. I find it difficult or impossible to read an entire message and usually just skim them if not just skip them entirely.
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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 11:13 pm

KerryBog2 wrote:I've loads of free time. Too much, in fact.. However, no offence, but I've not got enough to read in detail all that old guff above above.

Carroll rolled his dice, used lots of borrowed and some of his own money and failed. Just because he did not have a helicopter, or live in D4 or whatever, is no excuse. He had / has an ego, which made him do what he did. So what. It does not make him special for me.
I have more respect for people who traded prudently and paid their bills. It has been obvious for years to anyone with a modicum of wit to perceive that the construction sector was a bubble. These guys need to get real .
K.


Thanks for the feedback. I had a feeling this attitude is out there, and I can't find any faults at all in anything you have presented above. I wanted to try and present some of the other angles, or points of view above, to try and flesh out the issues that an agency such as NAMA might run into.

My biggest fear is that we will rush into some kind of a treaty of versailles nill sum game with builders. That we might end up paying for down the tracks as France did in 1940s. (Or rather future generations in Ireland might)

I know that some of the theories above border on the lunatic, the conspiracy 'was there ever a moon landing' sort of rubbish the internet is full of. But I think these are balls that are going to be thrown about, as we get into the serious business of cleaning up the mess. Thanks again, for the response. I do appreciate the knowledge of having people out there, knowledgeable such as yourself, who are not willing to cut builders like Carroll any slack. I think we will need that steel in order to deal with the problem fully.

I can tell you some of my own correspondance with Carroll in recent days has not been too polite either.

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Re: Liam Carroll: I did it my way?

Postby garethace » Sat Jul 18, 2009 11:18 pm

jimg wrote:You are better sticking to topics you have experience of, Brian. The mechanics of markets means the exact opposite; if there had been large short positions in the stocks that LC bought, this would have been of benefit to him and others long in the stocks.


I appreciate the correction thanks, pretty basic mistake on my part.

The point is taken. I hope people a lot better qualified than myself do get involved, get their shoulders behind the wheel and try and sort out some of the mess soon.

For my own part, I would like this all to stop weighing heavy on my conscience so I can go back to normality. But I don't want to leave the matter go, and have no one chase after the correct solutions or chase after the people responsible.

I found it diabolical that Liam Carroll's financial director has the nuts to send out a letter like he did, without mentioning an apology or anything for wasting whatever chances our company had to survive. The idea of them receiving a bail out now from the government simply makes me sick.

There is no conspiracy involved in figuring why Irish bank shares valuations collapsed last year. We don't need to wait for history - it is already completely clear. According to market fundamentals, the share price of a company reflect the equity (excess of assets over liabilities) plus the present value of expected future profits. Until the start of 2008, most people still believed that the exponential growth in Irish banking profits would continue their trajectory or at worst slowly level off and the share prices reflected this. Once doubts about future profits grow, share prices fall; this happens in every sector everywhere in the world; there is nothing special about the case with Irish banks.


Thanks, yeah, a lot of sense spoken there.

I had a google around this evening and came across snipets like this:

http://www.rte.ie/news/2009/0525/banks.html

There seems to be talk about 'denial of reality' by the banking sector. But I also see a problem in Ireland in getting too caught up in the issue of the assets themselves. I mentioned a country like Japan, because it is only a couple of islands stuck together beside China. But it is what those people on those islands do, and how they do it, that creates the wealth for them. How do you classify that in assets and liability terms? Unless you begin to include human resources as an asset.

They talk about it being difficult to put a value on properties in an uncertain market. But what value do you put on the many construction professionals, whose work might have added value to developments down through the years? Those people seem to be completely thrown on the scrap heap now. I notice this change in particular, as the banks took control more or less of Liam Carroll's operations and ended up dictating to him what to do and how to do it.

I mean, if you have spent 5 years or more studying to become an architect this sounds pretty scary. The Prime Time program on the 30th April, available on RTE's website has a point made by the Green party. In relation to how NAMA intends to develop the sites and projects. Sometimes the fastest way is not the most sustainable way. That seems to be what got us into difficulty to start with. But that is the basis of the banks 'rescue plan' for Liam Carroll. Lash up something as fast as possible. Hoping that it will make the pain go away.

http://www.rte.ie/news/2009/0430/primetime.html

A few people in Ireland were blinded by their own success and ego and refused to even consider doubting the Irish banks. These are ones who got burned.


That does make some sense.

Paddy Kelly's interview with Eamon Dunphy available to download from RTE's website is an outstanding example of 'refusing to even consider doubting the Irish banks'. My favourite sound byte from Kelly's interview is: "Some very smart guys at Anglo, watch Anglo". I am surprised that sound byte hasn't made its way into the media already. Poor old Eamon Dunphy was a bit sucked in too by the charisma of Paddy Kelly during that interview. Which is a rare thing also.

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