Pierse Construction in Liquidation

@PVC King wrote:

(snip)
Under the circumstances that have affected the entire sector it makes the 150 year milestone of John Sisk and Son all the more impressive; their UK arm is impressive. You strongly hope that those behind Pierse get themselves back up and running.

Yes, Sisks still carry the torch and let’s hope Jed and the boys haven’t screwed themselves over with personal guarantees to the banks and can walk away from this having the benefit of limited liability working as intended

ONQ.

@PVC King wrote:

This is a real tragedy, looking at their contribtion of the past few decades they did some really good work such as the remediation of the former Bord Gais site in the South Docklands and the very impressive for its time East Point Business Park which given another decade of prosperity would have in all probability have merged into Fairview / East Wall in the way the IFSC merged into Sherriff St in the late 90’s.

Thoughts are with those directly affected from suppliers to employees; nowhere other than construction does the issue of a knock on collapse appear as great a risk; you might operate on a 10% margin but if one link of the chain goes down you lose 100% of the sums you put into the supply.

Under the circumstances that have affected the entire sector it makes the 150 year milestone of John Sisk and Son all the more impressive; their UK arm is impressive. You strongly hope that those behind Pierse get themselves back up and running.

as bad as the next contractor. had as miserable a time with them as sisk, macs, cramptons and any other you could mention. same shite different arse

Were there any contractors you thought had a better touch?

As someone looking from the built product point of view Pierse did good work.

. I have worked on two major Pierse projects – one for the State and one for a commercial organisation – and can honestly say that Pierse were undoubtedly the worst “builders” I have ever come across. Their attitude to quality, safety and honesty was virtually non-existent. They treated sub-contractors like serfs and the tolerated the clients only because they held the purse strings.

The clients on both projects were lucky that they had excellent design teams who fought Pierse every step of the way and managed to achieve good buildings. Not great. Just good. Of course there were a few good foremen, but they took their directions from the top and were instructed to ignore building regs, codes of practice and quality and chase to the programme. Pierse substituted materials when they saw fit and only when they were caught out did they own up. Protection of finished work was not in the Pierse quality handbook, nor was the idea that work should be sequenced to prevent wet trades following dry trades (put the carpets down then plaster the walls – very Pierse!).

Pierse also habitually failed to honour final payments or agreed dayworks, instead promising their sub-contractors that they would be hired on future projects, but only if the price was right.

Who is to blame? The directors of Pierse, to be sure. But also the State for not having adequate legislation in regard to enforcing building regs. And not to mention Architectural Practices that often wore two hats when dealing with Contractor/Developers – one for the Client and the other as a subservient employee.

Pierse substituted materials when they saw fit and only when they were caught out did they own up.

No Clerks of Works around ?:confused:

I did catch them – often! 😉

And . . . .

You booked ’em ?
Or they booked you into the Hotel Murat for a week’s trawling the Louvre ?;)

I stood my ground and refused to accept poor quality or non-conformace, and was backed up 100% by my OPW architect and probably 90% by my dual-hatted architect.

On one project we had a saving of €1M plus and the other the client still holds the retention as Pierse hadn’t finished the snags/defects

Edited to add: Pierse might have been cowboys but they never attempted bribes – they were too arrogant for that!

Sounds like my rants against Connaught Group when their shares crumpled during the summer; are you sure you aren’t / weren’t some form of creditor?

In my limited experience of construction there were always weekly meetings which seemed more like the Somme than anything else where project managers and architects from each side argued everything; and then some.

No, not a creditor, just a humble Clerk of Works who never understood how Pierse ever won a contract considering thier poor track record and obvious disregard for standards and sub-contractors. Pierse site meetings were indeed lively. Project Managers ranting, cursing and banging the table. False promises. Lies. And they even had the gall to blame every one of their failures on the Design Team or their company standard excuse – nominated sub-contractors!. I never heard them admit once that they had made a mistake or apologised for trying to cheat the client by substituting materials. They were always the injured party, deeply hurt by erroneous accusations and impeded by the Clerk of Work’s inflexibility.

I can say quite truthfully that the demise of Pierse was felt with a warm glow of relief by more than a few architects, even though some still have to deal with the fallout on uncompleted projects. Were they the worst “big” builder? I have worked with quite a few and the answer is yes – by a clear kilometer!

@PVC King wrote:

This is a real tragedy, looking at their contribtion of the past few decades t…………….You strongly hope that those behind Pierse get themselves back up and running.

Tragedy my arse……… PVC, that post of yours is like the ones Brian O’H. used to write extolling the virtues of Zoe. 😉
Pierse has gone under with a deficit in excess of Euro200 million, of which more than 25% (>50 million) is due to ordinary trade creditors. That means that the knock-on effect will further add to the woes of those creditors – most already overstretched – and will hasten their demise. The size of the deficit would suggest to any financier ‘trading while insolvent,’ particularly when one looks at the amount of intercompany debt. I wonder where all that money went……
K.

I knew I had written about this stuff before – it was 18 months ago, (here, in full, post #13.. https://archiseek.com/content/showthread.php?t=7672&highlight=court )

@KerryBog2 wrote:

Commentators are slow to remark on the manner in which most builders & developers have structured their businesses. Most went for “unlimited” status during the boom years to avoid filing their financials and showing their vast profits (useful today for hiding their vast losses), but this is only a decoy. Inevitably the ultimate holding company is a limited entity, registered offshore which protects both their privacy and private assets. Intercompany debt, asset values and thus net worth even when figures are available are considerably disguised.

Intercompany loans at Pierse amount to about 70 million (Sunday Times, 7/11/2010)

@KerryBog2 wrote:

………..and show the magnitude of the problem when it is realised that the payment process for the costs element of those sales has ground to a halt. From the top of the pyramid downward, suppliers are not being paid. The message is going down the line that “we are awaiting payment on a big job that has been completed/signed-off on/whatever.” Prevaricate, delay, lie. Create longer snag lists, initiate proceedings. Whatever. Everyone is putting off the evil day of realising that the money is not there now and will not be there in the future. Round Two of failures will happen when NAMA starts.

