Customer fears as Metricon enters urgent crisis talks over future

Daniel Andrews says the government is ready to provide support to the building giant as they enter crisis talks over skyrocketing costs.

Crisis talks are set to be held on Thursday with building giant Metricon as skyrocketing costs hit home, customers take aim at delays and insiders fear for the company’s future.

The Melbourne-based company, which claims it is “a strong viable business’’, will meet with state Treasurer Tim Pallas about an explosion in material and labour prices, as pressure mounts on builders struggling to meet contracts.

Premier Daniel Andrews said the government stood ready to provide support to Metricon amid concerns about the home builder’s future.

“What we will consider is whatever Metricon comes to us with,” Mr Andrews said.

“Lets see what support they want and need and we will make assessments about what is appropriate to do.”

A Metricon Home being built in Kensington Gardens. Picture: Nick Clayton

The Premier said he would not speculate on Metricon’s future.

“We’ve engaged with Metricon...I’m not here to describe the challenges they face.”

“Our door is always open... we work with many different companies facing many different challenges and the Treasurer will sit down with that particular business.”

Internal memos seen by the Herald Sun have raised concerns about business cashflow and staff have been told “it has come to crunch time” regarding unsigned contracts.

The turmoil comes during an emotional week for Metricon, with the sudden death of founder and chief executive Mario Biasin, who the embattled firm said had been experiencing mental health issues.

Metricon founder Mario Biasin unexpectedly died earlier this week.

Metricon, which employs about 2500 people and is building thousands of properties across Australia, was last year ranked the nation’s biggest home builder.

The talks with Mr Pallas will cover the $195m worth of state housing contracts on the go, as well as the proposal to add costs to contracts due to legitimate price escalations – something the government has consistently rejected.

Metricon’s acting chief executive Peter Langfelder responded to the chaos last night by saying: “Metricon is a strong viable business without any solvency problem”.

“The biggest challenge Australia faces is to get more homes built for more Australian families, and as the biggest home builder in the country we are the ones to deliver,” he said.

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The construction industry has supply chain problems, with figures showing in the year to March the cost of timber rose 21 per cent and the cost of steel soared 45 per cent.

There have also been increases of at least 10 per cent or more for plumbing, electrical and ceramic products, while trade prices are also soaring.

Metricon staff revealed they were being pushed to secure ­deposits even though contracts were often being delayed.

Peter Langfelder has been appointed acting chief executive following Mr Biasin’s sudden death.

One veteran Metricon salesperson, who is owed hundreds of thousands of dollars in commission, said: “We have been pressured now to push for as many deposits as possible. They are 5 per cent, so on an $800,000 build that’s a $40,000 payment – then buyers would be charged as the build progressed, for the slab, then frame, and so on.”

Customers have also hit out at problems, with one detailing how he was pressured to pay a deposit of $50,000 for a $1.5m Auburn house.

He eventually pulled the pin on the project due to months of delays.

A Mt Waverley customer said steel shortages had delayed his build by a month but he had “no idea when work will be resumed”.

Mr Langfelder said while it was “business as usual” at the company, he asked for sensitivity to be shown because of “Mario’s sudden and untimely death”.

One industry insider indicated it would be unlikely Metricon would fall over given it continued to build townhouses in Victoria and seemed to have “money in the war chest”.

But Metricon’s acting chief executive Peter Langfelder denied the company was in financial difficulty.

“There is simply no basis to these rumours. Metricon is a strong viable business without any solvency problem,” he said.

“The biggest challenge Australia faces is to get more homes built for more Australian families and as the biggest home builder in the country we are the ones to deliver.

“We are dealing with ‘business as usual’ issues sensitively because of Mario’s sudden and untimely death.

Internal memos have raised concerns about Metricon’s cashflow and tell staff ‘it has come to crunch time’. Picture: Ian Currie

“Mario was much loved and admired and his loss has been heartfelt by many of the Metricon family. No one plans for these things.

“I ask for patience and consideration from our customers whilst our executives and staff deal with their loss.

“We are focused on the business running as smoothly as possible, servicing all our customers and continuing to get homes to site and completed on time.

“We have delivered a message to our team that the goal is business as usual, as Mario would have wanted. However, Mario was a very loved and admired leader of the company he co-founded so it is a sad time for all here at Metricon. As you would expect it may take us slightly longer to manage inquires.”

Data compiled by commercial credit reporting agency CreditorWatch shows even though Metricon has no ­defaults registered against it, credit inquiries spiked from seven a month late last year to almost 50 in March.

An increase in credit inquiries is one indication suppliers owed money are worried about the financial health of their client. Figures reveal 342 building and construction insolvencies in Victoria in 12 months, including billion-dollar company Probuild.

An insolvency insider said the collapse of another major builder would come as no surprise given the pressure on the industry which had locked in fixed-price contracts but had been hit with soaring costs.

“All big builders when they come up for financing are facing real challenges,” he said.

Shadow Treasurer, David Davis MP hit out at rising taxes and levies that had increased the cost of business for the construction industry.

“Daniel Andrews and Labor have jacked up taxes on the building industry to breaking point and that doesn’t include their planned $20,000 big new housing tax,” he said.

“Hundreds and hundreds of Victorian workers, including tradies, face being left on the scrap heap because the Andrews government has not acted.

“With ProBuild they left subcontractors swinging and unpaid.

“Given the key Metricon sites in Victoria, Daniel Andrews must urgently meet with Metricon to develop a rescue package to save the jobs.

“Whilst this may not be all Mr Andrews fault, his increasing taxes and heavy charges on building and construction have been a king hit.”

Master Builders Victoria chief executive Rebecca Casson said they were aware of rumours about Metricon’s future.

“We are in close contact with them, and we are very optimistic about the company’s future,” Ms Casson said.

“It is incumbent on everyone not to join in with the rumour narrative, especially during this incredibly challenging time.

“Now, more than ever, it is vital that our industry sticks together and supports each other.

Figures show there have been 342 building and construction insolvencies in Victoria in that same 12 months, with the most high profile being the billion-dollar company Probuild.

Originally published as Customer fears as Metricon enters urgent crisis talks over future