Major Australian homebuilder Simonds Group cuts 9% of workforce

One of Australia’s largest home builders has been forced to slash 9 per cent of its workforce as the construction industry continues to suffer.

Simonds Group, which has been operating for 70 years across the country, cut construction roles as well as sales staff after it suffered a net loss of $9.7 million in the past financial year due to skyrocketing costs and blow outs in building timeframes.

It was a stark contrast to the previous year when it recorded a whopping $4.7 million profit.

There were 69 roles impacted by the lay offs as it blamed land title delays, severe weather and supply chain and labour shortages for impacting the company’s pipeline.

The company also revealed the number of housing projects started in the past financial year were 2376, which had dropped from 2719 in 2021.

Simmonds chief executive Rhett Simonds said the company had go through a “process of rightsizing”.

“We know what can be delivered … over the next 18-24 months. Based on that we didn’t need the headcount we had across the board,” he told the Australian Financial Review.

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Construction crisis

Industry experts have predicted their will be more lay offs in the construction industry after the current boom comes to an end, which was aided by government stimulus and low interest rates.

Recent figures from the Australian Bureau of Statistics showed ABS figures showed there had been a 17.2 per cent decline in buildings approval across the nation.

It also showed a collapse in approvals for new apartment projects to a decades low, with economists warning that super-sized interest rate hikes and soaring prices had made property developers reluctant.
There were just 3439 approvals for multi-dwelling projects last month, 44 per cent fewer than in June, and 43 per cent lower than a year earlier.

New home sales fell by 1.6 per cent in August after the 13.1 per cent decline seen in July, Housing Industry Association (HIA) New Home Sales report found, a monthly survey of the largest volume home builders in the five largest states.

July and August represent the weakest pair of months for new home sales since the lockdowns in 2021.

“There remains a significant volume of work under construction and approved-but-not-yet-commenced that will provide a buffer for the industry and ensure building activity and demand for skilled trades remains exceptionally strong through the rest of 2022 and into 2023,” said HIA Economist Tom Devitt.

“The concern remains that that the adverse impact of rising rates on the wider economy will be obscured by this volume of ongoing work and that the RBA goes too far, too soon.”

Last month, construction giant Metricon unceremoniously sacked the majority of its NSW sales staff via Microsoft Teams on Monday, in the latest sign that the struggling company is teetering on collapse.

A number of tech companies have also dramatically slashed staff numbers in recent months, but the Australian construction industry has been plagued by dozens of collapses.

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Perfect storm

The sector has been battered by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Most recent was Queensland residential builder Oracle Building which went into liquidation in August, owing a reported $14 million and impacting 300 homes, 200 suppliers and subcontractors alongside 70 staff members who were made jobless.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

Snowdon Developments was ordered into liquidation by the Victorian Supreme Court last month with 52 staff members, 550 homes and more than 250 creditors owed $28 million.

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

Then there was NSW building company Willoughby Homes, which went into voluntary administration earlier this month, leaving at least 30 homes in limbo.

From Victoria to Queensland

National franchises like Hotondo Homes Horsham, which was also based in Victoria, collapsed earlier this month affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Norris Construction Group, which was in Geelong, collapsed in March with $27 million in debt.

It owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator’s report.

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Other failures have included Melbourne-based company Blint Builders collapsed with approximately $1 million in outstanding debt owed to 50 creditors, according to the liquidators.

Another Queensland builder, Besse Construction also collapsed owing $1.7 million, while a luxury building company in Brisbane called Art Struct went under with outstanding debts of almost $2 million.

sarah.sharples@news.com.au

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