Metricon Going Bust: Should They Be Bailed out?

Trying2SaveABuck on 19/05/2022 - 16:30
Last edited 19/05/2022 - 17:15 by 1 other user

https://www.abc.net.au/news/2022-05-19/metricon-denies-insol…

Looks like the Victorian Government is meeting with Metricon to 'sort out' the situation in which it is on the verge of bankruptcy and could leave a 'large' number of properties not completed.

Simple question should we just let them go bust or should the tax payers prop them?

Also anyone caught up in the terrible situation happening at Metricon atm

My 2 cents: Let them go bust help the 'individual' and families who might of lost there deposit etc instead of the builder that was happy to ride the gravy train for this long. Ill not meticon has been sued in the past for 'dodgy slabs' in a development in the Sydenham Taylors Hill Suburbs of Victoria - so them going bust doesnt surprise.

Poll Options

  • 11
    Tax payers should bail them out
  • 701
    We should let them go bust
  • 19
    Government will prop them up but id rather they went bust
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Comments

  • filmer on 19/05/2022 - 21:27
    +1

    Why is it so strange that Metricon who has contracts with the state government, meets with the state government?

    • dusktildawn on 19/05/2022 - 22:02
      +1

      Metricon has been asking the VIC government to approve passing of the rising cost to the homeowners but it has been rejected I’m guessing they’ll be asking for more money to build their housing projects. As someone building a house (not with Metricon) at the moment I certainly wouldn’t want my builder to go bust and face the uncertainty of not having our home completed.

      • filmer on 19/05/2022 - 22:10

        Even that is pure speculation.

        • rektrading on 20/05/2022 - 08:15
          -3

          Investing in Metricon is pure speculation that is now 👀 to be a bad investment.

  • serpserpserp on 19/05/2022 - 22:02
    -4

    The problem is that you can't let too many of these guys go bust or it does irreparable damage to the industry that will take many years/decades to right. So at some point as the government you'll have to step in and try and final a solution that can keep these guys solvent. I doubt it would be a management problem, it just seems like a systemic industry issue. Otherwise you let them go bust and then you have to deal with a bunch of other junior construction companies that will have exactly the same issues in taking up the outstanding jobs. If you have 100s of battler Keith & Karens left with a half built house out in Melton then you just have a political disaster on your hands because they will most certainly blame it on the government and want a hand out if Metricon go bust.

    I don't like it and in the GFC I was all for letting all those investment banks go bust. But in hindsight I sure am glad the US Government (and then governments around the world) stepped in when they did.

    • AustriaBargain on 20/05/2022 - 00:18
      +13

      Why can't they go bust? If Metricons growth model was a business model that was unsustainable, then they should go bust and be replaced with other builders who have a more sustainable business model. The mistakes Metricon made that revealed themselves when a bit of pandemic or supply chain issues hit were not unavoidable, Metricon could have used a more conservative growth model that would have allowed them to survive things like that. Metricon gambled their billions in value to potentially make billions more, but the gamble failed. Why should the government bail them out? If I put my savings at a casino then no one owes me anything, let alone giving me back my bet and the winnings I was counting on. There will be supplies and contractors after Metricon. Metricon is a private 20th century company and their demise is probably long overdue in any case.

    • rektrading on 20/05/2022 - 08:05
      +4

      There are plenty of other companies that can pick up the 🏀 when Metricon goes to zero.

    • HelpMeiCantSee on 20/05/2022 - 09:52
      +1

      I would much prefer Keith and Karen get a handout for their half built house than the business that failed them. Fk Metricon. Learn how to operate a business.

  • orangetrain on 20/05/2022 - 01:57
    +2

    We need less regulation as it's hampering businesses!

    Oh no, we went too far but we big. Bail out pls? Yay! Thank you tax payers! We will give a LNP a BJ when they retire from politics to tune of 880k! Big jobs!

  • jrvb42 on 20/05/2022 - 08:46
    +2

    Businesses should never be bailed out with public funds, unless publicly owned. And only a few businesses should be publicly owned.

  • HelpMeiCantSee on 20/05/2022 - 09:30

    Let them lie in the bed they made, and prosecute them for the ineptitude leading to the failure, plus strip all assets to pay for debtors, starting with the home owners screwed.

    F them. #nobailout

  • 2esc on 20/05/2022 - 09:41
    -1

    Usually when it becomes public that a company is having issues the problem didn't just happen last week. These issues would have been obvious to management not just months ago but 12 months plus or more. A larger company should have put in financial safeguards for a change of circumstances. Good management plans for this.

