Company sale expected to attract national interest
27 August 2004
Council’s design company sale expected to attract national interest
Auckland City voted last night to sell its wholly owned design consultancy City Design Ltd, to allow it to be more competitive in the commercial market.
City Design provides land, road, water, building and traffic design and support services to public and private sector clients. It was established as a Local Authority Trading Enterprise (LATE, now called a Council Controlled Trading Organisation) in 2000.
“In 2000 the council felt that giving City Design more independence would allow it to provide a more commercial offering to organisations outside of the council. It also satisfied requirements for the council to seek competitive bids for certain projects,” says Councillor Douglas Armstrong, chair of the Finance and Corporate Business Committee, which considered this recommendation from the City Design Working Party last week.
“We knew we would need to consider the future of the relationship once we reached the point where external clients equalled or surpassed council business,” he says. “It’s usual for consultancies in this sector to be owned by their principals. City Design has recently begun to take a more national approach with operations in Auckland, Lower Hutt and Napier. It now needs to re-brand in order to continue to compete nationally and respond fully to market opportunities.
“An extensive investigation process has indicated that it’s in the best interests of all parties that the council sell City Design, but it’s fair to say we’re expecting a lot of interest in this sale from around the country,” says Mr Armstrong. Consultation leading up to this decision has been extensive. In May this year a steering group, including a councillor working party and City Design directors and executives, including chairperson of the City Design board Kevin Johnson, was established to investigate the options available.
Mr Johnson says the company has recently been enjoying good revenues and improved earnings but believes the sale is now the right move for the council and City Design.
“The sale has been reviewed by external consultants PricewaterhouseCoopers and is supported by the City Design steering team, including chief executive Barry Potter,” said Mr Johnson.
Design industry leader Mr Potter was appointed as chief executive last June to lead a reorganisation of the company.
“Financial performance has strengthened as a result of employing market leaders, securing new and better work, improved productivity, growing capability and increasing client satisfaction,” says Mr Potter.
“The sale will also include a partnering agreement with Auckland City. This will see a continuity of work from the council. We’re very confident that there is an exciting future ahead for the company and its employees,” he says.
All city councillors were invited to discuss the working party recommendations at the 19 August Finance and Corporate Business Committee meeting. The final decision was made at the full council meeting on Thursday 26 August.
Auckland City chief executive Bryan Taylor has been delegated responsibility to implement and manage a rapid sale process to remove any uncertainty and minimise the impact on staff.