Lendlease and Multiplex caught up in Melbourne lockdown

Contractors including Lendlease and Multiplex are set to see revenues shrink as Melbourne implements tough new covid-19 restrictions.

Lendlease is currently working on the Victorian government’s $A11bn (£6bn) Melbourne Metro tunnel project and a $350m (£191m) mixed-use scheme for Melbourne university.

Multiplex is working on several commercial and residential towers across the city including the $A900m (£486m) 100-storey Australia 108 tower and the first stage of a multi-tower, mixed-use scheme called Melbourne Square worth $A490m (£264m).

KPMG estimates the new restrictions will cut 2.5%, or $830m (£448m), from the output of the Victorian economy as a whole this month.

Melbourne has been put into a stage four lockdown – the highest set of restrictions – as it battles a steep rise in new infections.

Victoria’s premier Daniel Andrews said residents in the Melbourne metropolitan area would be under curfew until 13 September. Measures include residents not being allowed out of their homes between 8pm and 5am and nearly all retail shops being closed.

Andrews, who also declared a state of disaster in Victoria for the first time since the bushfires earlier this year, added: “For major construction sites, that means the absolute minimum required for safety – but no more than 25% of the normal workforce onsite. Small-scale construction will be limited to five people onsite.

“To date, we’ve almost halved the number of people onsite on some of our biggest government projects. Now we’re going to go through project by project, line by line to make sure they are reduced to the practical minimum number of workers.”

A Lendlease spokesperson said: “We are working to understand how the new directives apply to our local operations.” And a Multiplex spokesperson told Building the firm had been working with the government, unions and other contractors on best practice protocols to operate safely throughout the period. 

She said: “Obviously these new restrictions will have a significant impact on our business, the supply chain and the workforce generally. We are currently working through the specific implications and what can be safely and sensibly achieved on site.”

Other firms set to be caught up in the lockdown are $A4.5bn (£2.3bn) turnover John Holland, which is headquartered in Melbourne and a subsidiary of China Communications Construction, and CIMIC Group, which was formerly known as Leighton.

Some trade bodies are concerned the new rules will not make it safe to perform some labour-intensive tasks.

“Many businesses will have to consider whether it’s feasible to work under the conditions as they are written,” the chief executive of Master Builders Victoria, Rebecca Casson, said. “Like all Victorians, we are devastated by the ongoing issues our state is having with covid-19. The decision to scale back the building and construction industry is one we are equally devasted by.”

Construction employs 300,000 people – about 8.5% of the Victorian workforce – and represents 13% of the state’s economy.