Australian tradesman forced to shut down business and return to university due to business failure

After working in the construction industry for over 25 years, a builder has made the difficult decision to close his business permanently. Anthony Lococo, based in Torquay, Victoria, will be ceasing operations of his company, Lococo Build, citing challenges with costs and supply chain issues that have severely impacted his business.

The closure of Lococo Build is a result of the ongoing struggles faced by tradespeople due to the escalating prices of materials. Lococo is among many in the industry who have found themselves struggling to cope with the financial burden caused by these market conditions.

Lococo elaborated on the various issues that led to his decision, highlighting issues such as scarcity of supplies, substantial price hikes, and the difficulty of securing skilled laborers for projects. These combined factors have left him with no alternative but to close his business and pursue a new career path by enrolling in university to become a teacher.

It comes after several high-profile building companies shut up shop in recent months, with Queensland construction giant Condev collapsing alongside Melbourne-based builder Probuild.

‘It’s been a heartbreaking decision to make, but after two years of struggling to get materials and trades, and costs continuingly blowing out and eating into anything that even looked like a profit margin,’ Mr Lococo explained.

Anthony Lococo (pictured) will be closing his building company Lococo Build for good later this year in what is the latest in a long line of tradesman and businesses giving up the tools due to a myriad of issues hampering the industry

‘I decided at Christmas that I just couldn’t face another year of it. I’m drained, and I’ve had enough.

‘Reports from the trade industry said that it was going to be just as bad if not worse this year, and we just couldn’t do it. I have a family, and I was feeling the pressure.’

Costs of metal ores, plastics, and timber have been consistently rising for years, but particularly through the pandemic as factories were forced to shut down for extended periods.

The trickle-down effect of these surging costs means Australian tradies are forced to cover the difference because they had entered fixed-price contracts with clients.

‘There’s a lot of builders who are struggling out there, I know a few of them. Many don’t want to talk about it but they’re feeling the pressure,’ he added.

A survey conducted last year by Master Builders Australia revealed that 98 per cent of builders in Victoria had been affected by price rises and wait times for materials.

Mr Lococo says rising material costs were possibly the most significant problem that required urgent addressing, revealing that his expenses had jumped as much as 30 per cent in the space of a month.

Mr Lococo (pictured with his family) told Daily Mail Australia that the spiralling cost of building materials and lack of staff had left him with no choice but to close his business

The father-of-two is one of many trade businesses either closing or teetering on the decision to close as problems in the industry worsen (stock image)

He had built the company with his wife ‘from the ground up’.

‘I got to the point where I couldn’t even face the thought of going into the office,’ he explained.  

‘Having to let my team go is devastating, but I don’t realistically have any choice.

‘You just can’t run a successful business like this, you’re just belting your head against a brick wall.’ 

Mr Lococo has committed to finalising all his current projects but admits picking an end date for his business will be a challenge.

Despite his decision to walk away from his business, Mr Lococo is keen to stay involved with the building sector, and plans to take up a course at university to become a teacher to young tradies.

Michaela Lihou from the Masters Builders Association of Victoria, elaborated on the ‘crisis’ impacting tradesmen in Australia.

‘We have got supply shortages, skills shortages and at the moment, it’s a perfect storm,’ she said.

Michaela Lihou (pictured) from the Masters Builders Association of Victoria, who was also featured in the same Today Show interview, elaborated on the ‘crisis’ impacting tradesmen in Victoria

Matthew Mackey, executive director of engineering company Arcadis, said smaller businesses are more likely to go broke because they can’t absorb the cost increases like their larger counterparts.

‘Smaller businesses don’t have the cash flow, they don’t have the same safety net,’ he explained.

‘They’re going to feel the pain a lot sooner and a lot more harshly.’

Mr Mackey said contractors were feeling the pinch after locking themselves into agreements months before the cost of materials rose, so they had to bear the weight of the difference and make only razor-thin profits if not total losses. 

‘Some people are blaming the pandemic, some are blaming material cost increases, but there’s a bigger issue, and it’ll affect just as much as the bigger companies as the smaller businesses,’ Mr Mackey said. 

Prices of materials have been rising steadily since the start of the pandemic, but exploded in April and May last year (average prices of commodities – Arcardis statistics)

While large companies are managing with big orders, small to medium businesses are really struggling – with extended waiting periods for materials impacting jobs. Pictured are tradies on a Sydney construction site.

In March, it was revealed now defunct company ProBuild owed 786 employees across 19 projects $14million, and even more to its 2300 creditors (pictured, a construction site in Darling Harbour)

Rising costs are also believed to have fueled the collapse of major construction firm ProBuild, as the company owed $14million to workers for its doomed 443 Queen Street project in Brisbane.

The chief executive of South African parent company Wilson Bayly Holmes-Ovcon that owns Probuild said there had been ‘red flags’ years ago.

In March, it was revealed ProBuild owed 786 employees across 19 projects $14 million, and even more to its 2,300 creditors. 

WBHO told the Johannesburg Stock Exchange it could no longer profitably build apartment complexes. 

As a result, administrators were assigned to Probuild after the parent company refused to throw any more money at the failed construction firm.

The bombshell decision will jeopardise 18 building and civil engineering projects around Australia and the livelihoods of nearly 800 workers.

The group’s project in Brisbane for a 264 high-quality residential apartments has hemorrhaged as much as $223million in material losses.