More building companies to 'overthrow', as display house giant Metricon loses staff to survive
One of the country’s most prominent builders will lose nearly a tenth of its workforce, due to growing concerns about Australia’s construction industry.
Key points:
- Metricon has told its workforce it is “restructuring”
- More than 200 jobs will be started
- Concerns continue about Australia’s construction industry
Metricon was forced to defend itself against rumors of bankruptcy just a few months ago.
The company has now notified its roughly 2,500 workforce that it is restructuring.
This move will impact 9 percent of its workforce.
It worked for more than 200 jobs.
Most of the roles that will be taken are not in the building or construction itself, but in front of homework such as sales and marketing.
In a statement, Metricon’s acting chief executive Peter Langfelder said the company was contracted to build 6,000 homes.
“We are working to restructure our business front end given the current climate and the need to move forward more efficiently,” he said.
Australia’s commercial and residential construction industry is currently grappling with post-boom hangovers.
Incentives like HomeBuilder during the pandemic saw at least 130,000 new homes or renovations subsidized by the federal government’s stimulus program.
At the same time, the industry has been grappling with soaring inflation or rising prices on a variety of essential materials, including wood, flooring and even toilets.
That collided head-on with a shortage of staff to build new homes, which was not helped by the east coast floods that swamped much of the construction and traded workers for rebuilds and repairs.
This year, a long list of building companies, including Previum, Condev and ProBuild, fell.
BIS Oxford Economics senior economist Maree Kilroy told ABC News a restructuring of Metricon is expected in the current climate.
“I’m not surprised,” Kilroy said.
“Home builders experienced a decline in margins.
“And we expect construction costs to remain high for another 12 months.
“Already the construction sector as a segment of the total economy for administration has increased a lot over the last two years.”
Just today, new ABS data came out on approvals for the construction of new homes and loans to them.
Ms Kilroy’s analysis found that home approvals are now flat and returning to pre-pandemic levels.
While there are still homes to be built that are sought after during the HomeBuilder boom, once the work is done, there may not be enough new jobs on the horizon for many companies.
The issue collides with rising interest rates, which have an impact on consumer sentiment and the ability of Australians to take out loans to build new homes or renovate their properties.
Today, the Reserve Bank of Australia raised interest rates again by 0.5 percent to 1.85 percent.
“Tight household budgets, deteriorating credit availability, rising construction costs and lengthy delays will further drag down demand for new homes over the next 12 months,” said Ms Kilroy.
“This is above the assumed higher dropout rate for the project, with a much larger share of approved residences failing to complete.
“The pressure on margins felt by home builders is likely to lead to more builders being ousted, particularly under-capitalized small to mid-sized operators.”
Peter Langfelder of Metricon points to skills shortages and supply constraints as reasons behind job losses.
“With today’s industry challenges, particularly labor costs due to competition for skills, combined with today’s rising global material costs and with our very strong line of work, we need to carefully balance the new development path with the construction side of the business.” he said.
“Our future pipeline construction shows no signs of slowing down with more than 6,000 start sites scheduled for 2023.”
In May, when rumors of Metricon’s bankruptcy spread in the media, the company met with the Victorian government.
Some of the rumors were sparked by the death of Metricon’s chief executive and founder Mario Biasin.
The company soon after secured a new financing deal, which included securing $30 million from its shareholders.
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