We are well into Round Two. The guys I feel sorry for are those who are slow to accept reality and are pumping money into their businesses to try to keep them afloat until the ‘good times’ arrive… it won’t happen, cut your losses, save your pension fund.

@KerryBog2 wrote:

…………During the boom, builders/developers operated on such huge margins that many never had to worry about accurate pricing. The odd bad debt did not matter, it could be absorbed. Credit control disappeared and credit terms were given out like snuff at a wake..

Bad credit control is now home to roost. (‘Pierse, Dunne, McNamara – ah, shur, the’re grand, supply them.’)

@KerryBog2 wrote:

NAMA & the future
The big elephant in the room is corporate enforcement, surrounding which there is deadly silence.
All senior bankers, from ordinary manager level up, are legally required to act with probity. (For bankers – that means integrity and uprightness; honesty.) IFSRA rules are very clear about this. Other professionals, like accountants, have similar requirements imposed by their professional bodies. Anyone heard anything from the void of accountancy bodies?

Mmmmmm… anyone yet heard of ANY sanctions from (so-called) professional bodies? Or any senior banker being disbarred from holding a senior position? Or any REAL changes to bank boards?

@KerryBog2 wrote:

Senior bank managers and anyone who devised lending criteria or sat on a credit committee during the 2004-2008 period have a question mark over their acumen. Directors are in a worse position; if they were aware they should be fired immediately; if they were unaware, they should be fired for incompetence. The banking sector must delete its top level or it cannot ever extricate itself from the present mire.

Sadly most remain on fat salaries; the few that were fired got massive pay-offs, i.e. got off scot free.

@KerryBog2 wrote:

Huge sums of money were moved around to dress up the dodgy balance sheets of banks. People spoke, phoned each other. These types of conversation, just like Dealing Room transactions, were taped. The Regulator must have known; even now, where are the tapes? Did anyone ask for them? Why the silence? Where are the journalists? Why no real questions?

According to the news today, hours of recordings have been listened to and hundreds of pages of transcripts made. Thank you Mr. ODCE. Now please do something with them. Same goes for the guys who ‘forgot’ their passwords. Clue – anyone from a boarding school education always uses their old laundry number.

@KerryBog2 wrote:

We saw what the accountants did to a defunct stockbroking firm in Cork a few years ago – they raped what was left, to the extent that the (broke) customers actually despised the accountants more than the stockbroker who ripped them off. Wait for the bun-fest that will be NAMA. The lawyers and accountants are licking their lips already.

According to a report by the Comptroller & Auditor-General quoted by the Sindo , http://www.independent.ie/business/irish/nama-adviser-rakes-in-fees-of-euro58m-2410752.html
NAMA is paying legal fees of up to €485 per hour while even trainee solicitors’ fees can amount to €100 per hour …
KPMG was paid €5.8m by Nama between November 2009 and June this year for valuing loans. Nama’s legal advisers, Arthur Cox — which billed the agency for €911,250 last year ….The CAG’s report states that from September 2009 onwards, Arthur Cox is billing Nama for €40,000 per month.
PWC have FOUR staff contracted to NAMA at an original cost of €60,000 per week and now €40,000 per week.
Ah, shur, we’re been oppressed before and got out of it, shur we’re a great country, it’ll be grand.
Kb.

@KerryBog2 wrote:

Tragedy my arse……… PVC, that post of yours is like the ones Brian O’H. used to write extolling the virtues of Zoe. ;).

You will note from the Garathace love in thread I did not join in the we love the convayer belt of lego-brick apartments afflicting BAC albeit that the Dungloe House acquisition provided the operation with sharp cookies on the property side. However one suspects that the collapse of Zoe along with other large Nama held portfolios has created significant systemic contagion that spread from land speculation into the construction industry.

@KerryBog2 wrote:

Pierse has gone under with a deficit in excess of Euro200 million, of which more than 25% (>50 million) is due to ordinary trade creditors. That means that the knock-on effect will further add to the woes of those creditors – most already overstretched – and will hasten their demise. The size of the deficit would suggest to any financier ‘trading while insolvent,’ particularly when one looks at the amount of intercompany debt. I wonder where all that money went…… K.

One can only speculate that the lack of clarity in the how and when the development pipeline of half completed schemes was going to be handled created difficulty for construction firms in knowing which assurances from developers would be honoured and which wouldn’t.

I will rephrase my original point, if this happened in 2006 it would have been shocking and considered by most commentators to be a tragedy; events since that date have obviously numbed sentiment significantly; no doubt the true course of events will come out in the fullness of time but until they do I think it is fair to afford one of the big 4 construction firms the benefit of the doubt on their probably believing some of the assurances they were receiving which turned out not to have been honoured; I strongly hope that the contagion from this collapse is manageable and does not trigger another wave of defaults at subbie and professional levels.

A very slow motion trainwreck has hopefully now come to a halt

@PVC King wrote:

I think it is fair to afford one of the big 4 construction firms the benefit of the doubt on their probably believing some of the assurances they were receiving which turned out not to have been honoured; I strongly hope that the contagion from this collapse is manageable and does not trigger another wave of defaults at subbie and professional levels.

A very slow motion trainwreck has hopefully now come to a halt

I don’t agree PVC. When a firm goes tits up owing that amount of money, I see no reason to be ‘fair’ when the facts remain hidden/disguised. The trainwreck has not come to a halt, it is inexorably grinding its way along a broken track and a ravine with no bridge is ahead of it. The rescue train with its IMF crane is building up steam in a neighbouring station….

According to today’s media reports McNamara is supposedly about to go the receivership route – work has stopped on all its projects.

More than a year ago I wrote :-

When NAMA gets going we will see the start of the shake-out. Most of the contractors I have seen recently could not be classed as viable. The big guys will be defunct and will bring many more with them. The efficacy of personal guarantees will prove almost worthless, key assets will be unreachable and expensive homes will be in wives’ names. Then the subbies and suppliers will discover that they never will be paid for their debts. Their accountants will not sign off on y/e figures, or balance sheet valuations, so a lot more will fail. A contributory factor will be lack of finance due to the opaqueness of the financials, where lenders will mistrust the stated values of fixed assets and the real or true worth of the applicant’s debtors.

