John Holland loss brings job cuts

Contractor building Melbourne’s trouble-plagued $6.7bn West Gate Tunnel to axe up to 200 jobs, restructure business.

John Holland chief executive Joe Barr.

The contractor building Melbourne’s trouble-plagued $6.7bn West Gate Tunnel will axe up to 200 jobs and restructure the business after grappling with a sizeable annual loss.

John Holland, wholly owned by the China state-run China Communications Construction Company, plans to shed the roles from its corporate offices after plunging to a $77m loss in the 2019 financial year.

A new major projects division has been created for infrastructure developments over $1.5bn that include the West Gate Tunnel contract and $11bn Metro Tunnel in Melbourne along with Sydney’s Metro City harbour rail facility.

Smaller infrastructure deals, previously split into three separate state-based units, will be merged into a single national business while there will be a review of its ongoing investment in Southeast Asia.

Challenges in the construction industry have been compounded by the COVID-19 pandemic, the contractor said.

“After reporting a loss in 2019, we took steps to address our profitability that included a hiring and wage freeze, the cancellation of executive bonuses, and a more strategic approach to the projects we bid for,” John Holland chief executive Joe Barr said.

“Regrettably, it is clear that this is not enough. We have to heighten our focus on business sustainability. This has been a very hard decision to make, but one that is essential to ensure a strong future.”

Victoria Premier Daniel And­rews issued a warning in early June to the Chinese-linked building consortium over West Gate Tunnel, telling them their conduct on the current job “will very much determine” whether they win tenders for ­future jobs.

The threat comes as the state government faces pressure over a dispute over toxic soil, which has led to hundreds of workers being stood down from the $6.7bn road project, and amid negoti­ations over a cost blowout that could amount to as much as $3bn with the consortium building Melbourne’s Metro Tunnel rail project, budgeted at $11bn.

John Holland is also part of a consortium bidding for the ­Andrews government’s $16.5bn North East Link road project.

The West Gate Tunnel has been delayed until 2023 after an escalating dispute over the handling of contaminated soil derailed the timeline, dealing a blow to Mr Andrews who had insisted the project would be delivered in 2022.

Toll road giant Transurban said the start of tunnelling is still several months off and first requires agreeing where to put a disposal site along with resolving a commercial spat with its contractors.

The Andrews government said it intends to hold Transurban to its contractual obligations and impose penalties for any late completion of the West Gate Tunnel project, despite conceding the COVID-19 pandemic had caused additional delays.