Fletcher Building is sacking 1500 people, including 500 in Australia, because of a sharp drop in demand as residential construction is hit by a coronavirus-related slowdown, and it has warned of further problems ahead for the housing market. Source: Timberbiz
Fletcher is to cut staff levels by about 10%, meaning about 1000 positions lost across New Zealand, while a review in Australia would result in a workforce reduction “in the order of 500”.
Chief Executive Ross Taylor said the impact of COVID-19 throughout the business had been profound.
“We shut down over 400 operating sites at the end of March,” he said in a statement to the Australian and New Zealand stock exchanges.
The deep cuts are among the first to be made public by a building company, although some private operators are also cutting back staff as new projects dry up.
Mr Taylor said the impact of the COVID-19 restrictions over the past two months had been significant, especially in NZ, where strict lockdowns were imposed.
He said the resultant redundancies and restructuring would mean some one-off costs, the level of which was yet to be determined.
Mr Taylor said COVID-19 meant a lot of uncertainty over the economic outlook.
“We expect COVID-19 will lead to a sharp downturn in fiscal 2021 and potentially beyond.
“Looking to the next financial year, we are planning for an environment that will see a shrinking economy, substantially reduced customer demand across all our businesses and sustained lower levels of productivity,” he said.
“In Australia, residential approvals prior to COVID-19 had been showing signs of renewed growth from a base of around 150,000. Our base case is that we now expect approvals to fall by a further 15% to 129,000 in fiscal 2021.
“In commercial and infrastructure, we expect a similar dynamic to that of New Zealand with the value of work done declining by similar percentages in both sectors,” Mr Taylor said.
The company’s New Zealand business closed down when the health crisis peaked, apart for small parts of its distribution and construction units. Fletcher shut down more than 400 operating sites at the end of March and then restarted operations on 28 April.
Fletcher had no revenue across most of its New Zealand operations during the nation’s level four lockdown. Australia revenues were running at around 90% of pre-COVID-19 expectations.
Mr Taylor said the decisions were difficult but necessary to ensure a strong future for the company in NZ and Australia.