It was in post number 159 here https://archiseek.com/content/showthread.php?p=99988#post99988

Rs
Kb.

Macnamaras went into receivership yesterday

@wearnicehats wrote:

Macnamaras went into receivership yesterday

Link?

@FunkyCoW wrote:

Link?

Its a rumor AFAIK. Have a look at today’s http://www.businessworld.ie/livenews.htm?a=2679258;s=rollingnews.htm
K.

@FunkyCoW wrote:

Link?

http://www.rte.ie/news/2010/1112/mcnamara-business.html

Thanks wearnh. I’m slipping:o:o
K.

looks ominous for McNamaras. Couldn’t happen to a shittier builder – oh wait – forgot about Pierse! 😉

FunkyCoW

I’m not letting that last comment on MacNamara’s stand unchallenged.

I cannot comment on Pierse, having seen little enough of their work, but I doubt they were as bad as you make out.

My experience with MacNamara’s ended back in the nineties, the firm went from strength to strength since then and building failures aare not associated with their work that I am aware of.

(not that I’ve been keeping tabs on them)

However, while my contact with MacNamara’s may be limited, both projects I worked on with them were carried out competently, and their workmanship was certainly up to the industry standards as was their project management.

Any work that was rejected, and this was work done by a sub-contractor on one job, was quickly remedied, and any work practices that were agreed were swiftly put in place.

Where difficuties arose, Bernard MacNamara acted as a hands-on head of company and was involved in any negotiations that had to be dealt with and they were dealt with effectively.

In the Nineties, MacNamara’s were the only building firm I knew employing its own in-house architect to vet their own construction methods and details in order to ensure that they BUILT in compliance regardless of what design information they were issued with.

Sometimes this resulted in rapid exchanges of information on compliance matters where new methods or materials were proposed, but the review by the design team was swift and comprehensive and the call rested with me as the certifying architect.

The general impression I formed was that as long as there was a profit margin at the end of the day, MacNamara’s would bend over backwards to address any and all issues raised by the design team and placed their emphasis firmly on quality workmanship.

For the record, I don’t have any association with Bernard MacNamara or his company apart from this past association, I am not a family friend or colleague and I cannot say we were particularly close on any of the work I did involving their firm.

I grew to respect the man, and he struck me as a tough businessman who understood the bottom line more than most and was committed to delivering a good product for a fair price.

I have already referred your unsupported allegations to the site owner and I would strongly advise you to watch your comments in a public forum.

ONQ.

weren’t Macs the contractor on the section of the new M7 that sunk near Birdhill?

Well, what a difference a decade makes then. I respect your right to feel offended by honest talk but as I haven’t mentioned named individuals or specific projects I shall continue to exercise my right to free speech and comment on what I know.

I worked on a McNamara project for the State. Two years in the trenches. They were late, blamed everyone but themselves (I know, an industry norm), and apart from cutting corners and substituting materials they were dangerous. I was mistakenly sent a fax from a partition supplier confirming that as per the Contracts managers request all fire rated walls were to be replaced by acoustic walls. When confronted he claimed it was a mistake and that the supplier must have “misinterpreted” his requirements. Yet Macs still attempted to install the acoustic walls instead of the fire rated walls, hoping that if they were closed in quickly no-one would ever find out.

In the Naughties Big Mac wasn’t as hands on as he might have been. He was far too busy developing and buying up land banks be concerned with the low income side of his business. He visited site twice in two years, and one of them was at the official opening by his pal Bertie. Flew into Weston from NY in his private jet. Flew back a few hours later. I don’t think he said more than two words to the Site Team.

Interestingly we were dined out after the opening, at the newly McNamara refurbished Morrison Hotel. We were the first to try out the new rooftop restaurant. It rained. We got drenched and couldn’t finish our meal. Summed up the whole experience really.

I find this difficult to understand in terms of the competence I knew from the firm.
On the building I took to site with them, furniture was moved in in advance of the occupiers, normal enough.
One of the movers may have been a smoker, but for whatever reason one of the penthouses took fire and burned out.
All of the fire containment measures worked perfectly – like I said competent work.

ONQ.

@onq wrote:

FunkyCoW

I’m not letting that last comment on MacNamara’s stand unchallenged.

I cannot comment on Pierse, having seen little enough of their work, but I doubt they were as bad as you make out.

It is understandable that you “sector” professionals would comment on the quality of the work, but, to be honest, it does not matter a damn now whether or not they were good/bad/indifferent.
What now matters is that they are officially broke and will leave another wodge of unpaid debt and tragedy behind them. That will hasten the demise of many more subbies.

What has fascinated me about the lenders and developers is how they fooled each other. Let’s just look at one hotel project, the Shelbourne. Bought supposedly for €140 million, a further €125 million was spent on renovations. Curiously, the hotel has 265 rooms, so that works out at a cost of Euro 1 million per room. Assuming that a luxury hotel room is 30 sqm, and allowing for a contribution of space to a bar/restaurant/common areas , the room cost should be about 75-100k max. (Open to you professionals to correct me on this.) So the per room €1 million cost at the Shelbourne is more than wide of the mark.

Looking at pay-back, with 265 rooms, to keep the figures ‘round’ for simplicity’s sake, let’s allow 250 rooms, as 15 will be out of service for repair/whatever. The survey last July by Bastow Charleton said that in Ireland’s boom years, profit (before debt service) per room of €14k was achievable. Today, because of falling tourist numbers, an oversupply of rooms and stupid pricing by receivers/administrators, and even assuming good occupancy rates, that figure is now down to 3k euro profit per room before debt service cost. That would give the Shelbourne an annual before debt service profit of 750k from the rooms. That would service a debt of € 15 million.

