CQ businessman reveals tough ‘ripple effect’ of liquidation
Across the state, there have been even more businesses go bust, affecting subcontractors everywhere including CQ like Ostwald Brothers' $76 million liquidation in August 2017.
Mitchell Flor, general manager of Tandy Concrete, which has offices in Rockhampton, Yeppoon and Mackay, says he has seen "countless" companies go into liquidation in his 20 years of business.
He said while each situation for each company was different, generally the demise could be attributed to poor management or people living beyond their means.
Tandy Concrete's Rockhampton branch is owed $16,128.90 from the Busby Contracting liquidation. The business is unlikely to ever see that money returned.
Tandy Concrete buys material to make its product and still has to pay its invoices - even if the firm doesn't get paid.
"There is a small margin in what we do, it is raw money, I still have to find the money to pay my suppliers," Mr Flor said.
The amount outstanding from each liquidation varied, Mr Flor said, with bigger builders owing "very substantial amounts".
Recouping the money is never usually an option which can make it hard for a business to continue to operate.
"You just have to try and work your way through it," Mr Flor said.
"It is what it is, you just have to try and manage your risk and debts."
Mr Flors said it meant you might not be able to upgrade your equipment as you much as you would like to.
"You just have to leave it be and you have to stick with what you have," he said.
In terms of how liquidations could be handled better, Mr Flor said it was always the suppliers that missed out.
He said in the construction industry, the building authority appeared to be focused on the client rather than the supplier.
"There are special laws in for contractors and the end users, I think there should be a type of law that supports the supplier of the product, similar to the contractor laws," Mr Flor said.
Unfortunately, companies going bust is to be expected in the construction industry as it happens so often.
"The construction industry goes through boom and bust cycles, it's traditional," Mr Flor said.
It can also happen so easily - it just takes an interruption to a supply chain, which can be something like a wet season or a job blowing out - and it costs more money.
"It has a very big ripple effect," Mr Flor said.
"There are genuine cases where things are a beyond their control and they have come unstuck."
Speaking about how business is going in the midst of COVID-19 times, Mr Flor said he was thankful they had some work.
He noted everything in Central Queensland seemed to be steady at the moment.
"Considering the way the year has been, construction is still ticking along, compared to unfortunate industries like hospitality and tourism," he said.