    Though sadly in some companies their versions of good management is redundancies or declaring bankruptcy rather than looking at the problems long ago.

    • gromit on 20/05/2022 - 22:23
      +1

      Not making excuses for them, but in the current economic climate even builders that had healthy risk reserves built in are getting blown out of the water by price rises that none of them dreamed of being remotely possible.

  • Chandler on 20/05/2022 - 10:27
    +4

    A relative of mine is getting a house built. Builder has well and truly passed their deadline, no end in sight. Asking for more money (not fixed-price contract). Basically told them that if they don't pay up they may never get their house. I can't remember exact wording, but when I heard it I was surprised as they were essentially admitting to trading insolvent.

    So much dodge in the industry… sad for all the individuals who are going to suffer, and pissed at all the fat cats who are going to get their parachutes, bail outs and that the taxpayer is going to have to foot the bill for the individuals (as well as the parachutes and bail outs…). Again.

    • Trying2SaveABuck on 20/05/2022 - 10:47

      I feel for your relative, i honestly see this situation pushing house prices higher as people start to 'fear' the risks of building might be too great

    • netjock on 20/05/2022 - 19:14
      +2

      Builders heard the 2023 Ford Ranger is going a price increase. Guess who is paying for that?

      • CalmLemons on 20/05/2022 - 21:04

        Nah I just bought one it was only a few thousand more.

        Probably that 40% rise in steel and 100% rise in wood…

    • gromit on 24/05/2022 - 09:50

      If it isn't a fixed price contract then asking for more isn't dodgy, with current prices it is expected and in many cases it results in multiple price increases throughout the build and they are right if they don't stump up more now they probably will never get their house finished as anyone else will demand significantly more. Also why is the builder past their deadline? is it builder issue or supplies, covid, weather, the last 12 months has been a nightmare for both builders and the home owners.

  • Sensiekatie on 20/05/2022 - 13:45
    +3

    Metricon is quite big here in Qld people. It isn't just a Victorian centre of the universe thing. The reason they met with the Vic Government is because they are a big contractor to the Victorian Government. They clearly said they have paid all their bills. Where there is smoke though, you will usually find a fire.

    The founder of Metricon died recently. This can have big consequences if that person was the big player. If the company is structured right though, there should be succession planning and thus someone to take up the reigns.

    My son was involved as a consultant to a group of companies and the head honcho died. There wasn't anyone who knew what was going on. It all collapsed because he was a silo that retained all the information without sharing. Other people had no idea of what was going on, planned etc.

    • CalmLemons on 20/05/2022 - 21:06

      Your post should be pinned. The only one with half a brain on here with some sense.

      The guy supposedly had 4 children, hopefully a few of them have been groomed to take on succession.

      If not, ooph.

      • Cho0028 on 23/05/2022 - 09:31

        They actually have two candidates who they can pick to lead Metricon. One is the current interim CEO and he's been managing most of VIC for the last 10 years. The other is the son who has been managing QLD and NSW since they expanded there.

  • zooter on 20/05/2022 - 14:38
    +5

    excuse me, why should my tax money bail out a private company?

    • rektrading on 20/05/2022 - 14:40
      -1

      Think of the mom and pop investors.

      • sashatheman on 20/05/2022 - 16:31
        +1

        Its people building their own home not just investors

        • rektrading on 20/05/2022 - 16:43
          -2

          PPOR and IP are just tax rules.

          Real estate is classified as an investment vehicle regardless of its CGT liabilities.

  • Jason Genova on 20/05/2022 - 14:42

    and i bet metricon helped themselves to millions of jobkeeper money too

    the fatcat execs got a nice chunk of that

  • whatwasherproblem on 20/05/2022 - 14:47

    You know I was laughing when it happened to Evergrande but now it kind of sucks now that it's potentially happening to people I actually care about.

  • Daniel-Tillet on 20/05/2022 - 14:59
    +9

    I am tradie and metricon owes me over $170,000 as of today…

    • Trying2SaveABuck on 20/05/2022 - 15:04
      +3

      I'd be raging man - good luck i hope you get whats owed to you

    • Jason Genova on 20/05/2022 - 15:33

      ouch

    • JimB on 20/05/2022 - 16:22
      +1

      Holy shit..

      Hope you get all of it.

      How much of it is overdue?

      Good luck.

    • netjock on 20/05/2022 - 19:17
      +1

      You need to focus on cash collection.