Even at 14k per room it could service interest on debt of €70 million, which is considerably below the lowest estimate of the initial purchase price and presupposes a permanent capital repaymant moratorium.

How did anyone think it could work?? How could any banker lend to a project like this??
K.

Hotels have several profit centres, not just the rooms.

– Sleeping accom
– Meeting rooms
– Receptions/functions
– Restaurants
– Bars
РLobby caf̩ bar
– Historic Tours within hotel (if historic — Shelbourne was involved in 1916)
– Concession / Referral income

The Shelbourne is a luxury 5 star.
Its room rates will always be at the top end of the industry average.
Its occupancy will not be as sensitive to general trading climate as lesser hotels.

Many (sufficiently well-to-do) people passing it in midday would go in for a lunch
or afternoon tea. Likewise with country visitors to Dublin.

Taking your room number of 250 and applying an avaerage of €200 to each room
over a 300 night year, you get €15 million in B&B alone.
If all the other hotel areas bring in another €20 million that gives a grand turnover of
€30 million per annum.
Would I be wrong in suggesting an operating profit margin of 75% for a five-star ?
That would give OPs of ~ €25 million for a busy Shelbourne.
Which would mean a return of ~ 9.4% on the owners €265 million investment, all
aside from the many perks, privileges and prestige of being an owner of the Shel.

The €265 million total outlay on a 20 year mortgage would mean an annual bill of
around €1.4 million — very manageable on this revenue.

At the time it was nearly a goer.
Moreover when you consider that the refurbishment costs were much more than
originally projected.

Of course, now, it’s not so attractive.

Teak,
Firstly, the Shelbourne is not involved in the receivership as it is a separate entity – I used it as an example of what I consider to be the daft forecasting/financial planning of McNamara.

That said, I disagree completely with your figures. –
@teak wrote:

The €265 million total outlay on a 20 year mortgage would mean an annual bill of around €1.4 million — very manageable on this revenue.

Ahem. :confused:You got the decimal point in the wrong place – @ 5% the interest bill is €14 million – somewhat less manageable.:p 😉

Rooms are the profit centre – it takes just one maid to service 12 rooms and he/she is not on shift rates. However, room rates have now dropped to 1999 levels and show no signs of coming back. The margins in restaurants are very slim, due to the high wages and other input costs. The staff –to- diner ratio in a good restaurant is one for every two guests. That is why the industry is being crucified by minimum wage costs and also explains why so many close. It also is why restaurants have the highest failure rate of all new business start-ups.

People dropping in for lunch? Lunch is a thing of the past; when did you last have a business lunch? In the boom times most were too busy and since then lunch for us ordinary mortals (i.e. not bankers or public servants;) )is a sandwich at the desk and if lucky that might be taken elsewhere and joined by a bowl of soup.

Receptions and functions are profitable if done right; however they never were a dependable profit source – they were an often-necessary ‘cream’ or icing on the ordinary business. The tighter drink driving laws has meant fewer people eating out and fewer bottles of wine being sold; a downturn in the economy means that people will not stay overnight for functions, which hits room occupancy and an gives the additional whammy of lower drink sales because punters have to drive home.

Luxury hotels might have higher room occupancy rates but they are much more sensitive to the economic environment. Look at the list of Irish hotels that have problems – they mainly are the 5 star ones (with the ubiquitous spa.)

Your figures are predicated on an occupancy rate of >80% which is not possible even in boom times. Occupancy rates of >65% is doing well, even in a city centre five star! (A good year in London used to be about 72% I recall from somewhere.)

@teak wrote:

Would I be wrong in suggesting an operating profit margin of 75% for a five-star ?

An operating profit margin of 75% is the stuff of dreams – for more correct figures look here:- http://www.hbc.ie/dublin/content/survey10highlights.pdf

It was great to see the Shelbourne being restored, but as an investment it was dead in the water from the start due to the purchase costs. The renovation costs were a small overrun. Last year the company that operates the hotel (and does not have to worry about such details as debt service – or even, heaven forbid, capital repayment:eek: ) made a loss of €3 million. This year the climate is a lot worse.

Rs
P.

I’m afraid I have to agree on the Shelbourne; Meridian may have lost the Meredian Dublin and the consortium may have restored the name to its original one but Meredian could scarcely have timed their exit better; the refurb is great for the City but you need seriously deep pockets to take on a project like that. This investment will be under water for a very long time; only in cities like London, Hong Kong or New York can one make money in pretty much any 5 year timeframe on prestige hotels.

On Pierse we will not agree; conditions in Ireland due to complete mismanagement of the economy have placed all companies in a vacuum where decisions are difficult to make; bear markets move very quietly between phases but when they shift down they are brutal in their speed. In the first wave went the clowns like Carroll and Dunne who thought they could create their own markets be it Carroll on listed companies or Dunne on creating a misplaced vision of 1970’s Knightsbridge in D4 in 2005; seeing people like McNamara and Pierse who were more followers than leaders was a lot less predictable and to my mind not pleasant to observe as they didn’t have their noses stuck up their backsides. Another 2 years of this government and Sisk and Ryanair will probably go under as well.

@KerryBog2 wrote:

How did anyone think it could work?? How could any banker lend to a project like this??
K.

Money is sometimes not the be all and end all.
It is information/contacts.

Its the economy stupid

Should Ireland withdraw from the EU and should the government be privatized/subcontracted?

http://www.irishtimes.com/newspaper/ireland/2010/1113/1224283236618.html

Deleted

Ireland cannot withdraw from the EU – we’d lose our main source of funding.

You cannot privatise a government – its either a representative democracy or not – but you could privatise the administration.

I’m pretty sure the only reason these people are paid so much in the civil service is that they know where all the bodies are buried.

ONQ.

No but enter a new economic phrase ‘Regionalisation’

Good behaviour at corporate level sees stock market flotations and subsequent offerings to buy competitors.

Good behaviour at Government level sees lower bond yields, cheaper debt service costs and every bank going trying to lend you money you don’t need. The 1990’s!!!!

