Construction giant Metricon unceremoniously laid off the majority of its NSW sales staff via Microsoft Teams on Monday, in the latest sign that the struggling business is on the verge of collapse.
The company later confirmed that 9%, or around 225 of its 2,500 national employees, would be made redundant as part of a restructuring.
David Shorten, Metricon NSW State Sales Manager, told staff at Monday morning’s meeting that the number of states would be reduced to just 18 from around 60 currently, with severance packages offered to those who cannot be redeployed.
About fifteen trainee sales advisers were also made redundant without a reclassification offer.
“To better meet and reflect the demands of today’s market and ensure the most appropriate deployment of resources, we have undertaken a significant review of the sales team,” Mr. Shorten said in a statement read at the teams meeting. .
“It is necessary to ensure that we remain competitive in the short and long term. The review was not undertaken lightly and resulted in proposed changes to the current team structure. We understand that you may be feeling anxious right now and probably have a number of questions. Under the proposed structure, the number of new housing advisers will be reduced to 18.”
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Affected employees were given until midday Wednesday to provide any “thoughts, ideas or comments you may have regarding the proposed structure and approach”, with employees to be notified if they are terminated by the end of the week.
Mr Shorten said Metricon would “select the most qualified people to fill future roles”, but warned that “options are limited” for redeployment.
“In the event that you cannot be redeployed to another suitable position within the notice period, you will receive the relevant termination rights if they were available to you,” he said.
Employees who are offered one of the remaining roles but choose not to accept may not be eligible for severance pay.
An employee, who asked not to be identified, said he expected the announcement after Metricon shut down its HR portal last Friday.
He said there had been a turnover recently with “people jumping ship to go to competitors”, and those who remained “basically had the rug ripped out from under them” by “no fault of theirs”. their part” after believing the company’s repeated public denials. that he was having difficulty.
“It was not well received by some of them,” he told news.com.au. “I’m a little burnt out by the whole situation.”
The company’s biggest homebuilder was plunged into crisis in May amid reports it was on the verge of financial ruin and was engaging in crisis talks with the Victorian government, following the sudden death of its founder Mario Biasin.
Interim chief executive Peter Langfelder has repeatedly dismissed the claims, but a question mark still hangs over Metricon’s future despite the company’s directors injecting $30 million to allay fears. as to its survival, and a bailout deal with the Commonwealth Bank.
Last month, Metricon listed almost 60 show homes for sale in New South Wales, Queensland, South Australia and Victoria, with a total value of around $65 million.
The Sydney employee said ‘events have snowballed’ since Mr Biasin’s death, adding he was skeptical the business would survive.
Reached for comment on Tuesday, Metricon confirmed it was in the “process of an internal corporate restructuring, with an increased focus on delivering homes to the over 6,000 Australians whose homes will be built this year”.
“To better meet and reflect the demands of today’s market and ensure the most appropriate deployment of resources, Metricon is working to appropriately reduce its sales and marketing capacity while focusing on building and delivering more 6,000 homes,” a spokeswoman said. in a statement to news.com.au.
“We have started a consultation process with our people. This process is proposed to lead to downsizing and layoffs across the national company.
The spokeswoman said 2020 and 2021 saw record homebuilding demand and that Metricon “expects demand to stabilize at pre-pandemic levels.” “As a result, the company will rebalance back to building the homes it is building and the thousands more being built – the largest volume in the company’s history,” he said. she stated.
The impacted roles will be at “front-end of the business, primarily in sales and marketing roles, representing approximately 9 percent of the national workforce”.
“With the current headwinds rocking the industry, particularly labor costs due to competition for skills, combined with current increases in global material costs and our very strong existing works pipeline, we need to carefully balance the new construction pipeline with the construction side of the business,” Langfelder said in the statement.
“We are working to restructure our front-end of the business given the current climate and the need to move forward efficiently. We are committed to taking care of all of our employees who may be impacted by these proposed changes, and they will continue to have ongoing access to company support and mental health services.
Langfelder said Metricon is rebalancing the company’s focus over the next 18 months on executing builds as quickly and efficiently as possible while maintaining balance in the pipeline.
“We have said before that our business has proven itself and remains profitable and viable, with the full support of our key stakeholders – that remains the case today,” he said.
Langfelder said Metricon should still continue to contract an average of 100 homes per week, in line with pre-pandemic levels. “Our future construction pipeline shows no signs of slowing down with over 600 sites planned for 2023,” he said.
Australia’s construction industry has been plagued by mounting problems which have already seen Gold Coast-based Condev and industry giant Probuild go into liquidation in recent months, while smaller operators like Hotondo Homes Hobart and Perth, Home Innovation Builders and New Sensation Homes, as well as Sydney-based Next, have also failed, leaving homeowners out of pocket and with homes unfinished.
The crisis is the result of a perfect storm of conditions following one another, including supply chain disruptions largely due to the pandemic, then the Russian-Ukrainian conflict, followed by labor shortages. qualified, skyrocketing material and logistics costs, and extreme weather events. .
The industry’s traditional reliance on fixed-price contracts has also seriously exacerbated the problem, with contracts being signed months before construction begins, including soaring costs of essential materials such as timber and steel. .
It comes after it recently emerged that Australia recorded a staggering 3,917 liquidations or administrative appointments across all industries in the 2021-22 financial year.
The construction sector led the charge, accounting for 28% of all insolvencies, although companies in countless sectors also failed in the face of soaring inflation and interest rate pressures, the chaos of Covid , labor shortages and supply chain disruptions.
There have been 1,536 collapses in NSW, with Victoria recording 1,022, Queensland 665, WA 350, South Australia 196, 91 for the ACT, 29 for Tasmania and 28 in the Northern Territory.
According to consumer credit reporting agency Equifax, “Australia’s smaller construction industry operators could well be the canary in the coal mine for the difficulties that await this sector”.
The company at the end of last month claimed that “the significant increase in construction company bankruptcies since the start of the year shows no signs of slowing down”, with provisional data indicating that insolvencies in the construction sector construction increased by 19% for the month of May, or 43% more. May 2021.
Overall, insolvencies in the construction industry have increased 30% over the past 12 months, according to Equifax.
– with Alexis Carey