Metricon seeks to dispel ‘malicious rumours’ on financial stability

The country’s largest home builder has been forced to tell staff and customers it is not experiencing money problems in response to industry gossip.

Metricon, the country’s largest private home builder, has been forced to tell staff that persistent rumours about its demise are not true.

Australia’s largest home builder Metricon has been forced to tell staff and customers it is not experiencing financial problems, claiming it is a victim of industry rumour mongering, amid rising costs and competition for workers to complete projects.

Higher residential property prices and government subsidies have prompted a surge in home building but for many construction companies is turning into a profitless boom as they are hit by rising costs.

Metricon Homes ranked as Australia’s largest builder in 2021 for the sixth year in a row. The company reported 6,052 starts, which was a 33 per cent increase from the previous year.

Most of these starts were detached houses, which accounted for 5,820, while it also undertook 232 semi-detached homes.

The private company, which is biggest in Victoria and Queensland but also has operations in NSW and South Australia, has been an industry fixture since 1976, although it has kept a low public profile.

In September when it was recognised as the top home builder, based on the number of home builds commenced for the year, Metricon chief executive Mario Biasin acknowledged the tough operating environment.

READ MORE: Probuild owners swift exit after promising to stay the course | Condev Construction to enter liquidation in another major industry collapse | Probuild crash the ‘tip of the iceberg’

Metricon was founded by Mario Biasin and George Kline in 1976. Ross Palazzesi joined them as a director and part-owner in 1998.

“We recognise our fortunate position in an economic climate that has been challenging for so many others. Despite lockdowns, materials shortages and construction pauses, 6,052 Australians have still chosen Metricon to build their new home across the last year, and we feel humbled by their support,” he said.

“The federal government’s HomeBuilder scheme, lower interest rates, and increased consumer desire to live in new homes, many away from high-density areas, have facilitated a huge surge in demand for new detached homes,” he said at the time.

Mr Biasin said then that Metricon had grown its “share of the national residential build market during this boom time for construction”.

But most recently the home builder has been in the spotlight since it sought to renegotiate building contracts where initial time frames had run out, to account for higher costs in some areas, including Queensland.

Although legally entitled to do so, it has since reversed the move and would complete the homes at the original costs, it told The Australian.

“In a small proportion of cases (mainly in Queensland), where customers had incurred delays in taking possession of their land titles, we were renegotiating contract prices with this small group due to unprecedented price increases over recent months. However, we made the decision a couple of weeks back to stop these renegotiations,” Mr Biasin said.

“When we talk about our commitment to price with customers, we want everyone to know we mean it. Metricon will honour every commitment we have made to customers around price. This has involved approaching our customers in Queensland who were asked to recontract over recent weeks to restore them to their old agreements if they wished; and working with every individual customer whose circumstances have changed to find a solution that best fits them,” he added.

And the company on Thursday issued a staff message labelled as a Director Message which was entitled Dispelling Rumours, which was obtained by The Australian.

Addressing recipients as “Morning team” the message acknowledged widespread industry talk about its financial position.

The message said: “It has been brought to our attention that there are currently malicious rumours circulating in the marketplace about Metricon’s financial stability. These rumours are false. We feel we must quash this gossip and state very clearly that Metricon is in a very strong position to continue operating as usual."

The message noted tough sector conditions but said the company was prevailing due to its top position.

“As outlined last week, nationally, the record pace of building activity combined with supply chain delays, a shortage of trades and rising material costs is putting pressure on builders. However, these conditions have not placed Metricon at any risk.

On the contrary, our business is vibrant and our forecasts are very healthy.“

The company said its finances and those of suppliers would not suffer.

“The great news is with the strength of the market and the Metricon brand, we are continuing our growth and are in the fortunate position that our staff, trades and suppliers will not suffer financial impacts as a result,” the company message said.

Metricon said it would “continue to design, build and complete homes in a timely manner” and said staff were ”free to reach out to your direct manager if you would like to discuss this matter further”. The message concluded by thanking recipients for their “support in helping us to smother these damaging rumours”.

Metricon‘s financial health has been the subject of scrutiny in property and insolvency circles, as a series of builders have been caught out by a combination of rising costs and fixed price contracts.

The impact of collapses including Probuild, Melbourne‘s ABD Group and Queensland-based Condev is also rippling through to subcontractors. They are operating under a heavy burden as they deal with hefty losses from these large construction companies failing, with some unable to recoup what they are owed.

This in turn is driving up prices further as some are not in a position to take on new work so are unable to bid on fresh jobs and those that need completing.

There are also blockages related to the floods which have caused both supply chain disruption and have caused significant damage as they have swept through Queensland and NSW, also diverting labour and resources for clean-up and reconstruction operations.

Home builders now face a cocktail of higher input costs due to the soaring price of materials like timber and bricks, and more expensive trades which are required for finishing homes.