Fletcher Building has proposed to cull 1000 jobs in New Zealand and 500 in Australia, which equates to about 10% of its workforce.
Fletcher Building chief executive Ross Taylor says if the situation worsened more jobs could be lost. He says Fletcher Building was not interested in financial support from the Government, and that it was really important for New Zealand to have strong independent companies.
“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 stand on our own two feet.”
The impact of Covid-19 restrictions over the past two months was significant, Taylor says, especially in New Zealand as a result of the 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,” he says.
Fletcher had suffered an approximately $55 million loss in April in New Zealand, and roughly broke even in Australia.
However, Taylor says as at April 30, Fletcher Building had $1.5 billion in liquid assets, and the company reported a profit after-tax of $164 million last year.
He says the residential market would shrink by about 30%, to 25,000 consents per annum. Work on Auckland Airport’s domestic jet terminal and the SkyCity International Convention Centre (NZICC) would be affected.
The NZICC project was given a new long stop date of January 2, 2025 earlier this month, and while the project could be completed within that time frame, Taylor says there may be some delays.
He says social distancing restrictions under level 2 had impacted productivity at the Commercial Bay building project.
“Before level 4 lockdown we could have about 1800 people — now it’s more like 800.
“You just cannot get as many people on site while staff implement social distancing, although on bigger projects people are generally working on big broad areas so it’s less of an issue,” Taylor says.
“In New Zealand, we will honour our obligations under the Government wage subsidy 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.
“This will include every permanent employee leaving Fletcher Building being paid their redundancy entitlement under the terms of their employment, or a payment equivalent to four weeks’ base salary, whichever is higher, to recognise and support our people given the exceptional circumstances,” Taylor says.
“We will also be providing a comprehensive range of outplacement and other support services.
“As a major employer, we need to ensure our business is resilient and can support economic growth in the longer term, just as we have done for more than 100 years.
“While this has meant having to make tough decisions, we want to thank all of our people for their valuable contribution to Fletcher Building,” Taylor says.
Fletcher Building’s plans paint a dark picture of the future of New Zealand’s economy, an investment analyst says.
Forsyth Barr’s David Price says 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 says.
He says the economy had been sluggish before the Covid-19 alert level 4 lockdown, which had made it even more difficult for businesses to operate post-lockdown.
“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,” Price says.
Amalgamated Workers Union national secretary Maurice Davis says 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 says.
“The last industry workers didn’t think would fall over was construction. That doesn’t bode well for confidence of the future.”