New Zealand contractor Fletcher Building has announced plans to lay off 10% of its staff, around 1,000 employees, owing to the impact of Covid-19 on the firm. Of those affected, 500 will be shed in New Zealand and 500 in Australia.
The company, which is New Zealand’s biggest contractor, added that it would meet the government’s wage subsidy scheme, which ends on the 26 June, and that permanent employees would be entitled to redundancy payments or four weeks’ base salary, whichever is higher.
New Zealand entered lockdown on 31 March, which meant Fletcher’s had to shut 400 sites and operate only essential services.
The restrictions were relaxed on 28 April, since when it has been reopening them, but not before it has lost around US$34m from its operations. Meanwhile, its Australian business broke even, although revenue was reduced to 90% of pre-pandemic expectations.
Ross Taylor, Fletcher Building’s chief executive, said: "While there is a lot of uncertainty over the economic outlook, we expect Covid-19 will lead to a sharp downturn in the 2021 financial year 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. As a major employer, we need to ensure our business is resilient and can support economic growth in the longer-term."
Fletcher Building has plans for preserving cash, including the cancellation of interim dividend payments, and the suspension of a share buyback scheme.
Fletcher has previously had business troubles, with multiple profit warnings in 2018, a withdrawal from construction projects after its building and interiors division racked up a $490m loss, sale of its roof tile firm RTG at a loss and takeover talks.
Image: Construction in Australia (Samuel Wiki?wikimedia Commons/CC0 1.0)