Melbourne builder Simonds Group lays off 10 per cent of staff amid construction industry crisis

A Melbourne building firm has slashed its headcount for the second time in six months, just a few days after another major construction company collapsed.

An ASX-listed mega building company is laying off 10 per cent of staff as the construction industry teeters amid tough market conditions.

On Tuesday, Melbourne-based residential builder Simonds Group put out an ASX announcement with vague references to troubled times, citing “prevailing market conditions” which was a “challenge” for the company.

Simonds Group indicated change was on the way to adapt to the tough times, letting the market know it was “implementing several initiatives that will further reduce overheads and streamline its corporate function and processes, including right-sizing the workforce to reflect projected demand”.

The company later confirmed to The Australian Financial Review that this meant lay-offs.

Overall, 70 jobs are set to go, out of the 700 currently in the construction firm. That means one in 10 workers are being made redundant.

The news comes just days after another major Victorian builder, Porter Davis Homes, sensationally collapsed into liquidation at the end of last week, leaving nearly 2500 projects and 470 staff in jeopardy.

Rhett Simonds, Gary Simonds and Mark Simonds from South Melbourne’s Simonds Homes have had to make a tough decision.

This marks the second redundancy round Simonds Group has endured.

In September last year, the company slashed 9 per cent of its labour force, or 69 roles, also citing “right sizing” as the reason.

At the time, the company also revealed the number of housing projects started in the past financial year were 2376, which had dropped from 2719 in 2021.

In the ASX statement, the company’s CEO and exectuive chairman Rhett Simonds said the building firm had made “tough but necessary decisions”.

“The reality of interest rate pressures mean conditions for the residential construction sector will continue to be challenging in the near term,” he wrote.

“The board has identified a range of options to enable Simonds to further strengthen its balance sheet and continue the work announced last August.

“This action includes diversifying our operations into wholesale and projects and reducing our cost base to provide further agility.

“These are tough but necessary decisions that will put us in a stronger position.”

News.com.au contacted Simonds Group for further comment.

The building industry is in crisis.

Building companies are dropping like flies at the moment as demand for residential builders has dried up.

Recent figures from the Australian Bureau of Statistics (ABS) showed there had been a 17.2 per cent decline in buildings approval across the nation.

So far this year, at least a dozen building companies have gone into liquidation, including some major ones like Porter Davis Homes, Lloyd Group and PBS Building.

The Australian construction industry has been hammered by rising material prices, supply chain issues, a shortage of workers and severe weather events, creating a perfect storm.