Australia’s construction industry facing huge challenges as companies go under

Australia’s construction industry is in crisis with a “perfect storm” of factors contributing to the toughest conditions since the 1970s.

Australia’s construction industry is facing huge challenges that have contributed to the collapse of two large companies – with fears for the future of a third.

One of Australia’s largest builders, Metricon, has denied speculation it is on the verge of collapse following the shock death of its founder Mario Biasin, but many of its customers and employees remain concerned about its future.

One Queensland couple who signed a contract with Metricon for the construction of their home near Ipswich said they not received information about the status of their build, with the company pointing them to a media statement in response to questions.

Emily Martin told Nine newspapers she had signed a contract with Metricon in November but was unsure when construction would start.

“Between our land deposit and house deposit we’re $38,000 out of pocket, and we’re not within a month of the build starting,” she said.

The speculation around Metricon, which employs about 2500 people and has around 4000 houses under construction, follows the collapse of building giants Condev and Probuild earlier this year.

Industry expert Adrian Hart said it was the toughest time in construction in 50 years.

“The feedback we’re getting is this is the worst experiences they’ve had regarding cost and capability challenges ever – and that includes the resources boom,” the BIS Oxford Economics construction and infrastructure head told 7News.com.au.

“You have to go back to the 1970s oil shock to get an idea of the sort of price increases that we’ve seen in the industry right now.

“It’s the worst experience that we’ve had in the industry, full stop.”

Workers on Metricon construction site on Avondale Grove, Mt Waverley. Picture: Kiel Egging

The construction industry has been hit heavily by price increases for materials partly because of global supply issues and high fuel costs. The Covid pandemic has also created worker shortages.

Labor campaign spokesman Jason Clare and former prime minister Scott Morrison acknowledged the problems during the election campaign.

“They’ve got a problem with a lack of skilled workers,” Mr Clare told Sunrise on May 20, referring to Metricon’s issues.

“Unbelievably, there are fewer apprentices and trainees in training at the moment than there were 10 years ago when this mob were elected,” he said, pointing to the Morrison Government.

Mr Clare said Australia didn’t have as many skilled workers, backpackers or international students as there would have been if the borders hadn’t been shut.

Mr Morrison acknowledged supply chains had been disrupted and there was the pressure of inflation.

“The challenge is about inflation. The challenge is about the disruption of supply chains. And the challenge is to ensure that we can onshore more what is happening in our supply chains,” Mr Morrison told reporters on May 19.

QUT property economist Andrea Blake said the Morrison Government’s HomeBuilder scheme to give people $25,000 for new builds or renovations also added to the problem.

Houses under construction in Minta Estate, Berwick. Picture: David Caird

“It’s like the perfect storm with the huge success of the Covid stimulus packages, which really did stimulate the market,” Dr Blake told 7News.com.au.

“And then they’ve been hit by material supply issues, cost increases and skilled labour shortages and possibly further interest rate rises, which have really squeezed the profits and overstretched the construction sector.”

Dr Blake believes there will be an “inevitable” slowdown in the industry and advises Australians to wait for things to stabilise before starting any construction work.