Covid 19 coronavirus: Builders warn of massive job losses if they don't get back to work

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The construction industry is facing the "biggest, biggest blow", which could result in massive job losses and immense economic ramifications if builders and other staff don't get back to work, Bay building companies warn.

One Tauranga couple who have a house under construction also said they are on the brink, trying to pay interest on their mortgage and rent while in the midst of being made redundant.

But business leaders remain confident the building sector will bounce back after the Covid-19 lockdown lapses and play a major role in the region's recovery.

Peter Cooney, director of Classic Builders. Photo / File

Peter Cooney director of Classic Builders, the largest construction company in the Bay, said: "There is no money coming in and it's a double whammy because you still have all your overheads".

He said the fallout would be much worse than the Global Financial Crisis.

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"You have got houses out there exposed to the elements so how much is it going to cost to fix those up? It is a major, big, big, blow and it's going to take a lot of time for the confidence to come back into the building game.

"There will be companies who will have four or five weeks with no sales so that will also affect your cash flow in four or five months."

Then there were the sub-trades with no income coming in, he said.

"In the GFC we got a black eye but this time we will have two black eyes and two black lips, that is the reality of it."

Cooney said if the sector did not get up and running soon there would be "massive job losses.

"There are so many jobs at stake here ... If we can get back to a level 3, companies like ourselves that have been around for a long time and have health and safety staff are confident bubbles can be created on individual sites."

Shane McConnell from GJ Gardners Tauranga South said it directly supported about 360 staff and last year it built 136 new homes in the city.

He said revenues had stopped completely but the company had work for about one year and a robust financial plan in place.

"We have a decent amount of reserves going into the lockdown so we're able to support our staff on 100 per cent wages. We do take that seriously as our industry and our business supports a lot of people.

''So we want to try and get things going again as soon as possible so we can get some money flowing through the local economy again."

Infrastructure NZ chief executive Paul Blair told the Bay of Plenty Times its survey revealed nationally that up to a third of the construction jobs were at risk within the next three to six months.

"It's because it's an industry that relies on constant cash flow."

Blair said the industry was relatively light on equity and already had a few ongoing issues including the standard building contract which would not have foreseen Covid-19.

"So it's a matter of what does the contract say? And how do we get money if we're not able to work? And if we're not able to get money, then how can we keep our staff?

"That's the compounding issues tipping right across the construction sector and putting it in jeopardy."

Priority One chief executive Nigel Tutt. Photo / File

Priority One chief executive Nigel Tutt said the construction industry was the region's largest contributor to the economy and also the largest contributor to GDP growth in the last year.

"It's a very important industry for us."

The industry would be badly affected by the lockdown, as staff were unable to work, and in the longer term by future investor confidence and developments, he said.

"On the positive side, construction companies will generally have work to come back to post-lockdown, which is better than some industries. We'd expect that the government will invest more in infrastructure.

"The key for the Western Bay is that we need that infrastructure to unlock opportunities for future development, giving maximum economic effect for that investment."

Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / File

Tauranga Chamber of Commerce chief executive Matt Cowley said the region's construction sector has been a big part of the economy since the 1970s.

While there would be job losses in the construction sector, "it will rebuild as we have a lot of skilled tradies and people who want to move to Tauranga over time".

"However, the sector's biggest achilles heel is its boom and bust cycles. This can be mitigated if the government develops a comprehensive plan to catch up with the region's infrastructure deficit."

A homeowner, who asked not to be named, said it was ''nerve-racking times'' as they had a house under construction in Bethlehem.

The homeowner said there had been no communication from the builder in the lead-up to lockdown and the couple was facing other dilemmas including redundancy.

They were also paying interest payments on their mortgage on top of rent.

"The best-case scenario for us will be if the lockdown only lasts for four weeks and we will only be $2000 out of pocket. It's pretty terrible and while we have a little bit of money in the bank that won't take last long."

But despite their circumstance, the pair tried to remain positive and had accepted the fact their new house would not be finished in June as anticipated.

"It is what it is and there is not a lot we can do about it so stressing out is not going to help the situation. There will be a whole lot of people in the same boat so we are all in this together."

Covid19.govt.nz: The Government's official Covid-19 advisory website