As Australia sees more construction companies collapse, a local Logan builder said he was saved by “not biting off more than he could chew”.
Australian Securities & Investments Commission data shows more than 1200 construction companies in Australia have gone into liquidation, receivership or administration since 2022.
Hotondo Homes Logan director, Mark Uzzell, said the industry was hit fast and hard by Covid.
“What Covid brought on at the very start was obviously fear, and people were pulling out and not building,” Mr Uzzell said.
“So, for three months back then at the very beginning, there was not a great deal of builds getting signed up.
“Then the stimulus package was thrown out to the world and that created a world of “I can’t miss out” and that… brought people to the market – all at once.”
Mr Uzzell said many builders took this opportunity to take on too many projects.
He said this prompted more expensive and scarcer sub-contractors.
“… and that’s been an ever-evolving element, because once you have too many jobs on the ground, and you don’t have the sub-contractors to do them, then you get into a situation where some builders have put themselves on a timeline that they have to meet.”
He said builders would then start “throwing money at sub-contractors” to get the project done on time.
Fortunately for Hotondo, Mr Uzzell’s experience of over 30 years may have saved the company.
“My wrinkles aren’t painted on,” he said.
Mr Uzzell noticed the trend, and said he decided against signing up too many projects at the beginning of Covid.
“I actually said, … ‘let’s just take from the market what we built last year, and let’s just get those done’,” he said.
“Well, I’m glad that’s what I did, because even we have had trouble getting sub-contractors and getting jobs done.”
Another local builder, Tyrone Hawley, director at Hawley Constructions, agreed it was a supply and demand issue.
Mr Hawley said, following Covid, overheads rose while cash flow fell.
He said the industry was changing culturally, and it was no longer an “employee’s market”.
“… now it’s a worker’s market,” he said.
“You pay top dollar for people who don’t work as much.
“People care more about a work-life balance.”
Mr Hawley also blamed large construction companies and government infrastructure projects for the shortage of workers.
He said larger companies, when borders closed because of Covid, took local workers from smaller businesses by paying them more.
He said the increased amount of government projects did the same.
Mr Hawley said Hawley Constructions managed to evade collapsing by using less sub-contractors and by being more selective with projects.
Now, the company works predominantly on government projects, such as schools.
Mr Hawley said he wasn’t hopeful for the future of the industry and that he couldn’t “see it getting any better”.
He said it would be, at best, “18 months until normality”.
Both builders said there would continue to be more construction companies to collapse.
