Two more Qld builders collapse, as Metricon gets $30m injection

Queensland’s troubled construction sector has seen the collapse of two firms in as many days as high-profile builder Metricon reveals it has received a $30m capital injection.

The troubled construction sector has seen the collapse of two more building firms in Queensland amid forecasts more companies will soon “fall on their swords.”

Surfers Paradise builder Pivotal Homes, once a sponsor of the Gold Coast Titans, went into liquidation late on Thursday.

Cleveland-based Solido Builders, which specialised in bespoke luxury homes, also has appointed liquidators after it struggled with tough market conditions.

It comes as Metricon, Australia’s largest home builder, announced late on Friday that it had received a $30m capital injection from its owners.

There had been speculation about the financial health of Meticon following the sudden and unexpected death of founder and chief executive Mario Biasin earlier this month.

Acting CEO Peter Langfelder said ongoing rumours were beginning to impact on the company, and Metricon’s owners wanted to demonstrate their confidence in the building giant’s future.

“This significant injection of capital by the owners demonstrates to our customers, employees, sub-contractors and suppliers our confidence in the viability, profitability and future of the Metricon business,” he said.

“We hope it may help cultivate a groundswell of support for Metricon, which is a great Australian success story.”

The company also announced its longterm banking partner – the CBA had approved a 100 per cent increase of Metricon’s existing working capital facility.

The building industry has been rattled by a wave of high profile collapes over the past year including Privium, BA Murphy, Probuild and Condev.

Pivotal Homes managing director Michael Irwin said he was devastated to be placing his company into liquidation.

“Unfortunately the rising costs that are impacting many in the industry throughout Australia have made our operations unviable,” Mr Irwin said.

“In my 30 years’ experience, I have never seen a set of circumstances like this.” He assured all creditors, contractors and subcontractors had been paid in full.

Pivotal, which was a category three builder licensed for low-rise jobs up to $30m, had 103 houses under construction, in various stages from slab pours to turnkey, and 177 homes waiting on council approval.

Lawyer Derek Cronin, who is acting on behalf of Pivotal Homes, said the only option open to Pivotal Homes was to appoint a liquidator.

“The decision for Pivotal Homes to go into liquidation has been based on forward

projections dictated by the increasingly challenging market conditions, including the

exponential rise in material costs,” said Mr Cronin. “It is an unfortunate set of circumstances that is impacting the industry across Australia.”

Liquidator Chris Cook. of Worrells, said he was reviewing all of the company’s financial records to confirm the creditors figure.

Solido founder John Hattink, who started the business with wife Libby in 2014, said rising material and labour costs were hitting all builders.

“Margins are already thin, especially for smaller builders,” said Mr Hattink. “We made a loss on a few projects and decided the best thing was to wind things up. Our subbies have been paid and we have not just pulled the rug out from under people.”

Mr Hattink, who began his career as an apprentice carpenter in the early 1970s with AV Jennings, said conditions were likely to remain tough across the whole sector.

Association of Professional Builders co-founder Russ Stephens said the collapse of Pivotal Homes and Solido showed that companies were making the calculated judgement that they could not continue in the current conditions.

Mr Stephens said the fact the companies had promised to pay all subcontractors in full signalled they had decided to “fall on their sword” rather than try and trade through.

He said building companies were advised to renegotiate unprofitable contracts before construction began rather than try to force through variations once work had started.

Figures provided by Pivotal Homes suggested a lead time from contract to the construction starting of over a year.

“What that means is that they should have been repricing each contract before construction starts and giving the client the option to cancel the contract and receive their deposit back,” he said. “This is what smaller building companies have been doing since June 2021.”

Mr Stephens said any industry bailouts by governments would only apply to large companies and not smaller players.

Mr Langfelder said whilst industry conditions are challenging for the entire sector, Metricon has always been confident of weathering the storm and powering ahead with plans for growth.

“Metricon executives will continue talks with all key stakeholders in relation to support packages aimed at assisting the entire construction industry,” the company said.

Metricon Homes employs approximately 2500 staff across Australia’s eastern seaboard and currently has 4000 houses under construction.