Subbies Fear Category 6 Unit Builders Imminent Collapse

12-03-2022 10am

Subbies are hearing disturbing news about a large South East Qld unit builder on the verge of collapse.

Update:

They have closed 5 sites to subbies which would usually be bustling on a Saturday morning.

They are having meetings with developer on Monday to tell them if they don't tip funds in, they will not be able to continue. The hope is the developers will stick with them.

I would not be writing this unless there is a real possibility of it being correct as we don't believe in scaremongering for the sake of a headline. The industry is in bad enough shape without people making wild unsubstantiated claims.

There is evidence that some builders won too much work pre Covid but once it hit, they cannot cope as the margins were too small to weather the storm of rampaging price increases and a lack of qualified labour.

The supply chain issues, labour shortages and the recent torrential rain could be the catalyst for this Category 6 builder entering into administration as early as next week if deals cannot be done with their developers.

Once supply of materials became an issue, prices went through the roof putting too much pressure on the builders bottom line. Their margins were already minuscule, for some, they are now well in the negative.

An example of supply chain costs rising rapidly is in Aluminium imports. A few years ago a 40 ft container might have cost 2.5k to freight from the Malaysia mills. Post Covid the same container might cost 14k and further increases, partly due to oil price increases, will no doubt make it even worse in the coming weeks.

SubbiesUnited has heard of one builder in particular, who has a big book of work in multi story unit buildings, now on the verge of appointing an administrator.

We have our doubts that its the usual story of stripping the company of assets then liquidating the debt away because this company has been paying their subbies on time.

Where subbies will also take a big hit is with their retentions if the worst happens and that builder goes into administration or liquidation.

We will fully support any builder who does the right thing by subbies from the start and it looks like this company is doing that.

On the other hand, we will challenge any liquidator of a company where there is the usual stench of dirty tricks.

There is a report in todays Courier Mail of "a glazing company that worked on Probuild’s troubled 443 Queen St project has gone under owing $3.25m and putting more than 130 people out of work".

The company is Narangba based Hitec Glazing. They will leave a large hole in the industry.

Subbies and suppliers, be very careful how you do business now with the industry sailing into uncharted waters on the back of the recent massive insolvencies of Probuild and late last year Privium and price increases that show no signs of abating.

Don't thing they are too big to fail, you only have to look at Privium and Probuild.

Any builder who asks you to fulfill large contracts in a short time are not to be trusted in this environment. A Subbie/Supplier told me they were asked to take on a 400k contract to be completed in 5 weeks.

You would have to ask the question, what happened to the original tenderer/ contractors they based their price on?

Why such a ridiculously short lead time? The lead time indicates they have real issues which will become your issues if you take the job on.

We suggest subbies at the very least get a quote for debtor insurance if you business is of a size that has a lot of exposure.

SubbiesUnited discuss those and other issues in our private members forum.

Subbies add a level of protection to your business and join SubbiesUnited and make use of our private members forum for up to date information but a warning, do not join if you are NOT a subcontractor, we will weed you out and you are not welcome.

This is one where we hope we are wrong but all the indications say we are not.