Target jobs uncertainty throws spotlight back on Geelong property market

The Geelong economy and property market have again been cast into the spotlight following concerns about the number of jobs retailer Target will cut.

Around 1,000 people are employed by Target at its Geelong office.

No announcement has yet been made about how man jobs will be cut, but the retailer has confirmed Geelong jobs will be lost. The cuts were anticipated as part of a company review after Target owner Wesfarmers revealed an earnings downgrade for the discount retailer for the 2013 financial year.

It follows Ford Australia’s announcement last month that it would close its Geelong production plant in 2016 with the loss of around 500 jobs.

There is also uncertainty around the future of workers at Shell’s Geelong refinery. The enterprise employs around 450 people as well as contractors.

Shell Australia announcing in April that it would seek to sell the refinery by the end of 2014 as part of its efforts to dispose of smaller, less profitable refineries. Should a buyer not be found Shell may be forced to close the refinery. Converting the refinery to an import terminal has also been muted.

A further 500 jobs at Alcoa's unprofitable Point Henry aluminium smelter with the American-owned enterprise considering cuts worldwide. Alcoa had planned to shut the smelter down last year before receiving a $40 million bail out from the Victorian and Federal governments.

The potential loss of more than 2,00 jobs (more when contractors and affiliated employment are factored in) has been tempered by news that Geelong has been chosen as the headquarters of the new DisabilityCare agency for the National Disability Insurance Scheme (NDIS), which will employ around 300 people plus another 150 in the regional office.

The NDIS will commence in the Barwon area on July 1 with the Victorian government to invest more than $300 million over the first three years of the scheme.

Victorian premier Dennis Napthine says the agency will be located in Geelong's CBD but has not been able to guarantee all jobs will go to local workers.

Local estate agents Property Observer has spoken to emphasise that Geelong is now a far more diversified economy then its manufacturing-heavy tradition

Nick Lord, an estate agent from Maxwell Collins, anticipates a limited impact from the closure of the Ford plant.

He says Geelong has grown to have strong employment in areas such as education and health “to name just a few”.

He says the city has changed over the recent years with people “continuing to commute to Melbourne for work whilst enjoying the Geelong lifestyle”.

Hotspotting.com.au’s Terry Ryder –a big believer in the potential of regional city property markets for growth, provided they have diversified economies - says new ventures in the pipeline will counter-balance the economic impact of the closure of Ford and other potential job losses in Geelong.

These include the Regional Rail Link and the plan to make Avalon the second international airport for Melbourne.

Ryder says Geelong will continue to have a “strong future as an affordable lifestyle alternative to Melbourne, with improving transport links to the City”.

However, some estate agents have warned the job cuts will impact on the sentiment of homeowners, buyers and investors.

Peter Nell from Stockdale & Leggo Geelong says the Ford announcement  would affect the confidence of all types of purchasers.

"The concerns are obviously employment, as Shell, Alcoa and now Ford have all turning their backs on this town," he says.

But, he believes Geelong has so much to offer that he is sure "we will figure a way to create different forms of employment".

"But we need to do something now, not in 2016," he says.

The April 2013 Real Estate Institute of Victoria (REIV) update on Geelong, the Surf Coast and Queenscliff has house prices up 2.6% to $390,000 over the year to April, but unit prices down by 4.7% to $305,000 over the same 12 month period.

The figures are based on properties sold in the previous 12 months, updated on a rolling monthly basis.

REIV spokesperson Robert Larocca says housing is more affordable in Geelong and it has a very good appeal due to the more country feel and access to the bay, but adds that the health of any property market is “directly linked to the health of the economy”.

“As a result if the closure of Ford leads to reduced economic growth and less employment then it will have a negative impact on the market. It really depends on the region finding a replacement for the economic activity provided by Ford and its suppliers. Thankfully there is a strong and resilient local community,” he says.

To mitigate the impact of the Ford closure and other job losses, there are already state and federal government initiatives underway.

Victorian premier Denis Napthine announced last month that he will lead a special ‘Premier’s Ford Taskforce’ aimed at generate new job opportunities for workers and communities affected by the Ford announcement.

Napthine says the taskforce will take action to diversify economies, build confidence and encourage investment in Geelong and the Northern Metropolitan area of Melbourne.

One of its first initiatives is a Jobs Summit taking place in Geelong on June 19 with the aim of identifying ways to further diversify the Geelong economy.

The Federal government has also committed to providing an extra $15 million to the $52 million joint Commonwealth and State Government jobs package for Geelong.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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