Bad behaviour at corporate level sees heavily discounted share offerings and in extreme cases nationalisation.

Bad behaviour at Government level sees rising debt service costs, bond markets shutting to much of the corporate sector and bailout by your regional partners; the term when this phase is reviewed will clearly be regionalisation. Dubai, Athens, Dublin, who is next Lisbon?

The PIIGs will become the LADDs

Go on, you know you want to.

Tell us what LADDS is

Lewd And Dangerous Drunkards Schmoozing?

Licensed Autonomous Debt Destruction Service?

Lard Ass Defunct Dynasty Supplicants?

What?

Don’t keep me waiting, I’m in suspenders!

🙂

ONQ.

@onq wrote:

Go on, you know you want to.

Tell us what LADDS is

Lewd And Dangerous Drunkards Schmoozing?

Licensed Autonomous Debt Destruction Service?

Lard Ass Defunct Dynasty Supplicants?

What?

Don’t keep me waiting, I’m in suspenders!

🙂

ONQ.

didn’t he say Lisbon Athens Dubai Dublin?

Pride the biggest hurdle to Irish bailout
By Carmel Crimmins, REUTERS

REUTERS/Cathal McNaughton

Is Ireland on the brink of collapse?

DUBLIN – National pride and fear of having to accept tough policy conditions are at the heart of Irish resistance to being bailed out by the European Union. But these considerations are likely to be swept aside if Brussels insists on a financial rescue.

Prime Minister Brian Cowen has repeatedly said he does not want external assistance. Deeply unpopular, he is resisting going cap in hand to Europe partly out of concern for the electoral fallout, and because as a condition of emergency loans, Brussels might demand he raise the low rate of corporate tax, a key part of the government’s economic strategy.

Cowen still appears to be hoping the publication of a four- year austerity plan later this month, and the planned passage of the 2011 budget in early December, will convince investors Ireland can solve its fiscal and banking crises by itself.

But last week’s surge of Irish borrowing costs, which dragged up bond yields of other weak countries such as Portugal and Spain, means Cowen may already have lost the argument — Brussels may be so concerned that Ireland’s crisis could destabilize the euro zone that it may effectively force Dublin into a bailout.

In the last two days, official euro zone sources have told Reuters talks on the possibility of a rescue are underway and it is “very likely””Ireland will receive help. One source said that although Dublin was not keen to apply for aid, it might not have a choice, depending on market movements.

“We have already surrendered our political sovereignty and anyone who doesn’t recognize that is naive in the extreme,” said Jim Power, chief economist with investment firm Friends First.

“Ireland is now being run out of Europe; the ECB is keeping our banking system solvent and indeed is keeping the whole economy solvent. I think that is the reality.”

While the Irish government is fully funded until the middle of 2011, and thus does not face any immediate solvency crisis, Ireland’s banks have been frozen out of term funding markets and are dependent on support from the European Central Bank.

HUGE SHAME

A bailout, with fiscal conditions attached in negotiations with the EU, would be humbling for a country once feted for its rags-to-riches transformation and proud of its struggle for independence from Britain.

“I remember the 1980s when you’d be working over in London hiding your Irish accent,” said one Dublin-based financier, who declined to give his name.

“A bailout would damage our reputation for years. We’ve achieved so much, it would be a huge shame to see it undone.”

Ireland’s central bank governor said last week that if external assistance were required, it would not force a shift in fiscal austerity measures already planned by Cowen, which total 15 billion euros over the next four years.

But the government has yet to outline exactly how it will achieve its budget adjustments and there is a real fear in Dublin that Europe would demand unpalatable measures in exchange for aid, most controversial of all a possible increase in Ireland’s 12.5% rate of corporate tax.

“It comes down to the corporation tax,” said Brian Devine, economist with NCB Stockbrokers. “If it wasn’t for that issue I would say we should call for it (external aid) straight away.”

Ireland’s corporate tax rate is a magnet for multinationals such as Google and Pfizer and a source of irritation in some other European capitals, which view it as unfair competition.

Greece had to raise its sales tax to 23% from 19% in a few months as part of a 30 billion euro package of steps it promised the EU and the International Monetary Fund in May in exchange for its 110 billion euro, three-year bailout.

OBSTACLES

In fact, because Ireland has already taken difficult budget steps, it might find it easier to agree on an aid deal than Greece did during its ten days of tense bailout talks with the EU and the IMF in late April and early May.

Athens eventually promised to cut its budget deficit to 2.6% of gross domestic product in 2014 from 13.6% in 2009. Ireland is already targeting a shortfall of 2.75-3% of GDP in 2014 against an underlying 12% this year.

If the Irish do apply for aid, “there can be no question that they’ll get it without much trouble; i.e. no need for long negotiations on conditionality,” Erik Nielsen, chief European economist for Goldman Sachs, said in a research note.

He said the issue of the corporate tax might be resolved with some sort of “gentlemen’s agreement” to move in the direction of a higher tax over the medium term.

Another contrast between Greece and Ireland is that the Greek bailout was pushed through by a strong leader, Prime Minister George Papandreou, at the head of a solid government which had recently taken power.

The most unpopular leader in modern Irish history with a shaky parliamentary majority, Cowen does not have a strong mandate to negotiate with the EU or the IMF. Analysts expect an early parliamentary election in the first half of next year will end his Fianna Fail party’s 14-year grip on power and create a new ruling coalition of the centre-right Fine Gael and the centre-left Labour party.

But while opposition parties would make political capital out of Ireland’s loss of sovereignty in a bailout, they would probably not obstruct an aid package given the lack of alternatives and the bonus that Fianna Fail would be blamed for it.

It is conceivable that if the EU presses Ireland to take a bailout before the Irish election that is expected next year, the government will try to involve the opposition in the bailout talks in some way, to ensure there is a national consensus around the rescue agreement.

Despite rocketing unemployment, the worst recession in the industrialized world and two years of austerity measures, Irish people have reacted with resignation rather than riots, and are already expecting an even tougher wave of cutbacks regardless of whether Dublin or Brussels is calling the shots.

