Another major builder in trouble - Metricon

My gut tells me government will pull them out of the shoot

 

Thats awesome mate. Congrats!

Can i ask how do you go about sourcing the land for this kind of thing? Do you have a method of filtering down searches on websites like domain, rea etc or is it just through contacts in the industry?

 

Smoke leads to fire but hopefully not a full blown one.

 

I use a BA, but have noticed that these estates are also are advertised on RE.com. as well. If you can, best to get stage 1 and 2 releases.

 

When a private company where a lot of control is vested in one person has something like this happen it is always a big deal. The sad circumstances - it sounds like he had been suffering from mental health issues and may have taken his own life - add a new level of concern and doubt.

The fact they are in talks with government and creditors is a big deal. Metricon have honoured fixed price contracts from what i've heard to now, this has obviously caused issues with so much inflation in materials etc . Maybe that needs to change.

The after effects of the pandemic are going to last a few more years that's for sure.

 

I'm dubious as to whether the company is in financial strife, or whether it's a media beat up. Latest word is that the meeting is being held due to the unexpected death of the CEO ... I am a cynic - but I will wait to hear the rest of the story before jumping to conclusions

Concern for future of Australia's biggest construction company

 

Problem is how bad their finances are becomes less relevant the more bad press they get. It's a downward spiral. Their suppliers, trades, end customers, creditors, employees etc are now all simultaneously losing confidence.

Those owed money will want to be first in line to be paid ASAP, customers yet to sign on the dotted line will walk, new suppliers will want tougher contract conditions, payment up front etc. I will be surprised if they can avoid insolvency without some sort of restructure/equity injection.

 

The economic effects from the pandemic were delayed from government stimulus and RBA printing.

 

lol, wishful thinking

 

Is there a pattern here?

I thought someone earlier said insolvency can often be the most effective way to restructure

 

Thanks! Yeah.. ive been struggling to find BAs that operate in the house and land/land space without some kind of conflict of interest. Anyone you recommend?

Thing is they'll always deny that they are in financial strife as long as legally they are not trading while insolvent. If they cant attract new customers theyll run out of cash and will definitely go bust.

 

What kind of customer would go with Metricon right now?

I wouldn't!

 

Or with anyone. If the biggest can fall ......

 

You could just buy the land now and build a couple of years down the track, once the building industry settles.

If new buyers are put off buying land then I would expect land to be trading at discounts to their longterm market values towards the end of the year. Of course there's always the downside you are paying interest on the mortgage of an unproductive asset. But I suspect averaged out it won't be so bad.

 

They could be negotiating a way to pass on costs to customers or break the contracts.
The non ability to do so meaning they'll have to close shop and leave a mess behind.

 

I feel bad for knowing what is happening in the construction industry way in advance - back to 2020 mid year. But I had to keep my mouth shut about it and not saying anything.
It is a trying times for the construction industry and everyone is trying to put on a brave face and soldier on as best they can manage.

Out of caution - I have put on hold of my plans to develop my 2 blocks till 2023 mid year as I was going to hold on to 50% of the development.

I can be a mushroom and be constantly keep in the dark. Hope for the best... that poop don't hit the fan with my projects. Or wait it out till all the dust settles.

 

Have a few clients doing exactly that, settled on the land, just sitting tight until things calm down

 

Does anyone think if Metricon fails, other builders will be slightly better off as trades, supplies etc will become more available?
Or is this wishful thinking?

 

I don't think many people will stop building just because metropole is no longer there.
And I don't think the other builders can just add capacity instantly, and so I will make delays worse for all for the next 6-12mths.

 

Hard to say - smaller custom builders may be more agile, adaptable, have their own suppliers and access to labour, or not overcommitted. You may have to pay them more, but there's now a good reason for that.