This affects all businesses. From our CEO Gavin Waring18.05.2022
We are not slammed into a recession, so how sensible and how much you focus on your business could now determine your outcomes over the next few years.
I appreciate that not all our clients are builders or tradespeople. But we have enough of you to make this a critical blog, as well the effects of the problems in the housing market will blowback on the economy and affect all our clients.
Below are comments and reports on Metricon. The company probably stayed ahead of all its problems by constantly signing new houses and staying ahead of the cash flow pressures.
There are new housing grants, and previously immigration drove this industry.
Then COVID came, and immigration stopped. Then the material shortage started, and the issues of staying ahead with orders and payments to creditors – like for many businesses, this crunch slowly strangled the company.
We had, like you heard stories about Metricon asking for payments of up to $80,000.00 to continue to build to cover new material costs. We have clients who, for example, have had $40,000.00 additional costs for quarry metal for small commercial contracts and they have been locked into a fixed cost.
There are 6,000 houses incomplete. If you have your wits about you there are 6,000 opportunities there as well, once the dramas of the collapse is over and houses need completing. I will be interested to see how the insurance companies deal with this. (Or don’t).
The articles and comments are below, but here are the “take-homes from my blog” because this will be more than a ripple across the industry.
- Who are you doing business with? Will they pay you? If you don’t know how to do a credit inquiry, contact your client coordinator with a name and we will see if we can use our credit reporting licence to dig up what you want. The credit reporting agency will charge us a fee and we will pass that on.
- Does anyone owe you money and they are starting to stretch things out? Time to have a conversation with your client about that. What a way to approach someone who owes you money? Call your client coordinator to have the team discuss things with you.
- Small potatoes are sweet – I have a plumbing client who works in construction who has linked up with a company that finds him work that often may involve no more than a day’s work. One day, one new invoice etc. and it’s all paid at the end of the week. For many of you, you need to retreat to where there is profit. If you want to analyse this and need help, you know what to do – call your client coordinator for help. They will put the team together in our company.
- Consider price rises now and implement– most markets have got use to rising prices. If your clients know you will do a great job, they trust you then they will always decide to stay with your business. Want us to help you with that approach? Call your client coordinator.
- Get rid of debt. Don’t take debt on you don’t need. OK So now I am at the preachy bit – Try and guess ahead to what the economy is going to do. Don’t take on debt you do not need and deal with your debts. If you have tax debt you will NEVER have a better time to make a deal of have a plan.
- Stop buying shit. Save your money, that’s personal and business. A mate of mine always referred to running his business by saving “pieces of string”. When he sold the commercial property he owned he walked with $1 million, he said it was paid for with little pieces of string. I’ve raved on about buying landfill online and try cooking your own meals.
Maybe the Federal Government will print a heap more money to get us through this building – is it crisis? Exports are strong so whats another 100 billion or two they can just print it.
You know there are interest rate rises, there is inflation, you know about shortage. We are not slammed into a recession, so how sensible you focus on your business could determine your outcomes over the next few years.
Your Business Angels client coordinator is just a phone call away to put you in touch with a team that can help.
“I’m blown away how many people have whispered hopes they collapse… “so this stupid market will cool down for us all”. But I see zero benefit eventuating, and 6000 broken dreams… with everyone else trying to pickup the piece”
Australia’s biggest builder Metricon is understood to be in crisis talks, just days after the sudden death of its founder and chief executive Mario Biasin.
The company, an early adopter of the Green Star for Homes program, is understood to have more than 6000 homes under construction and to employ 2500 staff.
Among its pipeline of projects is $195 million worth of contracts with Victoria’s state government, The Guardian reported late on Wednesday including Victoria’s ambitious “big build” public housing infrastructure program.
Industry sources have consistently blamed the federal government’s Homebuilder program for an unstable building industry that’s experienced massive price hikes for building materials and created labour shortages under surging demand for new buildings, renovations and a huge infrastructure program across the country.
The pressures forced the collapse early this year of Probuild and Condev.
“I live in a new housing estate. There have been metricon sites with slabs poured and no further work being carried out since. At least one sure I walk past each day the slab was done in January”.