The damage on this was done by Anglo Irish Bank and INBS during 2006-2009; it is time to accept the inevitable and the polls and give the Country a new government with a new mandate and the authority to carry out the necessary adjustments. International Capital markets have heard the latest ‘line in the sand measure’ from this Government once to often; they don’t believe the current government; they have been codded more than once too often.

Well, if this forces us to develop our own indigenous industries and become more aligned with the European norm, I have no problem with that.

The rampant growth of the Tiger economy went to the heads of those on the gravy train – not us, I hasten to add.
We saw madness – like huge loans advanced even to careful home-owners on the basis of their hugely inflated house values and we saw the recipients of these loans doing silly thing with the money.
Second and third homes, cars bought off the mortgage and huge extensions they didn’t really need.
“You’re under-borrowed” was the line used to suck in financially stable people like journalist Kevin Myers.
Not any more he isn’t having lost €60,000 on an investment where values “have fallen as well as risen”.

Banks went from lending money with sound policies, to selling money with an advertising policy to shovelling money at anyone they could interest, with no policy at all.
Since then they have screwed us royally, by drip feeding a country credit when it had become used to their torrent.
I warned the top managers in AIB last April at a function in the Cornelscourt branch – they didn’t listen.
The economy has shrunk and they will pay the price for this in the new year.

Cowan, possible a capable enough “safe pair of hands” in Fianna Fáil terms in another era assuming the famous “sound fundamentals” were actually in place, now has no mandate to govern.
Cowan, unfortunately, is a terrible communicator to the public, despite him apparently being one of the most devastating orators in the Dáil when he wants to and both good craic and intelligent company when he’s not at work.
What little good news there is [Chinese investment coming to Athlone, for example] is not presented well, if at all.
His government’s failure to anticipate the contraction due to the banks not lending and doing something about it has to rest equally on both his and Brian Lenihan’s shoulders.
To allow a contraction in the economy such as they one that has recently occurred on Q3 ans Q4 is the height of incompetence, and yes – they both have to go.

If we lose face by bringing in the EMF and corporation tax has to go up resulting in some companies flying the coop, so bet it .
The Chinese invasion of Athlone would not have resulted in many Irish jobs anyway, while our technical recovery is based on the profits of multinationals and it has resulted in no jobs here.
With the expected losses in revenue across the board due to multi-nationals pulling out, all sectors of the economy will have to slash prices and this will allow the rest of us to live here at a reasonable standard of living – those with jobs anyway.

ONQ.

@onq wrote:

You cannot privatise a government – its either a representative democracy or not – but you could privatise the administration.

I’m pretty sure the only reason these people are paid so much in the civil service is that they know where all the bodies are buried.

ONQ.

A valid argument could be made that the administration already has been privatized – we have the Dept. of Health and then the HSE, we have a multiplicity of civil servants and then we have the outside consultants that are creaming it on ‘advisor’ contracts. Civil servants now think that they are ‘managers’ and policy setters, it is for other donkeys to do the work. That is why they have such a high opinion of themselves and continue to justify their large salaries.

The reason these people are paid so much is because (a) no politician had the …..emm .. gumption to stand up to them and face them down; (b) most of the Ministers are too thick to survive without their minders and they know that; (c) the Secretaries General measure their status by staff count so they hire more. Thus we have a self-perpetuating system of inefficiency, in-fighting, and downright incompetence.

PVC – the damage was done long before 2006-2009. It was becoming very apparent in 2001 when I returned to Ireland. We can agree to disagree on Pierse – time will tell (and my record of being right is a bit higher than yours;) )

ONQ – I disagree with your comments on Cowan being good craic and intelligent company . The guy is a boor, I sat next to him at a dinner when he was a minister – Transport I think , and he was downright rude. The ability to communicate with the common man via karaoke, funny stories and yarns is not and never was what this country needs.

Nobody was forced to borrow/build/develop. I refused to accept daft construction quotes; I refused to buy investment properties both here, the UK and in Spain. Sadly, I did not think that the banks were managed as badly as we now know nor did I foresee that they would crash the way they did and have suffered as a result.
The sooner an outside body runs this country the better. An election will not be sufficient, and a hung Dail would be no help.
K.

http://www.thedailymash.co.uk/news/international/ireland-to-dance-its-way-out-of-debt-201011153254/

apologies for going all missarchi-esque but, when the leading online news satirical site reckons your problems are well known enough to get the piss taken out of you then there is a relevance

@wearnicehats wrote:

http://www.thedailymash.co.uk/news/international/ireland-to-dance-its-way-out-of-debt-201011153254/

apologies for going all missarchi-esque but, when the leading online news satirical site reckons your problems are well known enough to get the piss taken out of you then there is a relevance

At this stage you’ve got to laugh. That is funny.
All we need now is a Bloomberg interview with Fr. Jack.

+1 plus they did their homework; plenty of 1980-‘s emmigrants did support Bushmills and a little Noraid; these days though you’d have a bit more faith in the UCD grads funding start up Bio-tech and IT companies from the MIT campus culture with their spare change rather than tossing dollars into a bucket to Noraid; sure wouldn’t they would gain valuable exposure to in their graduate employment and even get to know the winners from the losers to give the IDA leads into who to target down the timeline; remember that concept grads getting jobs? As a people we have moved on so far in the last 20 years just a pity the economy was wrecked by the most indecisive government in Irish History.

If the last year has taught us anything it is that the best way to take down a country is to bury ones head in the sand. The only question now is will Lenihan Bros take down Portugal as well?

The Taoiseach said what was needed was ‘calm heads and cool consideration’ of all the complex issues involved

The complex issue is the psychology of those that provide the funding; lets look at it from their point of view on the positive they hold an asset that is likely to provide a much higher yield than core EU economy bonds such as German, French or Dutch bonds, take inflation at 2% and French 10 year bonds provide a return above inflation of 1% p.a. In the case of Irish bonds that premium is likely to be 2% – 3% above French rates and 3% – 4% above inflation; if you think Ireland is a good prospect then Irish yields are a real opportunity at the current time.

