Metricon to cut workforce by 9% as inflationary pressures and a building backlog weigh on the sector

inflation metricon

Source: James Ross / AAP Image

Hardship continues for Australia’s largest home-builder Metricon, which has revealed plans to cut 9% of its workforce as inflationary pressures batter the construction sector.

The ABC reports Metricon acting chief executive Peter Langfelder announced an internal corporate restructure on Tuesday.

The reshuffle is focused not on tradespeople but on “the front end of our business”, Langfelder said.

Positions on the line include roles in Metricon’s sales and marketing departments.

Langfelder cited a trio of factors for the decision: the cost of labour in an incredibly tight jobs market, the soaring price of essential building materials, and a “very strong” pipeline of work in the future.

The final issue — the fact Metricon already has a backlog of projects to work through — appeared to be front and centre of Metricon’s decision.

Given the tidal wave of new building projects launched through 2020 and 2021, “we need to carefully balance the pipeline of new builds with the construction side of the business”, Langfelder said.

There are some indications that would-be occupiers and speculators are easing up from the frantic investment seen earlier in the pandemic.

New data from the Australian Bureau of Statistics, released Tuesday, showed that home loan commitments fell 4.4% in June, with the downfall likely driven by rising interest rates deterring some buyers from the market.

However, financing commitments for housing still hit the $31 billion mark, a mark well above the historical average.

Anneke Thompson, chief economist for Creditorwatch, last month said “longer term we are likely to see some pressure come off the labour shortages in the construction sector, although this probably won’t eventuate until 2023 as so many current jobs have been slowed down due to supply shortages and delays.”

Langfelder’s statement comes nearly a month after Metricon offloaded more than 50 display homes worth an estimated $65 million, a move which Langfelder said was par for the course.

In May, Metricon’s owners reportedly pumped an extra $30 million into the company, while financier Commonwealth Bank providing new funding assurance to the constructor.

Earlier that month, the company swatted away speculation it was facing solvency issues of the kind which claimed other builders like Condev and Probuild.

The company was also rocked by the death of its founder and CEO Mario Biasin in May.

“We are committed to continuing to run the Metricon business as usual during this sad time,” Langfelder said at the time.

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