NSW racing to save Metricon from collapse

The NSW government is racing to prepare a bailout package for Metricon as the troubled builder teeters on bankruptcy, according to a new report.

The NSW government is racing to prepare a bailout package for Metricon as the troubled builder teeters on bankruptcy, according to a new report.

Metricon, one of the country’s largest construction firms, has denied speculation it is in financial difficulty after the shock death of its founder Mario Biasin last week, days before crisis talks with the Victorian government.

Acting chief executive Peter Langfelder has insisted it is “business as usual” for the company, which employs around 2500 staff and has a pipeline of thousands of homes under construction.

But The Australian reports senior levels of the NSW government fear the builder is at risk of imminent collapse and are scrambling to finalise a rescue package for the state’s building industry and customers.

The NSW building regulator has already sought advice on engaging receivers, according to the newspaper, which further reports that contrary to its public statements, sources familiar with the company’s finances say cashflow remains dire and that the business is teetering on bankruptcy.

According to The Australian, senior NSW government representatives including from Premier Dominic Perrottet’s office held meetings on Thursday examining bailout proposals.

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NSW Premier Dominic Perrottet. Picture: Gaye Gerard/NCA Newswire

One would be a rescue package worth hundreds of millions of dollars to shore up construction industry players at risk of collapse due to escalating issues plaguing the sector, including the surging costs of essential materials such as timber and steel.

Another package would be targeted at Metricon to complete around 300 active builds, or to compensate buyers of house and land packages that cannot be completed.

Metricon and the NSW government have been contacted for comment.

It has previously been estimated that taxpayers may have to fork out more than $28 million to bail out families left with unfinished homes in NSW alone if the company goes under, potentially overwhelming the state’s Home Building Compensation Fund, which covers up to 20 per cent of the contract cost.

In each state and territory, there are similar schemes run by respective governments that could see the cost to taxpayers balloon even further in the event of a collapse.

Claims of up to $200,000 can be made in Queensland where, so far this financial year, Metricon has undertaken 1006 home construction jobs.

Claims up to $300,000 can be made under the a similar scheme in Victoria, where a collapse of the construction giant would spell chaos.

A Metricon home under construction in Minta Estate, Berwick. Picture: David Caird

There, Metricon holds $195 million worth of contracts with the state government, including a five-year deal to build and maintain public housing as part of Victoria’s ambitious “big build” infrastructure program.

In total, Metricon had 6052 homes under construction across the nation in 2020-21.

Its projects in Queensland alone are worth more than $400 million, according to Queensland Building and Construction Commission records.

Rumours about Metricon’s future began to swirl last week after the death of its founder.

Mr Biasin died unexpectedly on last Monday at the age of 71, after reportedly experiencing mental health issues.

Last week, Mr Langfelder shot down rumours surrounding the company, although he admitted the company was experiencing some delays on projects.

“We’ve got a strong history of performance, all our contracts in place are profitable, we’re completely up to date with all our trades, our suppliers, our employees, commissions, everything is completely up to date,” he said.

“In terms of our business, it’s just business as usual. Our business has been very strong for 45 years and will continue to [be] for a long time to come.”

The company sought to reassure panicked customers in an email last Thursday hitting out at “baseless rumours” it was in trouble.

“We wanted to reach out following media speculation about the future of our company,” the email read.

Metricon acting chief executive Peter Langfelder. Picture: Kiel Egging

“Today we reaffirmed our long-term viability, following the sudden death of co-founder and CEO Mario Biasin on Monday via a media statement. Our displays remain open for business as per normal and our new home advisors are ready to help you start your new home building journey. Our acting CEO Peter Langfelder fronted the media this afternoon, in an effort to put an end to baseless rumours.”

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 follows the collapse of building giants Condev and Probuild earlier this year.

On Thursday this week, another major Queensland builder, Pivotal Homes, was placed in liquidation leaving 200 home builds unfinished.

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.”

 – with Ben Graham and Sarah Sharples