Then look at what might make the people who fund the country scared, a number of final solutions have been issued to great fanfare and assurances given which have proven misplaced; the Government parties are at 11% and 3% respectively in the polls so have literally no support. The banking system excluding IL & P and BoI has credit markets closed to them and have swamped the exchequer with an extraordinary amount of debt. Unemployment is well in excess of 10% and real earnings are falling. An austerity package due in a month will probably take 3% off GDP for the next 5 years.

The EU are prepared to extend finance at a 3.1% discount to the market, the calming of the bond market would calm down not just in Ireland but across all of peripheral Europe making growth across the entire region more likely i.e. the country’s key market. Those holders of Irish debt who have remained loyal will see their losses cut and those that bet against the country will take a beating where it hurts in the pocket.

When you look at it once you get an assurance on corporation tax its actualy quite simple and you get to tell Jackie Healy Rae and his ilk which rock to climb under because it is out of your hands.

If pride stops an orderly bailout history will judge Cowen much more savagely than the poor scmuck who Bertie handed the sick baby to.

The only problem with this is that the EMF/IMF have a poor record in being concernd with events on the ground – they are not responsible to the electorate and we are a small country.
I would be very worried that austerity measures without alternative sources of credit will severely damage our economy, not 3%, say, but 10-20%.
We’d be back not at 1998 levels, but at 1980 levels.
A terrible result, surely, if it transpires?

But as for leaving it to the pair who ruined us to bail out the banks – no.
On that I am adamant – these pair of fools have all but ruined us and for what?
Preserving a “credibility” on the markets so we can continue to borrow to pay the public debt bills?

ONQ.

Compared to countries that have not destroyed their finances the IMF would have a pooor record; compare the performance of NINJA mortgages with those of more normal behavioural types and the record would not be good.

I agree on corporation tax; if it goes then the loans will not be paid back and they may as well let Ireland fail and burn the bailout money to generate a few watts of power.

Desmond snaps up a dark portrait of troubled nation‘Sword of Justice’ is one in a series of controversial paintings called ‘Boomtown’

By Ken Sweeney

Wednesday November 17 2010

A PAINTER whose recession-themed canvases have provoked controversy has attracted the patronage of millionaire businessman Dermot Desmond.

Artist Brian McCarthy’s ‘Boomtown’ series captures Ireland in 2010 in which the country is portrayed as a vast shanty town, or the Irish nation as boat people in a small craft on treacherous seas.

But it is the night-time scene. ‘Sword Of Justice’, in which an angry populace prepares for revolution, which has caught the attention of one of the country’s most successful entrepreneurs, Dermot Desmond, who purchased the work recently for €4,500.

“Dermot is a genuine patron of the arts,” Mr McCarthy said.

“I met him last year at an exhibition in London and he explained to me that, rather than collecting old masters, he preferred to buy work that caught his eye.

“This painting seems to have done that. It’s one of the biggest sales I’ve ever had.”

The 50-year-old said the inspiration for his ‘Boomtown’ work came from listening to RTE programmes like ‘Liveline’ each day.

“It’s the anger of the callers. I never planned to do a series of paintings on this subject but when the first piece ‘Boomtown’ got such a great reaction, I decided to turn it into a series. I’ve never known such a response. People seem to identify and understand perfectly what I’m feeling because they feel the same,” Mr McCarthy told the Irish Independent.

Another picture in the series, ‘Exodus’, depicts the Irish nation in a small boat making a desperate attempt to flee.

“The idea came from the Vietnamese boat people who were forced to set sail for a better life.

“This is true for so many young people leaving Ireland now. I choose the backdrop of pointed peaks because it’s as far away from an Irish landscape as you can get.”

The exhibition ‘Boomtown’ can be seen at the Keeling Gallery, 41 Clarendon Street, Dublin 2.

– Ken Sweeney

Irish Independent

McInerney to cancel Dublin & London listings
Updated: 07:35, Friday, 19 November 2010

Housebuilder McInerney Holdings has announced that it is cancelling its stock market listing in Dublin and London.

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Housebuilder McInerney Holdings has announced that it is cancelling its stock market listing in Dublin and London.

The company, which is under examinership, says the listing is no longer in the best interests of company or its shareholders as it is no longer in a position to meet its continuing obligations for listing.

‘The board has concluded that the continued listing of the shares of the company would jeopardise the successful implentation of any investment or similar arrangement that may be agreed by the examiner to ensure that the survival of the company or companies in its group,’ the statement added.

Earlier this month, the High Court said it would continue court protection for the companies in McInerney until December 3.

Mr Justice Frank Clarke said he was continuing the protection with considerable reluctance but he said he could not at this stage come to the conclusion that there was not a realistic chance of the examiner coming up with a scheme which could succeed.

But he said there would be very considerable difficulties in coming up with a scheme which would not prejudice the existing banking syndicate who are owed money by the companies.

Bank of Ireland, KBC and Anglo Irish Bank are owed €115m and are opposed to the examinership. Any scheme submitted by the examiner is likely to be strongly contested by the banks.

The cancellation is expected to take place this morning.

I wonder if any vistiors to the tent made loans as opposed to just donations; if so I wonder could any of those visitors could call in their loans and have Fianna Fail declared insolvent and unable to trade?

@PVC King wrote:

I wonder if any vistiors to the tent made loans as opposed to just donations; if so I wonder could any of those visitors could call in their loans and have Fianna Fail declared insolvent and unable to trade?

They might ask “Independent TD” Michael Lowry to come in and advise them on party finances.
Didn’t he do a great job for Fine Gael in the ‘Nineties?

ONQ.

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

An utter scumbag but in fairness to our new Commissioner of Sport he was booted as soon as a whiff of scandal emerged and the evidence given by DTZ director Mark Fitzgerald at the Moriarty Tribunal re the Eircom Rent Review on Marlborough Street was a very telling indication that FG do not close ranks and that even if the party reputation is on the line the that any perceived wrong doing will come out.

