This Business is Personal

When contemplating my article for the May edition of the Builders Bulletin, I had every intention to complete some research on the Victorian economy, it’s leadership and the financial mess in which our state finds itself. Whether or not you appreciate the job our Premier is doing, his lack of discipline when spending our money on Infrastructure Projects requires examination. The absence of transparency and grossly inaccurate cost announcements are, at best, deceitful.

Unfortunately, other events have taken precedence. The liquidation of Porter Davis Homes (PDH) and Mahercorp (Ubanedge Homes and Eight Homes) entering voluntary administration, demand our attention. They were more than transactional customers of Bowens, they represented 20 and 18 years of human connection. We, Bowens & Timbertruss, have worked with literally hundreds of their staff over their time in business, as we attempted to do our best job supplying their needs. At best guess, combined, 50,000 Victorian families are living in their homes.

“We, Bowens & Timbertruss, have worked with literally hundreds of their staff over their time in business, as we attempted to do our best job supplying their needs.”

It is important to acknowledge the vexed anguish of the Porter Davis and Mahercorp staff, the pain of the owners, the exasperation of customers and perilous losses of their contractors. Our empathy sits with all who have been affected by this shocking event. It is no different for any other builder who has or will suffer the same fate.

I need to be clear, while there is a distinct difference between liquidation (PDH) and voluntary administration (Mahercorp), this article does not have the space to focus on the specifics. In essence, there is a chance Mahercorp & its brands will re-emerge; for the individuals involved and the industry more generally, I hope this is the case. Putting this hope aside, the focus of my writing is on the immediate impact of the announcements and how they can affect the people involved.

Homeowners pour their hearts and life savings into what is most often the project of their lifetime. There is the excitement and time spent selecting a builder, then deciding on the house they dream of calling a home. The sacrifice of scraping together a deposit and the thrill of their build rising from the ground. It is a special journey, one they share with family, friends and work colleagues. To suggest it is emotional is an understatement. For those of us who work in or support the housing industry, it is necessary to pause every now and again to recognise how our everyday contributions mean so much to those who live in the finished product. The workmanship, the materials; they become the possession of families and will be proudly displayed or shamefully shunned. The experience and the final product are remembered equally.

“For those of us who work in or support the housing industry, it is necessary to pause every now and again to recognise how our everyday contributions mean so much to those who live in the finished product.”

As it is anytime a builder fails, the crushing stories of trades being owed substantial sums quickly emerge. Quite often it is a father & son, a small crew or a labour only team left with weeks, sometimes months of unpaid invoices. Frequently they have devoted themselves to the one builder and as rumours emerge or missed payments begin, anxiety levels rise and decisions need to be made. Most often they double down, while the amount in arrears accumulates. To withdraw service will mean build phases are not reached and stage payments cannot be made. The dreaded cycle of chasing what is owed, while continuing to support the builder with more work on site, becomes inevitable. An interesting note: the team at Mahercorp are adamant they only missed their last weekly subcontractor ‘pay run’.

As has been the case so many times before, devoted employees of Porter Davis and Mahercorp will feel let down, have unanswered questions and, at times, develop a peculiar sense of embarrassment. The vast majority have put in a lot more than hours in the office or time on site. They were committed to the brand, proud of what they played a part in creating. Yes, other jobs will come. Even so, scars will be left. The immediate uncertainty and persistent questions from family and friends must be difficult to manage when the wounds are still so raw.

And then there are the owners. The men and families who have created and developed the Mahercorp and Porter Davis businesses, along with others such as Lloyd Group and Langford- Jones; I know them all. Some better than others, but all well enough to understand their pain is real. This is not a moment in time soon to be forgotten. Their companies have been an extension of their person. Three of the four have their name on the door, all cared (and still care) deeply for the brand and only ever wished to eventually leave a positive legacy. I am no different, it is how I think of Bowens.

Bowens and Timbertruss have been working with Porter Davis and Mahercorp for several months, as they managed their business through an extremely difficult period, particularly for volume home builders. From a firsthand perspective I witnessed how hard the builders mentioned in this article worked to keep their businesses alive. They didn’t walk away without first exercising every tool in their armory. As I wrote in the March Builders Bulletin, the years of covid have contributed to extended build times, significant price increases and, ultimately, unprecedented financial head winds. We had been hoping the summer holiday period might bring a substantial lessening of concerns, unfortunately many issues continued to linger. The battle for trades seems to have outlasted all other challenges.

“We had been hoping the summer holiday period might bring a substantial lessening of concerns, unfortunately many issues continued to linger. The battle for trades seems to have outlasted all other challenges.”

There is an increasing need for suppliers, sub-contractors, insurers and governments to work hand-in-hand with builders to ensure they survive the turmoil; news of two big players failing would suggest the industry must lift its game. The effects will be far reaching. Consumers will naturally be nervous; many will rethink their intention to build. Product manufacturers, wholesalers, merchants and well-run building companies are going to be touched in some way.

As far as Bowens is concerned, we are fortunate. While we worked hard to accommodate the needs of PDH, Mahercorp, LJH and others, we only ever traded them within terms. Additionally, our spread of customers is an asset. While the press and this article focus on the volume end of the market, the Bowens business is heavily weighted to small and medium sized building companies. At the same time, since November last year, we have been preparing for a variety of reduced activity scenarios. The job for Bowens and Timbertruss is to back fill the gaps, execute our new plans and revel in a modified future.

With investments made in three new locations between October 2022 – February 2023, we have been focused on growth for some time now. Retaining old relationships and introducing new ones in a market full of nervousness won’t happen without further surprises, we need to prepare for any unforeseen challenges thrown our way. For now, we must focus on doing the simple things exceptionally well. And, unlike our State Government, we will live within our means and stretch as far as we can to support Victoria’s builders.