Home builders

One of Australia’s largest homebuilders Metricon battles cash crunch

Construction giant Metricon is holding crisis talks amid cash pressures in the construction industry as it reels from the ‘sudden and unexpected’ death of its founder.

Mario Biasin, 71, died on Monday, the company confirmed in a statement and added that he had “had some mental health issues”.

He had set up the company in Melbourne in 1976 and grown it into one of the country’s largest homebuilders – with operations spread across NSW, Queensland and SA.

Metricon’s interim CEO Peter Langfelder thanked industry members and the wider community for the “outpouring of support” and said the company was not in financial difficulty.

“We are committed to continuing to run the Metricon business as usual,” Langfelder said.

Metricon founder Mario Baisin (pictured) died on Monday, the construction giant confirmed in a statement. He was an avid AFL and football supporter and was a big help to Canteen, a cancer charity.

Metricon reportedly met with major customers on Thursday for crisis talks amid soaring costs in the construction industry

Metricon reportedly met with major customers on Thursday for crisis talks amid soaring costs in the construction industry

“We greatly appreciate the kind messages of support from our business partners, suppliers, trades, contractors, government agencies and financial partners.”

He urged Metricon customers to be patient as they navigate these difficult few weeks.

His comments come after sales staff were reportedly told to boost cash flow by getting more deposits.

Mr Baisin had backed cancer charity Canteen, with CEO Peter Orchard saying his support had helped thousands of families.

He was also an avid AFL and football supporter, trustee of Melbourne Victory for 16 years and helping to establish the Gold Coast Suns through sponsorships.

As the AFL team, Essendon will wear black armbands in honor of Mr Baisin during Saturday’s clash against Richmond at the MCG.

Master Builders Victoria boss Rebecca Casson said Metricon “has been a valued member of the last 29 years and Mario was a good friend of the agency and an exceptionally strong advocate for our industry”.

“Mario’s commitment and contribution to the home building industry will always be invaluable,” said Graham Wolfe, CEO of the Housing Industry Association.

Newland Developers director Gideon Kline, whose father George Kline co-founded Metricon and worked with Mr Baisin for decades, said he was a “passionate and committed individual”.

It is understood that the builder’s major customers, including the Victorian Government, will meet company management on Thursday to discuss their plans.

Acting CEO Peter Langfelder (pictured) said it was

Interim CEO Peter Langfelder (pictured) said it was ‘business as usual’ for the carmaker

Material prices have been rising steadily since the start of the pandemic, but exploded in April and May last year (average commodity prices - Arcardis statistics)

Material prices have been rising steadily since the start of the pandemic, but exploded in April and May last year (average commodity prices – Arcardis statistics)

Metricon employs around 2,500 people across Australia and has thousands of projects on its books – being ranked the country’s largest homebuilder in 2021.

But the construction industry is grappling with soaring raw material prices and 24 months of intermittent shutdowns that have upended pre-arranged quotes, schedules and the supply chain.

Internal company memos seen by the sun herald raise questions about cash flow and alert employees that this is “critical time” for unsigned contracts.

The Victorian government alone has $195 million worth of projects with Metricon.

Across the country, builders are feeling the pressure, with wood having seen its price rise 21% in the past 12 months, while steel has soared 45%.

Fittings, including plumbing, ceramics and electrical materials, jumped about 10%.

In March, Metricon announced it was renegotiating fixed-price contracts in Queensland, but quickly reversed its decision.

That same month, Queensland builder Condev folded with 18 projects in southeast Queensland and northern New South Wales under construction.

Melbourne-based builder Probuild entered voluntary administration in 2022 after running up tens of millions in debt

Melbourne-based builder Probuild entered voluntary administration in 2022 after running up tens of millions in debt

Co-owner Tracey Marais said the builder had been battered by a “perfect storm” of soaring raw material prices, labor shortages and work disruptions caused by Covid and torrential rain.

Asked if she considered other major builders to be struggling as well, Ms Marais said that was definitely the case.

“I don’t think potentially, I think for sure,” she said.

Rising costs are also believed to have fueled the collapse of major construction company ProBuild, as the company owed workers $14million for its doomed 443 Queen Street project in Brisbane.

Two construction companies in Perth have also recently closed – Home Innovation Builders and New Sensation Homes.

Tristan Kirkham, managing director of New Home Building Brokers, said he’s heard clients from several different companies say their builders aren’t getting the job done – but there’s a bigger problem.

Mr Kirkham said there had been a huge increase in construction costs, which had a direct impact on trades.

“Right now I’m very worried about builders, they’re not all shady. If we don’t make a change in this industry and the way we do it, builders will continue to fall,” said he told Daily Mail Australia.

Queensland construction giant Condev has been crushed by back-to-back problems including labor shortages, rising material costs and flooding

Queensland construction giant Condev has been crushed by back-to-back problems including labor shortages, rising material costs and flooding

He said customers were ringing in panic because they saw no progress on construction sites, but he insisted workers were not to blame.

Despite a surge in demand for new homes, construction companies are more likely to go into administration than any other type of business.

In the December quarter of last year, 328 construction companies went into administration, compared to 178 in the food and accommodation services sector, according to data from the Australian Securities and Investments Commission.

Housing Industry Association senior economist Nick Ward said Australia’s apartment building sector had rebounded from Covid restrictions.

“Confidence in the market has weakened after the borders closed, but there are warning signs coming back,” he told Daily Mail Australia.

Nonetheless, the Australian construction sector is facing challenges with higher construction material costs for steel and timber due to Covid supply constraints.

“Generally, raw material supply is a very big constraint for builders right now,” Ward said.