Is Metricon Homes on Life Support?

22nd June 2023

When the founder died in May 2022, SubbiesUnited supported Australia's largest home builder Metricon Homes but issues had started to surface much earlier in late 2021 and early 2022.

Many people think this builder is too big to fail but tell that to the victims of Privium, Porter Davis Homes, Probuild and all the other large builders who have recently collapsed in a pile or rubble.

In May 2022 Metricon were given a lifeline of 30 million by the Commonwealth Bank no doubt backed by a mountain more collateral than the bailout value and NSW and Victorian Governments were considering gifts of taxpayers money. That 30 million would be like an ant on an elephants back. I would not go far at all for a monolith like Metricon.

When it gets to this point, better to turn off life support than to put subbies and home owners through years of misery while fattening the pockets of greedy liquidators. They will be fighting over this one if it fails.

We have information from various sources in Queensland and Victoria that Metricon Homes is on life support and the machine is making serious gurgling noises.

The home building sector is a disaster and Metricon is at the forefront.

They have a lack of quality supervisors and staff and those they have are stretched too thin and that would be as a result of the massive turnover in 2021 and 2022 and now the massive drop in turnover in 2023 but more about that below.

From Subbies

Some subbies saw the writing on the wall when late payments became the norm last year and earlier this year.

In March 23 it is reported that Metricon asked subbies in Qld for a 10% reduction in rates.

Metricon have asked subbies to perform work without a Purchase Order (PO).

Metricon have asked subbies to perform work with a different company's name on the PO than the company who was asked to perform the work.

In other words, the subbie the PO was made out to is not being used, not being paid or pulled the pin so they just shuffled the PO onto the next subbie. That is move 101 from a wounded builders playbook.

This particular subbie was switched on enough not to accept a PO without his company name on it because it's an excuse for non payment and at best, will always result in late payment.

It took 3.5 weeks and a 30 email thread with numerous staff copied in to get the PO in the correct company name but now after the work is complete, the payment is substantially late.

Houses are sitting for a long time with no progress which results in mould growing on the unfinished homes and substantial weather damage.

Unpaid invoices, in some cases over a month and more late and if payment in the normal course of business is late, then the only reason for that is they don't have the cashflow/money to pay.

If they don't have the money to pay their accounts when they fall due, then they are trading insolvent. If they are insolvent, it's only a matter of time.

High turnover of staff and supervisors.

Supervisors not supervising sites so product delivered is dumped in the way of subbies trying to do their job.

Low rates are on offer for subbies so experienced subbies move on.

New unvetted and unsupervised subbies are performing in some cases, substandard work.

From a Home Owner in Brisbane

I have had discussions with Brisbane people who have just moved into their new Metricon home. I have also talked to Metricon home owners from the Gold Coast and it was a similar story. 18 months and more to complete a build.

I asked them did they have any problems during the build and there is not enough time to write down their answers to that question, a can of worms was opened.

One home owner said that "basically she managed the build because the construction manager was hardly ever there".
She also said "they have lost a lot of subbies and had to use new people who have not been vetted and their work in many cases was terrible".

From Metricon's QBCC Licence

In 2021 the total value of their builds on the QBCC licence was 511 million and 550 million in 2022.

In 2023 the value of their builds is 221 million. It is very difficult to shrink a business in a short time but its impossible to shrink a business by 60% in 12 months. Imagine the quality and quantity of employees you would lose.

Imagine the infrastructure required for 550 million in turnover and the staff shedding that would be necessary to cut that by 60%.

The average cost of Metricon's box prices in QLD has increased in this FIN year but was not increased in 2021 and that was when the damage was done. COVID years bled them dry.

Qld build numbers are down from 2022 - 1,378 to 2023 - 385 (115 units per month to 32 per month).

From Their Buyers Agent - Referrer

A company provides Metricon with wholesale customers who sign and pay a deposit to have Metricon build them a new home.

The company receives a fee for referring clients and then looks after build quality and ensures that the work Metricon have invoiced to the customer has actually been completed.

Metricon send an invoice for staged payments such as a Fixing Stage 5 and sends photos of the install as evidence that it has been done.

They are now sending invoices without photos and when the work is checked, the referrer found the work has not been started, let alone completed, not once, not twice but on 3 separate builds.

When the company sends in their Commission request, Metricon normally pays it as per their terms and contract.

This month that has changed.

Since early June payments have been on hold. After numerous emails, following is the message they receive;

"All commission payments have been placed on hold for the time being. Please though continue sending through your invoices as normal for collation in accounts."

The hide of them to mandate that; "all commission payments have been placed on hold!"

What we read into that is "we have no money to pay you" or "we took on Porter Davis Builds and don't need you now".

I know this referrer, they were a large creditor of Privium and worked tirelessly for their clients during that debacle.

They can now see the same thing happening again with Metricon.

They are financially in very deep and once again, payments have been placed on hold.

Metricon is a shambles with late payment, non payment, high turnover of staff, little communication with their customers and subbies, slow to react, slow builds, pissed off customers and for Australia's largest home builder, it's simply not good enough.

We would like them to survive but it's starting to stink like Privium and more recently, Porter Davis Homes and on that subject, we have heard Metricon have taken on some of their builds when clearly, they are struggling to complete their own contracts.

Time to get your shit together Metricon, you are no spring chicken, you are a 40 year old company.

Over the years I have seen some of your beautifully built homes but now they are not so beautiful.

From evidence I have seen and particularly in Victoria, it seems they are scrambling madly to get as much money in as possible before leaving thousands of subbies, suppliers and home owners holding the empty bag!

It's hard to see a happy ending for Metricon unless Governments come to their rescue and that would only be a stop gap measure so it looks like the life support machine will have to be turned off soon.

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