    • kiwimex on 20/05/2022 - 19:31
      +1

      Thats awful mate….hope you get your $$$ how did you manage to get so far in the Red without them clearing invoices?

    • godofpizza on 20/05/2022 - 21:03

      is that normal amoung tradies?

      • CalmLemons on 20/05/2022 - 21:08
        +1

        Not sole trader tradies.

        if this guy is legit, he would be a medium size supplier and $170k would be a small percentage of his actual turnover.

        And if he is owed $170k, one would think his turnover would be in the $2m+ at least.

        • h0mbre on 20/05/2022 - 23:26
          +1

          I’m sorry and don’t mean to sound rude but you have no idea what you’re talking about.

          170k is well within the bounds of what a sole trader can be owed and I would say it’s a normal pattern when a builder is about to go bust or experiencing cash flow problems.

          I’ve seen it countless times and it’s happened to people close to me as well.

          A trade will do repeat work for one company, said company starts having problems, payments start getting stalled but all the while the jobs are still coming in but the unpaid bill is getting bigger and bigger. Eventually company goes bust and the subbies are caught with their pants down.

          Construction is a mugs game and a builder going bust usually sends many of their trades down the gurgler as well.

    • RatBargain on 21/05/2022 - 09:01

      Really sorry to hear that. Is it overdue or unusually late?

      “All our contracts are profitable, and we are up to date with all our payments: to contractors, suppliers, employees and trades,” Langfelder said.

      Are they trading while insolvent? He’s personally liable if he’s making fraudulent claims

  • FlyingMiffy on 20/05/2022 - 15:19
    +3

    Might be jumping the gun there… their CEO died on Monday, and you would expect that as a private company, they would feel obliged to give reassurances to its main creditor and customer of its intended operations. The rumors themselves are actually dangerous, if it triggers something like a Bank Run, it will turn the rumor into a reality and everyone involved in spreading the rumor will have contributed to families with metricon losing out on deposits and half built homes…

  • Max P on 20/05/2022 - 15:50
    +1

    The rich are a cancer on society….

    • brendanm on 20/05/2022 - 17:18

      Indeed, we should eat the rich and seize the means of production, comrade!

      • netjock on 22/05/2022 - 20:23

        Didn't realise we eat cancer, you might need to check your prescriptions.

  • BertieBrown on 20/05/2022 - 17:37
    +2

    I feel like there’d be loads of people who over-mortgaged, and are in dire straits because of the increase cost of everything (can’t come up with any more money). The article refers to increase costs of materials, and labor.

    I am particularly worried about the people who are building houses and might find themselves in the shit, with a half finished house! I don’t know how that gets sorted out? That I think needs to be addressed by potentially running the directors through the ringer if need be.

    I also feel for the people who work in these companies, suddenly finding themselves without employment.

    It’s tricky though. If a company is run into the ground with shit management decisions - the government can’t be just bailing them out every five seconds, it would never end. I mean look at Mitsubishi. They just took more and more money, and then just pissed off. Pardon my language.

    If they fold it’s a shitty situation all round methinks.

  • Bid Sniper on 20/05/2022 - 18:00
    +2

    Will go bankrupt to screw over customers and reappear under a new name like all the other dodgy builders, rinse and repeat.

    • [Deactivated] on 20/05/2022 - 18:30
      +1

      And let go 45 years of reputation?

      • MrThing on 20/05/2022 - 19:51
        +1

        Metricon has a reputation?

        you mean reputation for poor quality

        • [Deactivated] on 20/05/2022 - 23:07
          +1

          What's a good builder then?

          • MrThing on 21/05/2022 - 09:08

            @[Deactivated]: not a volume builder

            • [Deactivated] on 21/05/2022 - 18:36

              @MrThing: So… Private builder who can screw customer and reappear on a new name?

      • netjock on 22/05/2022 - 20:25

        Name (like dick Smith) usually gets sold.

  • Whomastadon on 20/05/2022 - 18:50
    +4

    Bail out the families that have paid for the house they won't get.

    Let the company sink

    • rektrading on 20/05/2022 - 23:11
      +3

      Taxpayers shouldn't bail out bad investments.

  • jaylee88 on 20/05/2022 - 18:54
    +1

    so how do it change my poll vote? Fat fingers here

  • ekwipt on 20/05/2022 - 19:09

    B ailed out no (profanity) way

  • MrThing on 20/05/2022 - 19:51
    +1

    volume builders are scumbags, just like real estate agents and used car dealers.

    they are just predators.

