Sunday, June 8, 2008
New Goldman Building Beset by Problems
Famous for its deft avoidance of one Wall Street crisis after another, Goldman Sachs Group Inc. hasn't been so lucky with its future headquarters.
Now under construction, the 43-story building in lower Manhattan, designed with six gigantic, state-of-the-art trading floors, was supposed to be the envy of Wall Street.
Associated Press Construction of Goldman Sachs's new home in New York City has been hit by several problems.But the $2.4 billion building has been beset by problems. In December, architect Robert Woo suffered paralyzing injuries when seven tons of aluminum wall studs fell from the building and crushed a trailer he was in. May 17, a 30-inch-by-30-inch aluminum plate dislodged from a construction hoist and plunged 18 stories. It landed like a knife in the grass, according to witnesses. The project has been hit with 20 building-department violations.
"I was really scared," says 10-year-old Alexander Monticciolo, who was playing baseball when the plate landed about 20 feet away from him. "When it landed, everyone just stared at it."
Tuesday, New York City's Department of Buildings lifted a stop-work order imposed after the latest incident, but so far construction has resumed only on the lowest 13 floors, which are enclosed by windows.
The accidents pit the image-obsessed Goldman against Tishman Construction Corp., a 110-year-old firm that has built landmarks such as the Hancock Tower in Chicago and the Twin Towers in New York. Goldman has insisted Tishman take extra safety precautions.
Douglas Monticciolo Last month, an aluminum plate fell from 18 stories up and landed on a baseball field.Among them: Netting now must completely shroud the building, and a senior Tishman executive has been assigned to the site full-time to oversee safety. Goldman Chief Executive Officer Lloyd Blankfein now receives regular briefings on the status of the building, according to a person familiar with the matter.
"We are not experts in the ways of construction," Goldman Chief Administrative Officer Jeffrey Schroeder told about 40 frustrated parents and nearby residents last week. "But we are deeply concerned about your safety."
Richard Kielar, a Tishman senior vice president, says that the changes, "on top of an already robust safety plan, will prevent this type and similar ones from happening again." He says the moves are "aimed at achieving a zero-incident goal on the project." Among other moves, the closely held construction firm will have nearly 1,000 workers on the site go through a safety refresher course. "All violations on the project have been addressed immediately and pertinent information provided to the Department of Buildings."
The accidents come at a time when New York's massive construction industry is under a glaring spotlight. More than a dozen people have died this year, including seven in a crane collapse in March. Last week, two construction workers were killed when a crane collapsed on an apartment building.
Safety problems also are cropping up elsewhere as the commercial-building industry chugs along in a frenzy of activity. Workers at the MGM Mirage's CityCenter, a $9 billion project on the Las Vegas Strip, walked off the job Monday to protest safety conditions. Six workers have died there, including one Saturday, who apparently got caught between the counterweight and the track of a crane in motion. According to Department of Labor statistics, more than three construction workers died per day in 2006, the latest available figures.
Founded in 1869, Goldman has always been based in downtown New York. Its current lease at 85 Broad Street, near the New York Stock Exchange, expires in mid-2011. In 2004, the firm started looking for a new home.
At the time, firms still rattled by the 2001 terrorist attacks on the World Trade Center were threatening to leave downtown Manhattan. In 2005, Goldman got tax breaks and grants valued at more than $400 million toward the new building, considered the sweetest deal given to a New York firm in several years, some industry observers say.
"Overly generous would be an understatement," says Bettina Damiani of Good Jobs New York, a watchdog group. She sees a harsh irony in the building's trouble. "Wild subsidies go to a highly profitable firm like Goldman Sachs, and the city has to scrounge money for enough building inspectors to keep the buildings from falling down," she says.
Goldman is a bit of an oddity in New York City real-estate circles, declining to brag about the particulars of its new home. People familiar with the building say it will be secure from potential attack, thanks to extra-beefy steel and glass. To control the area around its headquarters, Goldman bought the hotel that sits next door.
The accidents have put Goldman, which doesn't even display its name on its current headquarters, in an awkward spot with its new neighbors. Tensions flared when Goldman officials failed to attend a community meeting May 20 to discuss the tumbling aluminum.
"We certainly meant no disrespect for not attending," a Goldman spokesman said. "We simply wanted Tishman to have all facts so they could answer questions fully. But in hindsight it would have been better if representatives from Tishman and Goldman had attended."
Mariama James, who lives nearby, says that "people are not so happy with them right now, and they are going to have to pay some sort of restitution for that to go away." Her 6-year-old daughter Delia plays soccer on the field where the metal fell.
Mark Costello, president of the Downtown Little League, says that the community has had its share of headaches with new construction over the years but that Goldman has tried hard to hear the community's concerns.
Write to Susanne Craig at susanne.craig@wsj.com and Alex Frangos at alex.frangos@wsj.com
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