Construction Carnage: More than 80 businesses collapse in a month as building industries suffer in 2012
Article from: Madeleine Heffernan on SmartCompany

 

The building and construction industries have had a poor start to the year, with more than 80 construction businesses entering administration, liquidation or being hit by a winding up notice over the past month on the east coast alone.

 A SmartCompany review of insolvency appointments shows that companies in earthmoving, project development, kitchens, fencing, civil engineering, plumbing, electricians and plasterers have recently collapsed.

Collapses this month include Royal & Taricon Construction, Amorin Constructions, BQL Constructions, Bina Constructions, Simtom Constructions, Australian Property and Construction Pty Ltd.

Registered company liquidator Cliff Sanderson, of Dissolve in Sydney, says construction company collapses are "always prominent", but have become increasingly so over the past six months.

This is due to the courts opening up for 2012, the weakness in construction starts, companies getting around to unpaid tax bills, and the trickle-on effect from larger company collapses.

"There have been a few larger building companies go broke in the last 6 to 12 months, like Kell & Rigby, and there's always flow-on from that, but most of them are actually suburban tradies [who have collapsed]," Sanderson says.

"For us, February was bigger than January, and in March there's been a noticeable uptick on last year."

According to Sanderson, part of the problem is that small construction businesses are not diligent on bookwork.

"The average director doesn't want to look, and then 18 months they find they have a large tax bill."

Peter Jones, chief economist at the Master Builders of Australia, says of its 31,000 members, about 95% are classified as small business, and many are "really struggling".

"The forward orders aren't looking too flash; they're looking to lay-off staff and are concerned about their outlook."

Jones says the problems stem from flatlining construction starts on the residential side, and declines on the commercial side as Government stimulus wears off.

He says there's no evidence that a Tax Office crackdown on the sector was boosting collapse numbers, although it's conceivable many companies had fallen on large tax bills.

Jones says a rate cut of 0.5% would provide a fillip to the building and construction industries.

 

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