    Let them go bust and their crap quality buildings

    No more socialising the losses, privatising the profits

  • Korban Dallas on 20/05/2022 - 19:52
    +1

    If Metricon are not going bust I sure hope they end up suing the newspapers.

    Tremendous strain on their trades, clients and workers.

    Not to mention other builders, investors and the general economy.

    The fear has and will continue to do a lot of damage even if false.

    Woman on the news saying she has had massive delays. Well that's every builder at the moment not specific to Metricon.

    This title is terrible. Like you know what's going on.

    Sick of this bullshit sensationalist journism.

    Oh a sales person hasn't received a commission. Sometimes there are valid reasons. I've seen a lot of Karen like sales people in the industry.

    Can't wait for a royal commission into the media industry.

    PS I work for a mid tier builder.

  • Herbse on 20/05/2022 - 20:26
    +1

    I don't get it. Sure materials and labour are expensive. But considering houses are seen as investments more than anything these days, the demand has been Sky high and people have been willing to pay the costs because it's beneficial for their portfolio.

    • Korban Dallas on 20/05/2022 - 20:29
      +1

      It's not that. The builder gives a price, predicts how much extra to allow for price rises delays.

      Month after month. Price rises = reduced profit

      It's not even slowing down.

      • Herbse on 20/05/2022 - 20:32

        Every building contract has a "prices can increase" and request more money from the customer though. Builders don't just absorb the cost of price increases.

        We've seen at least 3 threads in here alone from people who didn't read their contract and were unhappy but had to comply.

        Housing and building is the biggest booming market we've had for the past 2 decades. If they can't manage to keep their profits up, there has to be some bad mismanagement happening behind the scenes.

        • Korban Dallas on 20/05/2022 - 20:34

          Correct. Most did comply.

          However, some didn't comply and the builder cut them lose or build at a loss.

        • brendanm on 20/05/2022 - 20:36

          Every building contract has a "prices can increase" and request more money from the customer though.

          Nope.

          • Korban Dallas on 20/05/2022 - 20:42

            @brendanm: Mate I oversee 200 contracts a year.

            Yes.

            • brendanm on 20/05/2022 - 20:55
              +1

              @Korban Dallas: From HIA.com.au

              Lump Sum (Fixed Price) Contract
              Under a fixed price contract the builder agrees to bear any costs above the fixed price, except for those costs incurred because of variations requested by the client or matters outside the control of the builder, such as a fire, war, strike or natural disaster.

              But what if continuing to perform under the fixed price contract becomes unprofitable?
              Even if a rise or collapse in the market dramatically pushes up the price of materials, it is unlikely a Court will intervene and help out the builder. Future material price increases should have been contemplated when the contract was quoted.

              Just as an owner is not able to reduce the amount paid if the price of materials decreases a builder is not entitled to pass cost increases to the owner.

              So, when you have entered into a fixed price contract, there are very limited ways increases in the cost of labour and materials can be passed onto the client as the risk rests with the builder.

              Try and make sure any commitments you have made in a fixed price contract with an owner match those obligations the suppliers have to you.

              • Korban Dallas on 21/05/2022 - 10:22

                @brendanm: https://www.afr.com/property/commercial/metricon-s-queenslan…

                In the second week of March, in response to questions from AFR Weekend, the privately owned company said it was renegotiating contracts with some customers in Queensland (a move it reversed after the state government said there was no legal basis for clients to pay more)

                • brendanm on 21/05/2022 - 10:31

                  @Korban Dallas: Paywalled.

                • rektrading on 21/05/2022 - 10:32

                  @Korban Dallas: Metricon will keep the extra change as a 🙇 when they go pop.

                  • Korban Dallas on 21/05/2022 - 10:40

                    @rektrading: Interesting a lot of subbies coming out to defend them

                    • rektrading on 21/05/2022 - 10:43
                      +1

                      @Korban Dallas: I would too if I was charging a $100 to change a tap.

                    • hayne on 22/05/2022 - 00:54
                      +2

                      @Korban Dallas: hold on - I'm not following your argument.

                      You agreed that all builders can just increase their prices whenever they want in all contracts.

                      Brendanm points out this is wrong according to the HIA (https://hia.com.au/resources-and-advice/covid-19/managing-yo…).

                      Your post a link which says "the state government said there was no legal basis for clients to pay more". Doesn't this means that builders on fixed price contracts have no recourse but to ask their clients nicely if they will pretty please agree to pay more out of the goodness of their hearts?

                      That's not a contractual right.

