More building and construction companies will go under: Lend Lease

Lendlease Australia CEO Dale Connor has warned more building and construction companies will go broke - ‘there are days where I feel like we’re doomed’.

Among businesses that went bust this year was major home builder Porter Davis, believed to be linked to the cost of materials and labour getting away from its contracted amounts. Picture: Ian Currie.

The head of property giant Lendlease Australia has warned more organisations will ‘go broke’ caught in the crossfire of high demand spurred by massive infrastructure rollouts.

Lendlease Australia CEO Dale Connor told the Property Council’s Queensland Leader’s Lunch that “there are days where I feel like we’re doomed”.

“It’s hard right now,” he said, “it’s about the amount of infrastructure that’s being built in Australia.”

Lendlease Australia CEO Dale Connor. Picture: John Feder/The Australian.

“There’s a limited capacity of the workforce and the workforce will go where they believe that they can get the best returns. That’s what you would expect. So if the resource industry is on fire, if government land whether that’s federal, state, whatever, if infrastructure is generating a better return for labour, then the capacity for the private sector is going to be back of the queue.”

“We’ve all seen that in all sectors,” he said. “It’s hard to attract subcontractors, suppliers and labour in competition to some other markets that are far more attractive.”

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Labour will go where they can get the best returns, which are believed to be higher in some sectors. Picture: William West/AFP.

Mr Connor said they had told “a number of the state governments” that “it would be great if you harmonise the conversation around infrastructure around the country, so everybody’s not trying to try to build mega hospitals all at the same time or mega tunnels or mega metro stations.”

“We also say wouldn’t it be better to space some of it out, to allow for the private sector to absorb some of that labour.”

Mr Connor warned “we’re still in that phase right now in construction”.

“It always goes back into a phase where there needs to be far more risk sharing,” he said.

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”Right now if you try to push risk all through the construction trades to general contractors that risk factor is going to be just far too high because of the uncertainty of availability of labour and supply chain, and just the sense of where the markets are.”

“Unfortunately, I think there’s going to be more organisations that perhaps are going to go broke before it gets better.”

Mr Connor expected to see some project delays start to set in across the government sector.

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Originally published as More building and construction companies will go under: Lend Lease