Major construction company COLLAPSES as $100million company buckles under the weight of labor shortages and huge hikes in prices
- BREAKING NEWS: Another huge construction company has collapsed
- West Australian business FIRM Construction has gone into administration
- Subcontractors are reportedly owed hundreds of thousands of dollars
- Australian building industry is facing higher labour and material costs
- Have you been affected by a building company collapse? Let us know at [email protected]
A company that had a turnover of nearly $100million just two years ago has become the latest construction industry business to collapse.
The Western Australia-based FIRM construction announced on Thursday night that it had gone into administration, with subcontractors reportedly owed hundreds of thousands of dollars.
Director and co-owner Mark O’Gorman said the company had been undone by growing financial difficulties caused by higher labour and material costs.
‘We have been closely engaged with the Department of Finance in the past few weeks to ensure our approach is aligned in terms of how best to deliver on our public sector projects, and we hope that process will continue while we are taking steps to restructure the company,’ he said.
Mr O’Gorman said though the company had completed 75 projects worth $500million for the WA government since 2010, FIRM had been hit by labour shortages and global supply chain issues since the Covid-19 pandemic began.
Thousands of Australian tradies have gone broke in recent times as building firms collapse. Pictured is a house under construction
The storm of crises afflicting the construction industry has led to the slashing of profits on existing fixed-price contracts.
‘It is unfortunate that five projects awarded by the state government between July 1 2021 and May 2022 did not qualify for any financial relief for the significant cost escalations they incurred,’ he told The West Australian.
Earlier this week, FIRM lost the contract to build a school over fears it would not be ready for the coming school year.
Subcontractors on that project are reported to be owed several hundred thousand dollars.
Mr O’Gorman said his company had been doing everything it could to work through its financial challenges.
‘Paying our staff and subcontractors while continuing to deliver the projects we have committed to has been our focus and priority.’
Australia’s struggling construction industry
The firm are facing a similar fate after reports emerged skyrocketing prices of materials saw the company warn staff it’s ‘crunch time’.
WIth more than 2,500 employees and an estimated 4,000 projects in the works, a Metricon collapse would have huge rammifications for a lot of homeowners.
Acting CEO Peter Langfelder denied they are facing any issues of insolvency and maintained Metricon remains a viable business.
‘There is simply no basis to these rumours. Metricon is a strong viable business without any solvency problem,’ he said.
‘The biggest challenge Australia faces is to get more homes built for more Australian families and as the biggest home builder in the country we are the ones to deliver.
‘We are dealing with ‘business as usual’ issues sensitively because of Mario’s sudden and untimely death.
Metricon is meeting with government officials for showdown talks over its future.
The company poured $3million into a Gold Coast cryptocurrency and more than half a million to a Christian charity in a last ditch effort before it went under.
Privium group, a conglomerate of companies best known for home building, went into liquidation in December, with a report conducted into their finances finding they had likely been trading while insolvent.
Hundreds of properties have been left unfinished due to Privium going bust, with founder and CEO Rob Harder saying they are ‘deeply sorry’.
Privium, which is based in Brisbane and includes property developer Impact Homes, has built houses in Queensland, New South Wales and Victoria.
The pandemic hurt the group’s business, with building sites shut down around the country but particularly in Victoria due to the state’s lengthy lockdown in 2020.
Administrators, however, believe it was a series of investments that were responsible for its downfall rather than Covid, citing the $3million crypto punt.
It turned the cash into Bartercard dollars which were then converted in Qoin coin, a Gold Coast-based currency.
They also noted a $530,000 donation to Christian charity Love Your World, who counts Privium founder Mr Harder’s wife Rachel as one of its directors.
The sum was paid over four payments in 2021, while a special dividend of $50,000 was also paid to Love Your World in 2019.
These payments could also be in breach of directors duties.
The Sydney-based company went under in April, blaming the pandemic, rising material costs and even the floods for its demise.
Next, which specialises in affordable housing for aged care and students, collapsed owing $5million to creditors including $400,000 to employees.
It’s biggest project, a $35million student apartment complex in Kensington, next to UNSW, is now in doubt.
The Gold Coast firm collapsed in January, a month before ProBuild, with $1billion in projects on Queensland’s waterfront in the works.
Condev founders Steve and Tracy Marais unsuccessfully attempted to achieve a $25million bailout from developers, with Mrs Marais saying he believed other firms would suffer the same fate.
They have been forced to abandon a series of brand new developments including a new complex on the Cannes Waterfront in Surfers Paradise.