                      If you really do oversee 200 contracts a year, do you mind posting some links that show builders can raise prices whenever they want on standard form fixed price contracts (HIA, MBA, or equivalents to the Department of Fair Trading)? I'm not an expert so if that's really the case then I'd be keen to see some evidence.

                      • netjock on 22/05/2022 - 20:34

                        @hayne: Missing is that variable pricing is not allowed in VIC for contracts under $500k

                        Here

                        If you are a builder that builds single dwellings then you are stuffed.

                        If you do multi unit development then the developer is stuffed.

                        If you sell off the plan then you are double stuffed.

  • DiscoJango on 20/05/2022 - 21:11
    +5

    Interesting how after this entire fake news, fear mongering campaign by the news media this week, now thats its confirmed that metricon are financially stable and there was never a problem in the first place, the news media completely ignore that and dont have the decency to post a front page article stating this.

  • Seni0r El Cheapo on 20/05/2022 - 23:15
    +1

    "Metricon has been hit by rising building costs, supply constraints and soaring subcontractor fees, but the company strongly denied it is on the brink of collapse and said it has no solvency problem."

    Fresh pile of fresh Bulls Sh!7.

    These futher muckers passed every increased cent along with their cut to every customer…

    • rektrading on 20/05/2022 - 23:20

      These futher muckers passed every increased cent along with their cut to every customer…

      Metricon is still collecting payments from investors that they don't have to pay back then they go pop.

    • Korban Dallas on 21/05/2022 - 14:02

      This is a false accusation

      • rektrading on 21/05/2022 - 14:13

        It's a rumour.

        Anything goes.

        • Korban Dallas on 21/05/2022 - 14:21

          No this is it literally a false accusation

          These futher muckers passed every increased cent along with their cut to every customer…

  • striker5950 on 21/05/2022 - 00:10

    to hell with them, why should we the tax payers bust out a private company going bust, tf?

    • DiscoJango on 21/05/2022 - 09:30

      1. Their not going bust, that and this entire thread are based on media lies and rumors

      2. IF they were going bust, its the wider impact and effects on the community. They build approx 6000 homes annually. If on avg 4 people live in each home, thats 24,000 people who would be severely impacted and potentially homeless due to expecting their home to be finished by X date. Not to mention the 2,500 direct employees & 20,000 plus sub contractor trades engaged by metricon. Thats now roughly 46,000 people who would be severely impacted IF this company folded.

      Could you then imagine the media and political shit storm that would ensue?

      Bailing out companies is not about keeping the directors paid, its about keeping people employed.

      • rektrading on 21/05/2022 - 09:42

        "where there's smoke there's fire"

        Investors are concerned about losing money. They should be scared, very scared in this weak property market with rate hikes, +15% inflation and looming uncertainties.

        There is also the potential for a change in government.

        It would be financially justifiable to pull out now before Metricon go pop and investors lose everything.

      • Korban Dallas on 21/05/2022 - 10:36
        -1

        It would be Labors fault

  • Zacsik on 21/05/2022 - 09:36

    Won't this drive an increase in house prices though? Like suddenly there are a bunch of half completed houses and those people are back on the market.

    Not a fan of bailing them out. But one less big volume builder means less houses being built and available right?

    Maybe I'm oversimplifying it in my head.

    • rektrading on 21/05/2022 - 09:51

      What happened to Holden?

      Badly managed and unprofitable businesses must be allowed to fail so that the cream can rise to the 🔺.

      • Zacsik on 21/05/2022 - 10:35

        But I assume - at least in the short term (3-5yrs) - its going to impact the availability of houses?

  • D3HUN on 21/05/2022 - 12:31

    "Maybe they should have bought less smashed avocados"…

    • websterp on 21/05/2022 - 14:07
      +1

      Or kit out less recovery gear on your Wildtrack Rangers.

  • Blargman2001 on 21/05/2022 - 13:19
    +2

    Let them go bust. The owners will just phoenix the company, only to proceed to pull the rug from their customers, suppliers and subcontractors again next time. Typical building industry behaviour.

  • BluebirdV on 21/05/2022 - 13:53

    Question. If I ever wanted to build a house, how can I be sure that this won't happen to me?

    • Trying2SaveABuck on 21/05/2022 - 13:58
      +1

      you can't

    • rektrading on 21/05/2022 - 14:01
      +1

      Buy a used home.

    • Korban Dallas on 21/05/2022 - 20:43

      Get them to write up a no contract price increase declaration and send it to your lawyers for review.

    • Richmond Tigers on 23/05/2022 - 09:21

      Be your own project manager, of course you'll not get a loan that way either.

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