Fletcher Building to cut 1500 jobs
Fletcher Building’s plans paint a dark picture of the future of New Zealand’s economy, an investment analyst says.
Fletcher Building has proposed to cull 1000 jobs in New Zealand and 500 in Australia, which equates to about 10 per cent of its workforce.
Forsyth Barr’s David Price said considering Fletcher Building’s balance sheet was in good shape, its plans raised concerns about the country’s recovery from Covid-19. ‘‘Fletcher Building’s plans will only have a knock-on effect on other businesses. We’re likely to see more restructures as we come out of the lockdown levels.’’ .
Price said the economy had been sluggish before the Covid-19 alert level 4 lockdown, which had made it even more difficult for businesses to operate postlockdown. ‘‘While we’ve been in our bubble we’ve been in a state of suspended animation. Now that we’re out of our cocoons we’ll see how the businesses are going to adapt and survive ... House prices will fall. It’s not a matter of if, it’s a matter of by how much.’’
Amalgamated Workers Union national secretary Maurice Davis said workers were nervous about the future of their jobs. ‘‘Given that construction is meant to be the vehicle to drive back the economy, we’ve got New Zealand’s largest construction companies doing this,’’ Davis said. ‘‘That doesn’t bode well for confidence of the future.’’
Fletcher Building chief executive Ross Taylor said if the situation worsened more jobs could be lost.
Taylor said it was a ‘‘sombre day’’ and Fletcher Building was not interested in financial support from the Government.
‘‘It is really important for New Zealand to have strong independent companies and it’s not sustainable for all the companies in New Zealand to be dependent on government subsidies for the long term. It just doesn’t work. It is important we are independent and on our own two feet.’’
Taylor said ‘‘no part of the business would be immune to the cuts’’.
The impact of the Covid-19 restrictions during the past two months was ‘‘significant’’, Taylor said, especially with New Zealand’s level 4 lockdown. ‘‘Our New Zealand businesses were closed throughout level 4, except for small parts of the distribution and construction divisions, which were asked to provide essential services. We shut down over 400 operating sites at the end of March.’’
Fletcher had suffered a loss of about
$55 million in New Zealand last month and roughly broke even in Australia. However, Taylor said as at April 30, Fletcher Building had $1.5 billion in liquid assets.
Taylor said the residential market would shrink by about 30 per cent, to
25,000 consents a year. He said work on Auckland Airport’s domestic jet terminal and the SkyCity International Convention Centre (NZICC) would be affected.
This month, the NZICC project was given a new long stop date of January 2,
2025, and while the project could be completed within that time frame, Taylor said there may be some delays.
He did not give specifics on which other projects would be affected. ‘‘We’re impacted on our pipeline projects.’’
Level 2 social-distancing restrictions had affected productivity at its Commercial Bay building project, he said.
‘‘Before [level 4 lockdown] we could have about 1800 people now its more like
800.
‘‘You just cannot get as many people as your staff implement social distancing. On bigger projects, people are generally working on big broad areas so (it’s) less of an issue.’’
Steve Evans, chief executive of the Fletcher’s residential development business, said its housing developments in Christchurch, some of which form part of the central city rebuild, would not be affected.
Fletcher Building received $67.68m for
9694 workers from the government wagesubsidy scheme. Through the lockdown, it implemented a 12-week pay plan, where staff who were not working, or working part-time would receive 65 per cent of their salaries for two weeks until April 22. Then salaries would drop 50 per cent for the next month, and by 70 per cent the following month.
‘‘We are beginning consultation with some of our people and unions this week,’’ Taylor said.
‘‘In New Zealand, we will honour our obligations under the Government wagesubsidy scheme by retaining our people through the 12-week subsidy period ending June 26, 2020.
‘‘We are committed to supporting our people as they leave us and will endeavour to do what we can to help them secure their next opportunity.’’