‘Very nervous’: Hutchies warns overheating, collapse underway

The head of Australia’s biggest family owned builder has warned major overheating across the market is now worse than 2003’s boom - with one area collapsing amid fears costs will ‘kick again’.

The head of Australia’s biggest family owned builder has warned major overheating across the market is now worse than 2003’s boom - with one area collapsing amid fears costs will ‘kick again’.

The chair of Hutchinson Builders Scott Hutchinson said there was “too much work” and “nothing can be done” to stop costs escalating amid rampaging demand.

He expects Hutchies’ turnover to hit $3.5 billion in 2023-24 financials – a $380m rise from the previous year – but warned “it will be another rubbish year”.

“It’s terrible,” he said. “It’ll be just in the black. We’ll probably make a third of one per cent if we’re lucky and that’s with rent and interest as well.”

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Hutchinson has 2000 workers on its payroll. Picture: Kathleen Skene

“The market’s still overheated. What we’re worried about is there’s a slight easing at the moment but it’s likely to take off again, and then we’ll get prices going even higher. It’s incredibly busy, too busy, there’s too much work.”

Building prices jumped 30 per cent in the last two or three years, he said, and firms could only minimise risks and ride out the “bad boom” now.

“Nothing can be done except wait for the demand to go down and it will go down because the Gold Coast is starting to collapse. So when that market collapses, it’ll hopefully go back to normal,” Mr Hutchinson said.

“You’ve just got to wait it out. and not do too much work. Get rid of anything that looks over a long term or you can’t see how you’d get it done if (costs) blew up.”

Costs have escalated dramatically for all builders. Picture: John Gass

He said the Queensland based firm had “probably a dozen” projects still costing them money to finish given contract pricing and increased costs.

“It is better. We’re still finishing them off but we’re further through them, so there’s less time to go.”

“It’s not existential for us. We’ve got a big balance sheet and we’re not losing money but we’re struggling on a lot of jobs and we’re doing okay on other jobs, and it’s balancing out.” “We will end up with effectively another nil year and that’s been going on for four or five years.”

To keep his project pipeline moving, Hutchies has had to take the extraordinary step of putting 500 more tradies directly on the payroll.

“We’ve got about 2000 workers, probably five times more than anyone else,” Mr Hutchinson said, “but we’ve had to go into the trades now because so many subcontractors went broke.”

He said the firm has always had its own plumbers, carpenters, and workers doing joinery, cranes and scaffolding but this was a different scale.

“We’ve only got the capacity to do half our jobs with our own labour and the other half with subcontractors still,” Mr Hutchinson said. “It’s been so hard to get them. We’ve had to go and do it ourselves. What we basically did is take over the crews that are from our subcontractors, just employ them.”

Among measures Hutchies has taken to cope with the market situation was a decision to hire 500 tradies directly onto the payroll in the past 18 months to ensure they had the skills needed. Picture: John Gass

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He said Hutchies was big enough to ride it out with pockets of brightness ahead.

“Everything we’re signing up now is at the new rates so it’s a lot more comfortable,” he said.

“There’s still a shortage of workers but it’s come up a little bit and we’re getting paid properly for it now. But we don’t know if it’s going to kick again so everyone’s very nervous.”

“I’m not calling on anybody to do anything. We’ve just got to wait it out. It was like this but not nearly as bad in 2003 – that was a bad boom – and then the market cooled and we were able to get on with business as usual.”

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