It is vital that both the EPP & Socialist blocks in the Brussels parliment have a coalition for our new government; I am not voting Fine Gael as since Garrett Fitzgerald retired they haven’t had a decent candidate in DSE any way the last Finance Minister with an IQ above 10 was Ruairi Quinn

Totally agree in relation to Ruairí – a potentially great Taoiseach we never had.

As for “Inda” and the bois, Bruton is the one one I rate and he has played the “rebel” card and been defeated.

He needs to oust Inda before the next election or form his own party to move forward.

Otherwise he’ll end up supporting a weak leader who in the past fortnight has gloriously shot himself in the foot in a radio interview.

Pompous and arrogant though COwan looked yesterday delivering his “do it for the country” speech, he still blows Inda away.

The trouble is FIanna Fáil are not right on this matter.

Front loading pain before the economy and jobs are showing signs of recovery is simply wrong headed.
We have a paper upturn based on the profitability of foreign multinationals located here.
The economy is not yet resilient enough, the consumer not confident enough.

After a year when the banks were caught no lending but lying, we need liquidity to restore the market and the consumer confidence and we need it before Christmas.

ONQ.

I’m not sure what is more depressing

1. the shopfront
2. the spelling
3. the fact that this takes up newsprint
4. The fact that we care at all

if it was spraypainted on his face then I might be interested

Of course, by posting this, I have spread the malaise.

Unless. of course, Noel has shut up shop and is in the throes of opening a trattoria and all the “irish education in a portakabin” years got the better of him

Am I the only one to be offended at the cartoon on the front of today’s IT? Would any other country’s – supposed – primary newspaper have written – for all intents and purposes – “fucked” on their front page? It says a lot really

Is that “TRATIORS”?

Is this not just a cunning plot by Dempsey to –

1. Get much needed TLC from people commisserating with him
2. Look like someone already “did” him to avoid getting hassled on the hustings
3. Get some insurance money in to do up the store front in time for the next election in January 2010.

Or

4. Give him his “reason” for departure from Irish politics?

ONQ.

Oldish news but tones of Pierse in the company spiel

http://www.irishtimes.com/newspaper/finance/2010/1116/1224283410768.html

CAVAN-BASED construction company P Elliott Co took a writedown of €43 million in property impairment and provisions against related party debt last year, pushing the company almost €30 million into the red.

The accounts state that the company construction division had made “very good progress in 2009”. The company secured a number of public contracts, while rental income from its investment properties remained “very stable”, according to the company.

Not convinced they will go; they have some nice work in London at the mo

I think they are a possibility. Their work in London isn’t enough to service their debts alone and apart from the NHS hospital in Enniskillen (a JV) they haven’t much in the way of large projects here.

Another contractor/developer I feel may possibly go in 2011 is JJ Rhatigan. Their flagship project, Heuston South Quarter, (Rhatigan Commercial Developments Limited) a half built and residential units aren’t selling. Again, a few minor (less than €10M) other projects isn’t enough to service their debts.

So who will be left after our “period of austerity”? Hmmmmmmmm……………….

I hope you are wrong; have we learned nothing from the contagion that resulted from the various collapses of Carroll, NcNamara etc. At this point those that have a viable order book should be permitted to trade on as clearly the valuation curve has reached a point that like the height of the boom does not reflect the medium term outlook, this time it reflects armageddon, which has happened but is a phase we need to move on from. Accept the following

A government of gobshites wrecked the economy
The Euro will soon be a very different entity
Asset prices are below medium term value
The cost base is adjusting down (only the public service left to follow)
Most FDI has and will stick around given the revised labour and real estate costs including construction costs for capital intensive plant.

We need four things to happen

1. A new government with a strong mandate
2. The Euro to be restructured
3. FDI flows to continue and grow employment
4. Asset values to stablise

http://www.irishconstruction.com/page/2679

NAMA takes over McNamara properties

NAMA is set to take control of a string of properties from developer Bernard McNamara

McNamara has flat complexes, offices, a share in the Shelbourne Hotel and in the infamous Irish Glass Bottle site in Dublin. McNamara Construction, which has undertaken flagship work on the Shelbourne Hotel, Sir John Rogerson Quay and Lansdowne Road, shut all its sites on Thursday night

Construction at a number of public projects such as Letterkenny Hospital and Tallaght IT have fallen victim to the failing business with workers refused entry to the sites and forced to picket at the gates. Declan Taite, of Farrell Grant Sparks, has invited offers for the business and for its assets that include substantial work in progress sites, large premises in Dublin and Galway, plant and machinery and motor vehicles. The business also retains what the receiver describes as an experienced and technically skilled labour force that come with it. The company went into receivership following a legal action by the National Asset Management Agency (NAMA) as part of its efforts to recover the millions owed to Irish banks.

NAMA is to shut down more property developers as early as this week, as it moves to take control of some of the country’s biggest borrowers. The agency is also expected to take action against other companies belonging to developer Bernard McNamara, after putting his building firm Michael McNamara Construction into receivership late last Thursday. Informed sources said other developers also faced action in the near future as Nama accelerated its work.

One source said that Nama had been ”getting its ducks in a row” for legal proceedings for a number of months, with the appointment of a panel of insolvency experts and lawyers. The agency is expected to target groups where construction companies are owed significant sums by related development firms, as was the case with McNamara.

This has been coming for a while, whilst I feel sympathy for BMcN personally it is vital that any contagion is prevented from entering the construction/design supply chain below them; as far as is possible with the assets as currently valued.

There have been some very interesting developments today economically not least of which is the Fed seeming to indicate that they will backstop the ECB if things get messy; that combined with a fall in Unemployment leads me to one conclusion; the International picture looks more favourable but it is based on printing money which will lead to inflation. If the country didn’t have banks with balance sheets equivelent to 1000% of GDP you would regard it as a problem; but given the debt thats outstanding at corporate, governmental and personal level; cross both sets of fingers that Ben gets the choppers spinning and soon.