Wednesday 23-02-2022
Subbies on the Probuild 443 Queen Street Brisbane project were told today to pack up their gear and leave the site immediately.
What followed was an unprecedented mass exodus from Probuild sites, not just in Brisbane but also in Sydney, Melbourne and Perth.
Our sources revealed that the Queen St job was a black hole to the tune of 130 million and no matter how big you are, losses of that magnitude are unsustainable, especially when margins are already cigarette paper thin.
Talk about thin margins, it has been reported that Probuild has a 5 billion pipeline of work and last year they had revenue of 1.3 billion and a pocket change profit of 4 million. To get to a profit at all, they must have raided their petty cash tins.
Thats a profit of 0.00003 of 1%, why didn't the alarm bells right then? Was it because its a profit and not a loss? Was the profit manufactured to keep their licence?
Reportedly they tipped 16 million into the company but that is a minuscule amount when compared to revenue. Was it done to prop up MFR's to buy time?
History tells us that this will not end well for the industry with Subbies always at the bottom of the food chain.
Many Subbies have little or no protection from construction failures and the majority do not take out debtor insurance. One reason I hear is the cost but the main reason given was because they thought this company and other like it are too big to fail. "She'll be right mate" but it won't and Privium and now Probuild are proof of that.
At the risk of repeating myself, it's time for subcontractors and suppliers to batten down the hatches and take every precaution possible going forward as this is just the tip of a titanic scale iceberg.
You only have to look back to Privium late last year to see that size is no safeguard and means nothing in this industry, especially now in the Covid era.
It has been widely reported that Probuild will be placed in administration tomorrow and the administrator will be Deloitte in Melbourne.
If that happens, it will almost certainly become a liquidation soon after.
Why? Because Probuild is a foreign owned private company. It's owned by a large South African construction company WBHO and we were told today they will not bail out the Australian operation.
There will be a lot more to come with this one and none of it will be pretty for subbies and suppliers or the industry in general.
One way to help protect yourself is to join SubbiesUnited and make use of our private members forum for up to date information but do not join if you are NOT a subcontractor, you are not welcome.
Its a tough time to remind subbies and suppliers to enquire about debtor insurance, especially when they may be about to take a major financial hit but we know from experience whats coming and the value of being insured. And it's coming for hundreds, maybe thousands of decent hard working people and their families Australia wide.
Debtor Insurance is not cheap but you can pay it off in instalments so the hit is not so hard to take. In 2016 our company bought a policy and when Cullen Group, Bloomer and others failed it helped our business and gave us peace of mind.
Debtor Insurance has the potential to save your business just like home insurance can rebuild your house if it burns to the ground.
We have said it before, you insure your house, your car, your boat so why wouldn't you insure your business which pays for all those things?
We are in uncharted waters, not just in the construction industry and you simply cannot afford not to protect your business with whatever means are at your disposal. If you don't, you could lose it.
Another way to keep a close eye on a company like this is to ask or seek out their financials and if you can't understand them, ask your accountant to look them over.
Potentially massive failures like this is why Project Bank Accounts should not have been delayed by the fat and lazy Queensland Labor Government.
It's doubtful anything could have stopped this juggernaut from crashing to the ground with all the delays, material, labour and sea-freight price increases but what PBA's may have done is limit the damage to just one months revenue.
Mr De Brenni why has it taken you so f.....g long? You were sucked in and spat out by the whining big wheels at so called "peak bodies" like the MBA so you and them should own destructive, Subbie destroying disasters like this.
Yes yes I know, you have just bought in PBA's for projects over 10 million but if you had done it when you said you would, you would have captured projects like this which started two years ago.
All you were when seeking re-election was a bag of hot air and nothing has changed. It seems like you have left it all too late now.
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