Metricon creditors to be paid ‘on time’: Treasurer Tim Pallas

Metricon bosses have reassured customers and creditors it’s “business as usual” and denied that the under-pressure building giant is at risk of financial collapse.

Under-pressure building giant Metricon has told Victorian Treasurer Tim Pallas it has paid all its trade creditors “in full and on time” and expects this to continue, Mr Pallas says.

The comments come after the Treasurer met with Metricon on Thursday amid fears over its future, and the unexpected death this week of founder and chief executive Marion Biasin.

Following Thursday’s meeting, Mr Pallas said the Andrews government welcomed the opportunity to meet with Metricon, and would continue to talk to the company and sector about factors affecting the building industry.

Speaking to the media on Thursday, acting chief executive Peter Langfelder declared it was “business as usual” for the home building titan, firmly denying any risk of financial collapse.

“This is an extremely difficult time for our business, we’ve just lost the co-founder of our business, and we’re dealing with the grief,” he said.

Metricon acting chief executive Peter Langfelder speaks about the state of the home building company alongside acting executive chairman Ross Palazzesi and suppliers on Thursday. Picture: Kiel Egging

“Metricon has long term viability, we’ve got a strong history of performance.

“Everything is completely up to date, we have an incredibly strong management team and fantastic staff, and trades and suppliers who have been loyal with us for many years.

“We have the support of our banks … all our trades paid for today, on time and in full … and all our suppliers were in the same boat.”

“All I can say is we remain strong, and to please bear with us as we go through this grieving period.”

Mr Langfelder said Metricon was not seeking any new investors and hadn’t received any buyout offers.

“You always look at options, but at this stage we’re focusing on our business, getting our customers into their beautiful homes, and that we continue to provide great quality homes for our customers,” he said.

Mr Langfelder also stated the company was not offering money to customers to cancel their home building contracts.

Metricon’s acting chief executive Peter Langfelder.

Metricon is building about $195m worth of affordable homes for the government, and Mr

During Thursday’s meeting with Mr Pallas, Metricon executives discussed a growing crisis sweeping the eastern seaboard for builders that have fixed contracts and are grappling with massive increases to material and labour costs.

In a statement Mr Pallas said the government was aware of the pressure on construction companies, and would work to address challenges.

It’s understood there were no requests for a bailout or any emergency grants from Metricon, which is seeking to alter finance arrangements with its bank.

Pallas said those projects were “on track”.

It is unclear whether alterations to time frames for those projects or the costs of existing contracts were discussed.

“The Victorian government welcomed the opportunity to meet with Metricon today and will continue to talk to the company and the sector more widely about factors affecting the industry,” Mr Pallas said.

“We understand the pressure on builders on the eastern seaboard due to increases in costs, and the impacts this is having on the construction industry and residential clients.

“The government will continue to work constructively with the industry to help address these challenges.

“Metricon informed the government that all its trade creditors have been paid in full and on time and Metricon expects this to continue. Metricon also informed the government that it is working constructively with its lender.”

Works continuing on a Metricon project site in Avondale Grove, Mt Waverley, on Thursday Picture: Kiel Egging

Mr Pallas also paid tribute to the company’s founder and chief executive Mario Biasin who died suddenly this week.

“On behalf of the government, I extend my condolences to his family and his Metricon colleagues and acknowledge his significant contribution to the construction industry and the state,” he said.

Meanwhile, a building industry breakfast on Thursday morning opened with an emotional tribute to deceased Metricon chief executive Mario Biasin and a plea for struggling builders to ask for help rather than suffer in silence.

But the Master Builders Victoria event came with a stark warning for builders, with a leading economist pointing out that building costs would continue to rise with inflation into the second half of 2022.

MBV chief executive Rebecca Casson has also called on builders not to be involved in sharing rumours about the health of industry giant Metricon and said it was “more important now than ever that everyone sticks together”.

Master Builders Victoria chief executive Rebecca Casson says she’s ‘optimistic’ about Metricon’s future.

“I know that there are rumours out there about Metricon, we have all heard them in recent months,” Ms Casson said.

“I have been in very close contact with Metricon over the last few months and the last few days. I’m very optimistic about their future, and so should you be.

“But it’s incumbent on everyone in this room not to buy in on that rumour narrative.”

Mr Biasin was remembered as “a great friend” and an “extremely strong advocate for our industry” at the organisation’s May Industry Breakfast at the MCG this morning.

In an emotional address, Ms Casson lamented that two Australian builders or construction workers took their life every day and urged any of those at the breakfast struggling with mounting pressure on the industry to call her if they didn’t know who else to reach out to.

Mario Biasin died unexpectedly this week.

The flag at half mast at Metricon’s Mt Waverley headquarters on Thursday.

“Everyone in this room is under pressure,” Ms Casson said.

“(But) I would rather sit in front of you and listen to all of the challenges you are all facing … rather than sit and listen to your eulogy.

“Don’t make me do that. Remember that you are never alone.”

Despite the industry group’s optimism, Westpac Group chief economist Bill Evans warned there were still headwinds for the building industry.

Mr Evans said inflation still had a “way to run” and was unlikely to peak until late this year, with the reality this would cause further increases to material costs – which were already having their greatest impact on production, including for new homes, since 1974.

“Inflation should peak in Australia at about six per cent, in the second half of 2022.”

With Victoria’s population going backwards without migration in recent years, the state’s builders would also be faced with rising wage costs for workers as the lack of skilled staff put them in a position to negotiate for more.
He added that the outcome of rising interest rates would be fewer new builds, which would in turn reduce the amount of homes for builders to work on.

However, Mr Evans said he did not believe there would be significant job losses in the building and construction sector.

Meanwhile, Prime Minister Scott Morrison revealed his housing minister Michael Sukkar and industry ministry Angus Taylor were speaking with the Victorian government and the banks to ensure Aussies got their homes built amid concerns for the building sector and industry giant Metricon.

“The priority here is to ensure that people get their homes built, that the sites remain open and that the company is able to get through these difficulties,” Mr Morrison said.

“It is our hope that they will be able to work through any challenges they may have.

“But both the Victorian government and the federal government obviously takes those matters very seriously.”

Mr Morrison said more than $2bn worth of housing work was being completed by Metricon.

“That’s people’s dreams, that is their homes,” he said.

Asked what his government would do to help businesses such as Metricon facing the pressures of soaring costs for building supplies, Mr Morrison said it had provided support during the pandemic.

Asked if that support had been enough, he said: “This is what we’ll look carefully at in relation to the issues with Metricon”.

“The supply chains have been disrupted,” he said.

“That’s what the pressure is on inflation in this country.”